Bill McLeod is a Boston-based bankruptcy attorney, representing creditors and debtors with over 15 years of experience. You can learn more about this and read more of his blog posts at www.mcleodlawoffices.com. Follow him on Twitter.  Find him on Facebook.

In recent months, I’ve been hearing from and speaking with attorneys young and old who express a desire to practice consumer bankruptcy law. Only some express a desire to enter into a practice area that is evolving, intellectually fascinating, and in this economy extraordinarily relevant. Virtually (but not) all express their belief that this is one practice area that is expected to grow in the coming years. Some mention that as the only motivation to consider it. I guess they have mortgage payments too.

If you’re considering changing practice areas, adding practice areas, or entering the consumer bankruptcy arena as a newly minted attorney fresh off the bar exam lawyer, here’s my…

Top Ten Things You Need to Know Before You Become a Bankruptcy Lawyer

1. Own a copy of the bankruptcy code. If you do not have a copy of the bankruptcy code and you’re already practicing (or perhaps better said, think you’re practicing) bankruptcy law, you’re already doing a bad job. Actually, you’re flirting with a malpractice claim. I have two: one at the office, and one which is always in my brief case, and my brief case is almost always with me (except when I leave it home). In addition to owning it, you should read it.

2. Never forget the basics. Attorneys have rules. You cannot lie, nor can you help a client lie. You cannot steal, nor may you help a client steal. You cannot violate your oath. There is no “winking” in bankruptcy.

3. Join a bar association. If you’re fortunate enough to practice law in an area that has a strong local bankruptcy bar, join it and get involved. You should also join at least one of these two groups: the National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute.

4. Attend CLEs. Most states require CLEs, so fulfilling that requirement may not be particularly onerous. In states that do not require it, be aware that bankruptcy law is ever changing, ever evolving, and full of traps for those who could and should have known better. NACBA and ABI both offer great CLE opportunities.

5. Get to Court. Call the clerk and find out when “motion day”, “chapter 13 day”, or “confirmation hearing day” is. Sit in on a trial (yes, there are trials in bankruptcy court). Observe, listen and learn. And bring your copy of the code with you. Believe me; this will pay off in spades.

6. Remember this: bankruptcy court is not state court. Deadlines are real. Rules are to be followed. Orders are to be obeyed. Period.

7. Consider volunteering. Probably one of the best ways to learn some of the nuances of bankruptcy practice is to take a pro bono case. By and large, legal aid agencies that service the poor are unable to meet the high demand for bankruptcy attorneys. The cases do not typically involve complex legal issues and it is a good way to cut your teeth.

8. Get involved. Write bankruptcy related articles. Present at CLEs. Join committees. You will learn much interacting with colleagues and those learning experiences will expand when you are the one researching, writing and presenting. And that will make you a better bankruptcy attorney.

9. Keep perspective. If you think practicing consumer bankruptcy law is just completing forms, then you will find yourself at the wrong end of a malpractice complaint, a sanctions motion, or perhaps worse, an ethics violation charge. Think I am being a bit melodramatic? Think about this: In the last 12 months, I have personally participated in malpractice claims against two attorneys who bungled debtors’ cases because they did not take their responsibilities seriously. They thought it was just forms to complete for a fee. In both cases, the debtors almost lost their interests in the homes that they live in. Which brings me to this point:

10. Always remember this: what you do will affect peoples lives. Learn to do your job well. Respect your limitations. Know the law and the rules. Respect the law and the rules. And respect yourself.

This is a challenging economy and people are in need of real help from attorneys who have taken the time and made the commitment to want to help them. There are a lot of self-proclaimed consumer bankruptcy attorneys out there, but there are not nearly enough good ones.  The good ones lose sleep the night before hearings. The good ones care.  Americans in a debt crisis need good consumer bankruptcy attorneys:  professionals who are committed to helping them get the help they need.

If you’re truly up for it, you’ll find resources to help you help people navigate through this often tricky legal terrain during what history books might someday describe as the most difficult economic period our country has faced.

"So I ran into Bill in the clerk's office in Boston recently..."

