After you’ve gasped and giggled at the misleading bankruptcy information spotlighted here earlier, there is a serious point here: this sort of tripe creates real work for bankruptcy lawyers and a very real trap for clients.
Incomplete, overstated, inaccurate stuff about bankruptcy is all over the web, authored by apparently knowledgeable sources. Your prospects read this stuff as if it was gospel. How often does a client tell you “I researched bankruptcy on the internet”?
As a bankruptcy lawyer, you need to consider how you flush out and counter the misinformation and mistaken assumptions that a new client brings with them to the initial meeting. If you don’t, the information you get to complete the schedules may be, quite innocently, just plain wrong.
Your new client may have read and accepted something like this:
It is not required in all states to use the “Cash on hand” property type on Schedule B. However, if it is required in your state, make sure the cash on hand amount you list reflects the money left over AFTER the debtor has paid their allowable expenses (rent, mortgage, car, groceries, etc.) as well as their attorney fee.
Listen as the client talks for clues that they’ve gathered information before they met with you: family, web, other lawyers. Follow up to see what they think they already know. Recite the ground rules as you know them: list everything, valuable or not. List what you have today. Ask open ended questions: “anything else?”
At the top of the page in my questionnaire for clients to take and complete is the admonition: list it or lose it.
Often a client will have information that dates to before BAPCPA, either from their experiences or those of family or friends. It’s worth pointing out that the rules have changed, and the consequences of not following the rules have too.
An unrelated benefit of listening closely to the client is that you build trust and teamwork. But that’s a topic for another day.
Along the same lines:
Maximizing the Initial Interview
Clues from the Initial Consult
♦ Image courtesy of Forever 27
This is one of the main skills I think every attorney has to develop, but especially in bankruptcy. My favorite things to hear when sitting at 341 meetings are: “I didn’t know I had to list that,” or “My attorney didn’t tell me I had to include that.” I find that operating on the presumption that the client is always giving incomplete or inaccurate information, to no fault of their own, gives you a leg up in trying to identify those areas that could become problematic later. Practicing bankruptcy can sometimes get messy. Best to anticipate the mess first.
Absolutely. Try to leave the messes on the floor of your office, not the 341 meeting room.
why is it that most bankruptcy blogs don’t mention that your home equity may disqualifie you from chapter 13 and that if you go to court that the judge/trustee can force the sale of you home and take the equity to pay off the debt,
Cathy Moran says
Perhaps because it’s not true?
In Chapter 7, non exempt equity in the debtor’s home may trigger the sale of the house by the trustee. But in order to sell property, the trustee will analyze the situation to make certain that he can sell the property for enough to pay the costs of sale; the trustee’s commission on the sale; the debts secured by the property; any exemption claimed in the property and any capital gains taxes generated by the sale.
In Chapter 13, the debtor stays in possession and control of his assets. The only way in which non exempt equity in a home could disqualify a debtor in 13 is if the debtor cannot pay into the plan, over five years, the amount that a hypothetical Chapter 7 trustee would net from sale and pay to creditors.