I would add another group of people who are profiting greatly from the subprime problems (and economy in general), and will continue to profit for some time - bankruptcy lawyers. Including the ones who write about the subject for the purpose of marketing and getting clients. Books and Blogs; Pot and Kettle.

Fair enough. But since it’s my blog, I get to respond. In full.

Of course, this blog has a place in my marketing efforts. I’m a solo practitioner. I believe very strongly in the power of blogs to do two very important things: (1) reach people and (2) reach people. People as potential clients and people as consumers. Both need the information I provide here as a matter of public education.

And, yes, I need it as a means to reach more folks than I otherwise would be able to do through “traditional” marketing means (which I eschew in full — I do no advertising, and I don’t even have a Yellow Pages ad — or listing). I can certainly understand being skeptical of any blog that smacks of “advertising.” But that’s not the primary purpose of this blog, which is to educate and empower.

However, to understand fully why I do what I do, you have to know a little bit more about me.

I left a job that paid me about $70,000 a year to launch this solo practice. The timing of that launch was dictated in part by my mother’s final illness — I needed to stay home and take care of her, and I needed to have a way to make money that allowed me to work from home. But that doesn’t explain why I chose consumer bankruptcy as my primary practice area.

In point of fact, that choice doesn’t make a lot of sense, in the context of my legal experience up until the point of my solo practice’s launch. I’d spent my legal career up until that point practicing a very different kind of law: municipal and then more specifically airport law. I had bankruptcy experience in terms of monitoring the airport’s claims against bankrupt airlines but no experience representing debtors.

Why did I choose that practice area, then, when it was brand new? I certainly would have had an easier time focusing solely on employment law (another practice area that I did choose and work in initially, in order to help broaden my prospects), in which I did have direct experience.

The answer is simple: I chose bankruptcy — specifically consumer bankruptcy — because once upon a time, I’d been harassed by creditors and burdened by debt myself. I didn’t file bankruptcy (although in retrospect I think I should have), but I did know first hand what it was like to be buried by medical bills and have precious little income, to be torn and anguished, and to be harassed at all hours by ugly, intimidating, insulting collectors who flaunted their violations of federal law with impunity.

So I educated myself — I spent countless hours poring over every book I could find, reading cases, talking with other bankruptcy lawyers, preparing their petitions as “on the job” training, being mentored by them. And when I was ready, I began accepting my own clients.
As far as the “profiting” comment — well, yes, I turn a profit in the sense that I make more than expenses demand, but not by much. My fees are publicly stated on my website: I make $1200 per Chapter 7 bankruptcy case, and I take no more than 4 cases a month, in order to handle the cases personally. I have no interest in creating a volume practice — in some months, the number is 0. I make nothing like Mr. Bitner’s publicized salary, and never will — at least not from this work. High six figures? More like low five figures — sometimes VERY low!

So as for why I do what I do: I do it, not to get rich, but because I believe in it. Because I believe it’s important work, and I’m uniquely situated to do it. If my daughter and I have to eat hot dogs and mac and cheese a few times a month, and forgo a vacation to — well, anywhere — it’s worth it. I will never get rich off of it, and I don’t want to. I get paid in far more profound ways.

To this list, I’d add the following comments:

1. Don’t discount new attorneys. What you want is a competent lawyer who’s passionate about your matter. To that extent, a new attorney (as long as she or he knows the law and demonstrates competence) could be your best bet. Such a lawyer could also charge less than more established lawyers.

2. Think long and hard about the kind of attorney you want to hire. Do you want a firm that throws out dozens of petitions a month? Is there a chance you’ll feel like you’re getting lost in the shuffle? A smaller firm or solo might offer more personalized services. On the other hand, you may want that kind of anonymity. Also, heavy filers sometimes charge lower fees because they file in bulk.

Technorati Tags: hiring a bankruptcy lawyer

The simple fact is that most debtors’ attorneys charge similar rates - certainly not out of any agreement to do so (that would violate antitrust laws), but simply because the market tends to be uniform (there’s only one district in SC, though there is more than one division) and the services tend to be similar as well.

The real difference in bankruptcy services is between bankruptcy lawyers - those individuals licensed to practice law who dedicate part or all of their practice to representing consumer bankruptcy debtors - and bankruptcy petition preparers. I’ve blogged about this difference before but basically, the difference is in the type of service you get. Sure, a petition preparer will charge you a lot less than a lawyer will - that’s because the preparer can only give you, by law, much less service. Preparers are forbidden from giving you legal advice.