Friends of Bankruptcy Bill (FOBB) are experienced consumer bankruptcy lawyers willing to share their thoughts and answer bankruptcy questions on this site. Feel free to get in touch if interested in contributing as a FOBB.

Bill McLeod is a Boston-based bankruptcy attorney, representing creditors and debtors with over 15 years of experience. You can learn more about this and read more of his blog posts at www.mcleodlawoffices.com. Follow him on Twitter.  Find him on Facebook.

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When you discover that you are a creditor in a bankruptcy case…

Bill McLeod, Esq.

Recently, I was in the clerk’s office in Boston and overheard two people ask the clerk which forms needed to be filed in a bankruptcy case.  But this person was not a debtor – they were a creditor.  Their landlord had filed bankruptcy.  The former tenant was looking for their security deposit back, and was going to sue the debtor in small claims.  I couldn’t help myself – and I butted in.

“You need relief from the automatic stay.”

“The stay applies even to me?” one asked.

“It applies to everyone.”

After that short exchange, I thought I would put together a short checklist of things to do when your landlord – or someone else you know who also happens to owe you money – files a petition seeking bankruptcy protection.

• Don’t panic.

People have the right to seek bankruptcy protection.  Simply because they do does not mean that you’re not going to get paid.  On the other hand, simply because I am encouraging you not to panic should not be read to mean that you are going to get paid.  But still, don’t panic.  In my experience, panic can lead to actions that can get you into more trouble…such as violating the automatic stay…so with that said…

• Don’t violate the automatic stay.

The automatic stay applies to all creditors.  It does not matter if you’re a big bank or a friend or neighbor of the debtor, the same rules apply.  There are very limited exceptions to the automatic stay and you should not assume that you fall under one of those exceptions.

If you know that someone has filed bankruptcy, do not call the debtor and ask about payment.  Do not send them a letter.  Do not sue them – even in small claims court.   Don’t assume that just because you heard about it from a third party and did not receive any written notice does not mean that the automatic stay does not apply to you.  Stay violations can be costly.  Willful violations of the stay can be very costly.

Call an experienced bankruptcy attorney to determine what your next course of action should be (such as filing a motion for relief from the automatic stay).  And remember, the court clerk’s office cannot give you legal advice.

• Consult with an attorney.

At a very minimum, talk to a bankruptcy attorney.  Be prepared to explain the basis of your claim against the debtor and why you are entitled to payment. Have the docket number or the debtor’s name handy so the attorney can review the filings on-line.   Let the attorney determine whether you should seek relief from the stay, or whether you may need to file an Adversary Proceeding – seeking a court determination that the discharge injunction will not apply to your claim.   Both have costs associated with them (at a minimum, a filing fee).  There are a number of discharge exceptions in the bankruptcy code.  Some require the creditor to file an Adversary Proceeding.  Check with an attorney as soon as possible to explore your options.  But again, you should…

• Consult with your own attorney.

Many times a creditor has called me directly and said “what do I do now?”  If I am not representing the debtor, I can review the facts and answer the question.  But if I am representing the debtor – or perhaps even another creditor in that case – my response needs to be very limited.  Debtor’s attorney cannot tell you what to do – or what not to do.  Meet with your own bankruptcy attorney and get an opinion you can rely on.

• Be mindful of deadlines.

When a petition for bankruptcy is filed, deadlines are established.  There are deadlines to file claims.  Deadlines to file Adversary Proceedings.  Deadlines to object to a debtor’s claimed exemptions. Deadlines to object to a debtor’s plan.   Miss those deadlines and you may lose your rights.

• If you want to challenge the bankruptcy filing, or challenge the discharge, consult with an attorney and proceed wisely.

Just because people seek bankruptcy protection does not mean they deserve it.  However, just because you – as a creditor – may think the filing unfair does not mean that the debtor’s case should be dismissed or the discharge be denied.  If you’re thinking of challenging a debtor’s bankruptcy case, meet with an experienced bankruptcy litigator – or two (as I tell my own clients, it never hurts to get a second opinion).

