The Situation
I recently had an exchange with a potential chapter 7 bankruptcy client. I’ll name the client “Sam.” Sam wanted to meet Saturday afternoon and have the case filed Monday. I told Sam that unless I specifically agree to file a case by a certain date, I reserve the timing of the filing to my discretion. Sam didn’t understand this and decided to seek services from another attorney.
Because we never did meet that Saturday I can only speculate why Sam wanted the case filed so quickly. It might be because I handle routine chapter 7 bankruptcy cases at reduced fees for unemployed clients, and Sam was about to get hired. But who knows, it’s only my guess. Regardless, I found I want to discuss two topics from this exchange in a two-post series.
In this post, I’ll share some thoughts on why fast emergency bankruptcy filings – unless absolutely necessary – are usually not a good idea. In Part II I’ll talk about the discretion the bankruptcy attorney has when it comes to the timing of the filing of a bankruptcy case.
MY THOUGHTS ON EMERGENCY BANKRUPTCY FILINGS
While not recommended, a fast emergency bankruptcy may be appropriate in certain situations – like for example, if your home is about to be sold at a foreclosure sale or your car is about to get repossessed. In those cases, an emergency filing may be to only option to keep your property. But mind you, fast/emergency bankruptcy filings are expensive and involve certain added risks.
1. DEADLINES
Once the case is filed, the clock starts ticking on many tasks with deadlines. When the attorney has plenty of time to completely analyze and prepare a case the deadlines should be a non-issue. A hasty filing, however, may lead to problems because the client may not be able to provide (even due to circumstances beyond the client’s control – the bankruptcy court will generally not care) the attorney with the documents or information to complete the task before the deadline. This may jeopardize the case.
2. DOCUMENTS AND INFORMATION
Filing a bankruptcy case involves the gathering of many documents and a lot of information; things that a bankruptcy client may not have readily available. These are needed for a complete analysis of your case, as discussed below, and to complete certain tasks before deadlines as discussed above.
3. COMPLETE ANALYSIS
A dedicated and competent Des Plaines bankruptcy attorney will completely analyze the client’s situation for adverse consequences that may result from the filing (consequences that a client may not be ready to accept), and whether bankruptcy is even possible and advisable. Unless a situation is fairly simple and the client has all the documents and information at the initial consultation (this is rare), the analysis of your case will be an ongoing process and will not be complete until you provide the attorney with every document and piece of information needed to complete the analysis. This is why initial consultations are usually just the start of the evaluation process.
Here are some common reasons why potential clients usually do not have the documents and information at the initial consultation: (1) the information may not be readily available; (2) not sure if wants to proceed with the bankruptcy so lacks the effort to gather information ; (3) forgot or could not find the information or document; (4) issues come up during the consultation that the potential client has not considered and additional information and documents are needed to complete the analysis; (5) there is a continuous change in the potential client’s situation (like a divorce); (5) changes in the law; (6) the situation involves an issue that requires additional legal research.
4. COOPERATION AND COORDINATION
Even simple bankruptcy cases involve a great deal of cooperation and coordination between the attorney and the client (and even third parties) in doing what is discussed in the points above. This is time consuming and takes effort. After all, life doesn’t just stop because a person is filing bankruptcy. You still have to go to work, kids get sick, you get stuck in traffic, the bank or some agency from which you need a document closes, etc... The point here is: Filing a successful bankruptcy case takes time.
5. RISKS
Adding to the risks and uncertainties listed above, in chapter 7 bankruptcy cases the client has no right to voluntarily dismiss the case when things go wrong. A judge must give the approval. Getting approval may be difficult, if at all possible, particularly when assets that can be administered by the trustee are discovered. Voluntary dismissal of a chapter 13 case is not guaranteed either. All bankruptcy cases must be filed in good faith. This means that they must be filed for the right reasons with the proper intent. Filing a chapter 13 case without the intent of ever completing the plan is considered bad faith. Keep in mind that in the rush to file the case things may be overlooked; important things. This can lead to a dicey situation with consequences such as a dismissal of your case, denial of discharge, or, while rare, even fines and imprisonment.
6. EXPENSE
Even if an attorney agrees to represent a potential client in an emergency bankruptcy case or promises to file your case by a certain date that is fast approaching, it will be very expensive.
First, the attorney will increase fees just for taking on the risks and uncertainties discussed above.
Second, the attorney will increase fees because the attorney will have to spend more time and effort coordinating matters to get the case filed as agreed and addressing complications that may arise. The attorney may have to put the matters of other clients on hold just to do this.
Third, the attorney will probably charge higher fees for allotting time that may have to be spent writing and filing motions and going to court to extend deadlines, for example. And an additional bill may be sent to the client for actually doing these things later.
The point here is: Getting an attorney to agree to file an emergency bankruptcy case or to file a case by a certain date fast approaching will be very expensive.
CONCLUSION
In summary, emergency filings are possible but are expensive and involve certain risks. You really shouldn’t wait to the last minute to get bankruptcy advice. Talk to a bankruptcy lawyer about your federal debt relief options when you find your financial situation STARTING to get out of control. Don’t wait until your financial situation already IS out of control. And certainly don’t wait until the eve of a foreclosure sale or lawsuit judgment!!! A dedicated and competent bankruptcy attorney will meet with you, hear you out, and give you initial advice for free.
In the next post, I’ll discuss the bankruptcy attorney’s discretion when it comes to the timing of the filing of a bankruptcy case.
- BKguy
“Get out of debt . . . and start living your life in color.”
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