We live in two different worlds, the client and the bankruptcy attorney. (care to hum along?)

“Creditors”,  for debtors, means those folks who send a monthly bill, and  who call if you are late.

“Creditors”, for bankruptcy lawyers, means everyone who has a claim of any kind against the client.

In his Fundamentals of Bankruptcy Practice for newcomers last night, the new Chief Judge of the Northern District Alan Jaroslavky ,  recounted for a room full of newbies, some of  the non obvious creditors it is our job to ferret out:

the debt on real property deeded to another subject to the lien;

the bonding company for a contractor;

the ex spouse if there is a  division of joint debts in the divorce;

former customers or employees of a business who may have claims;

partners of any sort.

To his list, I’d add tort claimants, taxing authorities, and banking institutions.

Judge Jaroslavky’s litany supported his theme that as bankruptcy lawyers, we are also real estate lawyers, family lawyers, personal injury lawyers, and tax lawyers.

We must approach each initial interview as an exercise in issue spotting.  That initial interview is not delegable to someone without our legal training.  In my view, it is the most important and the most difficult work I do in a bankruptcy case.  Expect the client to do it and disaster looms.

Not only is good listening required, but also active processing of what you hear. His example:  when the client brings you a stack of medical bills, you must ask, “how are you feeling now?” What were you treated for, and might you incur more expenses before the course of treatment is complete?  If the prospect of more bills looms, now may not be the right time to file.

Hat’s off to a Chief Judge who not only recognizes the problem of a flood of new bankruptcy attorneys into the field, but exercises himself off the bench to generously talk about what the practice requires and opens the floor to questions and a free exchange with the newest members of our bar.

Got to file the 2010 tax return to get your Chapter 13 plan confirmed

But it isn’t due til April 15th and I usually get an extension, comes the reply.

Not this year. A case filed at any point in 2011 includes tax liability for 2010, since the tax is due as of the close of the tax year.   A Chapter 13 plan has to pay priority claims in full.  How can a Chapter 13 trustee assess feasibility or recommend confirmation if she doesn’t know what taxes may be due for 2010?

Practitioners should be aware of  §521(f) which allows the trustee to  require the debtor to provide the tax returns for the tax years ending  within the three years prior to the commencement of the case.

If the debtor uses a tax preparer, this can be your chance to request that  the preparer evaluate the adequacy of the client’s withholding for the current year.  It’s worth seeing if the number you’ve used in the means test for future taxes is consistent with any changes in the debtor’s income or in available deductions.  A decision to surrender a house will eliminate the mortgage interest deduction for this year.

Doesn’t the client have health care expenses, taxes, internet service, I asked?  The reply:  I’ve gotten to a negative number, so I stopped.

I’m sorry, but that doesn’t cut it. Why?

• What if you’ve made a mistake in the things you’ve put on the B-22 and the real numbers don’t yield a negative?
• As a bankruptcy professional, do you want to tell the client and the world you do only as much work as you think necessary?
• The client signs it under penalty of perjury.

Any one of these reasons justifies doing the job as well as you can.  I know that it seems to be an exercise in make-work, not necessarily connected to the real world.  But we’re stuck with it until Congress changes it.

It drives what our clients have to pay for five years.  Five years of our client’s life ought to be worth doing the job right.  If something changes, a mistake is found, or an item of income or expenses are disallowed, how are you going to put a good face on new numbers that vary wildly from your first filed B-22 when you include all the items called for on the form?

I’ve shamelessly lifted stories from my clients and those of my local newbies to write about here.  I’ve snatched issues I’ve tripped over to share with you.

Enough!  Rather than me guessing what you’d like to see here, how about you tell me?  Do you want discussion of the law?  Tricks of the trade? More about cases?  Education by parables?  Is it too basic? Too advanced?

Who are you?  New to law?  Just new to this field?  My competition snickering about things I think interesting?

Come out and tell me.

Image courtesy Wikipedia.

Lee Rosen, a well known family lawyer, described the demands of his practice thus:

Family law attorneys live in an information deprivation zone. They need to know more than they can possibly remember. They’ve got to master the fundamentals of family law. On top of that, they must have a working knowledge of property law, tax law, estate planning, juvenile law, criminal law, and half a dozen other practice areas. They’ve also got to be moderately proficient at psychology, child rearing, and accounting.

Substitute “bankruptcy lawyer” for “family lawyer” and tweak the list of necessary fields of law to master to include business, formation and operation;  retirement planning;  household budgeting, etc. and you get an overview of what an accomplished bankruptcy lawyer needs to know.

That’s why this area of law is complex and challenging.  I wouldn’t have it any other way.

[This snippet was lifted from Lee's post on Legal Practice Pro on how to get bankruptcy referrals from family lawyers.  You may find that broader discussion useful, too.]

Image courtesy of runran.

Countless times, a new bankruptcy lawyer gets an objection or opposition and indulges in  a reflexive question about what kind of pleading to file or counter manoevre to initiate.  Their first move should be to pick up the phone to opposing counsel to see if the matter can be settled or the issues narrowed. 

I remember vividly my first contested matter when I represented a Chapter 7 trustee.  I continued the matter several times, afraid to confront opposing counsel for fear of revealing just how new I was and how unsure I was of what to do.  Thirty years later, anyway, it’s clear to me that I should have gotten on the phone and asked my opponent why he took the position he did, what was the legal and factual support for it, and did he see any opportunity to compromise or narrow the issues.  I could have avoided making a commitment on the spot and bought myself time to reflect by telling him, “I’ll have to discuss this with my client.”

By at least listening to the thinking of the other side, you get time to prepare your counter argument and marshal your resources in support of your position. You don’t get surprised in court and find yourself with the deer in the headlights look.

I also know now that one of the easiest ways to look like a fool in the courtroom is to have to admit that you and your opponent have not talked before appearing in court.  You find yourself unable to speak to the other side’s position and you reveal that, rather than work the problem yourself, you’ve just dumped it in the court’s lap.  Not a terribly effective approach….

Utilizing the phone may also allow you to gain a little advantage, though it may be long term, if you can tell the court that you’ve tried on X number of occasions to reach opposing counsel and your calls have not been returned.  You’ve made your opponent look like he’s the one unwilling to try to  resolve or narrow the dispute.

As the telemarketers say, “Go ahead, pick up the phone…”

As I worked on developing the course, I found myself seeing new aspects of the schedules, figuring out where “the law” on any subject was found, and asking myself “what is it that I know about this issue that you don’t find in books?”  There’s a reason that California offers triple continuing education credit to presenters:  it’s an education to be an educator.

I  also know from working with a couple of rookie bankruptcy lawyers that I mentor face to face that, a year into meeting regularly and having me mark up their draft petitions, they still don’t always get the petition right, much less get client issues that I can elicit in conversation included in the schedules.

The practice of bankruptcy law looks deceptively simple:  there are official forms, sometimes official instructions, and there are software programs where you just fill in the data fields.  Piece of cake, some think.

I think not.  Extracting information from clients is like peeling onions, layer by layer.  Recognizing that information for what it is and how it fits into the schedules, and seeing the Chapter 5 implications, is part of the basic bankruptcy lawyer  tool kit.  You have to keep adding to the tool kit and maintaining the tools you have.

Perhaps the most important tool is humility about what one knows about the field.  The surface of the water looks smooth, sometimes, but the depth of the pool is surprising.

Welcome to consumer bankruptcy.

Image courtesy, I think, of Jenny at http://www.piqs.de/fotos/1443.html