A few years ago, I represented a chapter 13 debtor in a contentious case where an individual creditor sought to challenge the filing.  The creditor chose not to have an attorney.  Despite my warning the creditor that there was no legitimate basis to challenge the debtor’s bankruptcy filing, the creditor persisted.  The end result: the debtor’s plan was confirmed (after a long process and a trial) and the creditor’s fight against confirmation of the debtor’s plan proved unsuccessful.  Almost all of the funds paid into the chapter 13 plan went to the debtor’s attorney’s fees.  The creditor ended up with nothing.

• Bookmark this.

If your landlord, friend, relative, ex, former roommate or former client or customer files bankruptcy, take a deep breath, and then re-read these 6 tips.  The bankruptcy filing might mean that things aren’t going to get better in that you’re not going to get your money.  But following these tips may ensure that things will not get any worse.

"So I says to Bill..."

Friends of Bankruptcy Bill (FOBB) are experienced consumer bankruptcy lawyers willing to share their thoughts and answer bankruptcy questions on this site. Feel free to get in touch if interested in contributing as a FOBB.

Bill McLeod is a Boston-based bankruptcy attorney, representing creditors and debtors with over 15 years of experience. You can learn more about this and read more of his blog posts at www.mcleodlawoffices.com. Follow him on Twitter.  Find him on Facebook.

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Bill McLeod, Esq.

Who really files for bankruptcy?

What leads a person to the steps of the bankruptcy court seeking relief from debt? That is not an easy question to answer – although there are some out there who may think they know the answer. But as I was digesting a recent opinion out of the Bankruptcy Court in the Northern District of Texas, I read the following:

Anecdotally, this court notes that it sees all sorts of consumer debtors come through the bankruptcy system. At one end of the spectrum, there are individuals who have been plagued with many bad circumstances that have led to their financial demise-such as health problems, injuries, medical bills, job loss or instability, divorce, or death of a bread winner. At the other end of the spectrum, there are individuals who have been blessed with good health and adequate jobs and resources, and yet have somehow created a mountain of consumer debt that they (and probably their creditors) should have known could never be repaid. Some of these latter individuals have even engaged in some sort of fraud along the way-perhaps in a loan application at some point, or with intentional avoidance and nonpayment of taxes, or by hiding assets before entering into bankruptcy.

But the vast majority of debtors this court sees fall somewhere between the two extremes. They are individuals who probably cannot honestly blame “bad luck” as the cause of all of their woes. And many of them have made more poor choices than wise ones, and such choices have finally caught up with them.

So what does this mean, and why am I sharing it with you? The easiest answer is that it is my experience that the court is right. However, there’s a rather significant “but…”

Unless we’re talking about a nefarious character with no sense of right and wrong, most people do not cheerfully enter the bankruptcy process. By the time they enter bankruptcy, or are at least considering it, they regret decisions they made. They know some of their choices were unwise. However, that does not mean that a debtor is not deserving of a chance to start over.

As I continued to read the Texas decision, I learned that the debtors had inconsistent income, high expenses, and some peculiar explanations for their debt. Also, the facts seemed to indicate a bit of ambivalence as to how they came into the financial predicament they were in, and why they sought bankruptcy relief. T heir case was dismissed because the court deemed it to be an abuse of Chapter 7. I did not summarize the case because I do not want people to read more into the facts but also because I want to assure readers who are facing bankruptcy that there’s something far more important in this case than the kind of car the debtor was driving or when they bought it. What’s more important is that they have a sense of who files bankruptcy and who is entitled to the relief afforded by the code.

Far too many talking heads (and readers know who they are) characterize people who file bankruptcy as buffoons with entitlement complexes. Making bad decisions is not evidence of an entitlement complex. Making bad decisions, standing alone, is also not evidence of fraud or other unscrupulous activity. Making bad decisions is evidence of being human (which by all appearances, some of those talking heads might be similarly viewed as such…although I often wonder).

Of course, whether a decision is so bad that it would effectively rule out bankruptcy as an option can only be determined after a careful review of the facts by someone who knows the law. As this court decision points out, there is no one cause that pushes people into bankruptcy and there is no bright line profile of a person who files bankruptcy. Those that attempt to convince the masses otherwise only breed prejudice and fear where it need not exist.