Bankruptcy Attorney

Bankruptcy Attorney

What is a bankruptcy attorney and why would you want to hire one?    I often hear: Why do I need to hire an attorney to file my bankruptcy case?  It is so expensive and you just need to fill out a bunch of forms and all the information is on the Internet, right?  What is the worst thing that can happen to me?  I hear the trustee will just walk you through your mistakes and it is not a big deal.  Never have those questions resonated so loudly in my head than they did while I was talking to my accountant about taxes.

Dave Ramsey says that he is not telling you something that you have not already heard when he speaks about controlling your debt, it is that you are now ready to listen.  I guess today I was ready to listen while at a meeting with my accountant and I really put myself in the shoes of the debtor as to why you hire professionals to assist you.  I have spoken about this issue in the past but I believe it is so important that I am writing about it in a different way this time.  Just in case as Dave Ramsey says, you are now ready to listen.

My accountant is a CPA, Certified Public Accountant.  A CPA is a professional who is trained specifically to handle accounting and tax needs.  Some will read this and say, “so what?  They have initials at the end of the name and this just means that I have to pay more money.  Good golly.  It’s just a form and all the information is on the Internet so anyone can just fill it out.  Especially an attorney who has received all this special training and therefore has initials after their name too.”  Hmmm…

Double entry accounting, cash vs accrual accounting, base cost, berry ratio, center of vital interest, debt dumping, factoring, gaap are some basic terms in accounting.  Do you know these terms and how they may affect your tax return or your general accounting?  These are JUST terms found on the Internet and the tax return is JUST a form that will explain how these terms affect the filing. right? NO! NO! NO!  Accounting and tax return preparation is a very specialized field with rules and regulations that are constantly changing.  If most attorneys who are trained professionals in the law hire an accounting professional why would you even attempt to file a tax return on your own?  Especially when the consequence for filing a false return is a felony that could result in a fine and jail time.

Now let’s draw a correlation back to bankruptcy.  If you do not fill out the bankruptcy petition and related schedules truthfully you can be charged with the crime of perjury.  This too is a felony punishable by a fine and or jail time.  If you filed your own case did you realize that you signed those documents under penalty of perjury?  In plain English this means that you know exactly what information is listed in the schedules and exactly what information you DID NOT NEED to list.  The bottom line is that the Court and the trustee are going to hold you to the same standard that they would hold an attorney to regardless of your experience or educational level.

As a bankruptcy attorney whose practice is over 95% bankruptcy clients I am constantly attending educational courses regarding bankruptcy.  Just like the tax professionals, bankruptcy attorneys similarly must stay current with the changes in the bankruptcy law.  I attend on average one continuing legal education course a month so that I may provide the best representation that I can for my clients.  No bankruptcy attorney would dare describe bankruptcy as “it’s just a fill in the blank and hope you did a good job” area of the law.

It breaks my heart when  a pro se filer gets interrogated by the trustee and they have not idea what is taking place.  I watched a pro se filer this week in a 341 meeting and I cringed as I listened to her story. She told the trustee that the bankruptcy “form seller” told her to just fill in the blanks and there are the sites you go to, to obtain the information.  The debtor had no idea of why she was placing information on the form just that she had to fill it out.  She was also instructed to not pay her vehicle or her rent because the trustee could take her car and the rent that was paid.

As it turns out her vehicle was exempted or protected but now she is two months behind on the payment and the creditor may seek to take the vehicle as well the landlord was not happy with her.  All of this could have been avoided if she had hired a bankruptcy attorney.  By the time the 341 meeting was completed she was going to have to come back and she had some changes to her schedules she was going to have to figure out how to handle on her own.  Were her mistakes fatal?  I could not say because we will not know until such time as the discharge or dismissal is entered.

When you file a Chapter 7 bankruptcy you will not who you will draw as a trustee.  One particular trustee in my area asks: “Have you transferred anything to anyone in the last five years?”  Why does he do this, because the form asks for anything in the last two years?  Even though the Statement of Financial Affairs asks for transfers in the past two years this trustee is looking to see if he can raise a statute of frauds issue under Missouri State Law.  As you can see by the link, the Missouri statute regarding the statute of frauds is information that is on the Internet.  Does it make it clear of how this statute may affect your bankruptcy filing?  Did you know that the statute of frauds was even a consideration when filing bankruptcy no matter what state you live in?  Did you know that you were required to file a Statement of Financial Affairs?

A fatal flaw that I do see with pro se debtors is how they value property, especially vehicles or homes.  Trustees spend hours every week researching, analyzing and reviewing values on assets.  If you provide me a name of a trustee in the Western District of Missouri or Kansas area,  I can tell you the special area that trustee is fluent in with respect to the values of assets.  For some it is a home, others it will be vehicles, another can take a took at a Rolex and tell you within a couple dollars of the market value of that watch and I have one trustee that can move Avon inventory like there is no tomorrow.  So when you value an asset for the bankruptcy do not believe that you are going to get one past the trustee.

In addition to the trustee’s experience you will be judged by the district guideline of  how you value an asset.  For Missouri the standard for a vehicle valuation is the In re Cheatham standard.  Not sure what that is?  It is the NADA clean retail value minus what it would take to get to clean retail.  If you use a Trade In value and think you have exempted a vehicle for you and your spouse that are paid off, you might have in reality just unnecessarily exposed those assets.  The result being that the trustee can seize those vehicles, sell them, pay you the exempted value in each vehicle and use the remaining funds to pay your creditors.

Is your head spinning yet?  Certainly you can file your own bankruptcy petition just as I could file my own tax return and both of us may or may not save a few pennies in our pocket.  But there is no way that I would even think of filing my own tax return without becoming fluent in the tax code to avoid tax fraud.  Time and time again we are taught that an attorney who represents himself has a fool for a client.  A debtor who represents himself in bankruptcy may end up having to hire not only a bankruptcy attorney to obtain a discharge but a criminal attorney to avoid going to jail.

Remember that knowledge is power.  The more knowledge you have about what filing your bankruptcy petition on your own is going to cost you, the more power you will have to make a decision of whether or not filing by yourself is a smart decision.

Qualified bankruptcy attorneys in your area:

National Association of Consumer Bankruptcy Attorneys

Bankruptcy Law Network