Sunday, August 3, 2014

Bankruptcy ... It is all in the details ...

Image courtesy of nonicknamephoto /
I remember the first Chapter 7 Bankruptcy Petition I filed. It was in the mid-nineties and one of the partners came into my office and said, "You wanted to try doing bankruptcy, right?" I sat at a conference table with copies of all the forms and schedules, pencils, a calculator, all the clients bills, and the code. I had to pour over the code ... pound out figures on the calculator ... and I had to understand the exemptions and how to apply them. I didn't have internet access, any special software, or even a "how to" book. But I knew the facts and details of my case and I learned the code or enough of the code to get the client through his bankruptcy.

Today, I have it much easier. Like most bankruptcy attorneys, I have specialized software, a couple "how to" books, the internet, and a network of colleagues. Even with all these tools, an attorney still needs to understand the basics. In fact, I think it might be more important to understand the code and master the facts of the case. I think it is more important because the program does the calculations and fills in the documents. Also, the software makes calculations based on selections the attorney makes. It is much easier to miss a mistake if you don't understand the details. The only way you know there is a problem is to recognize an anomaly from an answer without seeing the calculation. Attention to details is key.

I know that sounds simple enough and self explanatory. I was at a creditors meeting last week. They are not always private. While I was waiting I overheard the trustee talking to another debtor's attorney. I heard the Trustee say something like, "Do you do bankruptcy much?" Definitely not a good question. The attorney replied, "No." The trustee followed up by saying, "You used the Pennsylvania exemptions ... most attorneys in Pennsylvania use the federal exemptions..."

Not selecting the best exemptions, whether by making a wrong selection in the software or not understanding the exemption law and debtor's case, may allow the trustee to take property for the benefit of the creditors the creditors are not entitled to. This is a big deal to someone who has almost nothing and is making a fresh start with whatever is left. Knowing the details and understanding the code, even with all the modern tools, is still the important part.

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