In her recent article entitled Why You Don’t Want A Bankruptcy Attorney to Fight For You , Cathy Moran makes some excellent points about how bankruptcy clients may not realize the importance of what goes into preparation of a bankruptcy case.
It is, of course, important to be able to take a zealous stance and be aggressive on behalf of our clients if the need arises, but it is at least equally important to prevent the need from ever arising.
This has been my philosophy from Day 1 and, I believe, one that is frequently not recognized by many clients.
Since Cathy raised the idea, I thought I’d take the ball and run with it a bit, as it were, since some of these thoughts have occurred to me over the years as well.
Why Do I Require So Many Documents Before Filing?
It is possible to file a bankruptcy case on an emergency basis. Many attorneys do them routinely.
I do not handle emergency bankruptcy cases for a number of reasons, but the main one is that it makes it impossible to anticipate and prevent problems in the case.
Most clients want to call me on the phone, tell me they want to file bankruptcy, then have a magic wand waved to get the case filed.
But that isn’t how it works; certainly not if you want it done properly. And in 2005 Congress, in their infinite wisdom, imposed a litany of additional paperwork requirements on attorneys.
In my office, I review all the documents provided (bank account statements, paystubs, tax returns, etc.) and compare them to information provided by the client to ensure everything is accurate. After I get all the information, I am then in a position to anticipate issues which might arise and take steps to eliminate or at least minimize them.
This all translates into an ability for me to proactively present my client’s case in the best light, with up-front explanations for the court and Trustees, which enable the case to go more smoothly. Some examples follow below.
The Trustee’s Meeting
In every bankruptcy case, there is a required “meeting” with the Trustee in your case (also known as a creditor’s meeting).
Over the past 20 years I have had numerous clients attend the meeting and watch the other debtors be examined at length by the Trustee only to be nicely surprised when their turn arrives and it takes less than a minute or two for them to answer the questions. Why is that? Because if the petition and schedules are filled out completely and properly, anticipating the questions a Trustee would have, then in most cases the Trustee will have no further questions on those items.
Means Test Issues
The bankruptcy means test is one of the determining factors for eligibility to file a Chapter 7 case, and is a very complex calculation based in part on income received in the 6 calendar months prior to filing the case. However, just because the means test isn’t “passed” (the correct terminology is that a “presumption of abuse” arises) doesn’t mean the debtor can’t file the Chapter 7 or have it succeed.
Depending on the reasons the income in the past 6 months is too high (for example, if it was a one-time withdrawal from a retirement account), a properly placed Declaration in the initial bankruptcy filing can allow smooth sailing without any further inquiry. Without that, one would face a Motion to Dismiss from the Office of the U.S. Trustee to which an extensive opposition would need to be filed and then a court hearing, etc. That means more fees for the attorney, but not so good for the client.
There are many, many more examples of how proper planning prior to filing a bankruptcy case yields positive results after, but this post should give a clue as to the importance.
Preparing properly and presenting your bankruptcy case in the best possible light will enable a bankrupt debtor to avoid a lot of problems and issues after the case is filed. So if your attorney is driving you crazy asking you for additional documents, and information, and answers to what you think are really meaningless questions, trust him or her to do the job for which they were hired. But, as Cathy points out, you don’t want your attorney to have to fight for you, even if they are very good at it, unless it is absolutely necessary, because it will cost you more money and there’s no certainty as to the outcome.