Guess what you need most of all - especially in this post-BAPCPA climate? That’s right. Legal advice. Want to know how to exempt your savings, or whether you can? That’s legal advice. How to save the family home? Legal advice. Whether you can pay back your family members before filing and what the trustee’s response is likely to be? Legal advice.

What’s the old adage? “Penny wise, pound foolish”? It means that sometimes, we’re so eager to save a little bit up front that we neglect to note that in saving that penny, we’re ultimately risking a much larger loss down the road.

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The likely answer: Not many. Your creditors have to find out, of course. And some family members or your employer may also be entitled to notice, if they’ve lent you money, for instance, or if your Chapter 13 payments are being deducted directly from your paycheck.

But otherwise, the days of your bankruptcy being published in the paper to the derision of all are, thank God, over. It’s true that these are public filings and as such anyone can walk into the bankruptcy court, ask to peruse the files and find out (or these days, much more likely they have access to PACER, the court’s electronic filing system). But the honest truth is not many people care to put forth that kind of effort - they’re usually too concerned about their own financial issues, to be honest.

Dana tells some wonderful stories about this issue, and my favorite is her recount of two clients who, unbeknownst to either, had both retained Dana to represent them - a woman and her stepdaughter. They found out each other had filed the day of the creditors’ meeting, when they passed each other in the hallway. Dana also hints at the bigger issue at work - the stigma, and the fear, and the corresponding shame many debtors feel in regards to their plights. As Dana notes, though, when people open up (in careful, considered ways, and to appropriate people), they usually find a wealth of support and company that they had no idea existed.

Something to think about when you consider your next step out of financial distress.

Technorati Tags: bankruptcy stigma, personal finance

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The facts:

• Bankruptcy is widely recognized by lawyers who do not practice in that area regularly as such a specialized area that they do not “dabble” in it, as many general practitioners do in other areas. Example: a lot of “GP” lawyers will offer a variety of services - drafting wills, representation in DUI and other criminal matters, personal injury litigation, and real estate, to cite but one example I know of - and will entertain “becoming competent” through self-study in a new area (as the rules of professional conduct explicitly provide), but will steadfastly refuse to file bankruptcy petitions. The reason: it’s recognized by many to be so complex that the GP is asking for trouble - i.e., a malpractice claim - if s/he “dabbles” and messes up.

• Bankruptcy became even more complex in 2005 with the passage of the Abuse and Consumer Protection Act. Not only did the rules change, they became in some instances completely contradictory to each other. If lawyers, who practice in this field on a daily or exclusive basis, are struggling with the interpretation and implementation of these rules, how is a lay person going to navigate that minefield?

• Mistakes became even more costly with the passage of the Act, too. What’s the worst that can happen? Well, how about dismissal of your case? Having to incur another filing fee, another counseling certificate fee, another means test (because your old numbers are now out of date), going through another creditors’ meeting? How about a nondischargeable debt, that could have been discharged if it were properly scheduled and avoided, or a piece of property that gets sold by the Trustee that would have been exempt had the exemptions been properly planned? How about, in the worst scenarios, criminal prosecution?

• Petition preparers can’t help you with legal advice. If they do give you legal advice, they’re breaking the law. Nor can bankruptcy court clerks give you legal advice. Nobody can do that except a lawyer.

Here’s a transcript from Marketplace Money on NPR which recently took a look at the cost of filing bankruptcy “pro se.” Joseph Hurley is a bankruptcy court clerk who was interviewed for this story:

JOSEPH HURLEY: “People were showing up at our
counter without attorneys, who were very unfamiliar, those pro se
filers, with the bankruptcy requirements. As a result, the judges felt
that there were so many things that could overwhelm the debtor that
they were not in an equal playing field.”

So Hurley’s court hired a full-time clerk, Mary Fox. Her job is to deal
with people who file for themselves. She can tell clients what they
need to do to file correctly, but she’s not allowed to give legal
advice. A lot of times, she just helps people figure out what free or
low-cost legal services they qualify for.

Or convince them to hire an attorney, even if they have to borrow more money to pay for it.

There you have it. Yes, it costs money to hire a bankruptcy lawyer, but most will be willing to work with you to get the money together. Many, as I do, offer sliding scale fees based on complexity of the case, and many, as I do, also take a certain number of pro bono and reduced-cost cases a year.

More about the costs of bankruptcy in tomorrow’s post!

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Now that the program is online, all you need to do is visit the LRS page, enter your contact information, select an area of the law and a county, and briefly describe your case or problem. That description will be sent to the attorney selected as your referral. There’s no obligation, of course, and you’re free to retain that attorney or look elsewhere, as you choose. The site will even help you select the appropriate area of the law if you’re not certain what kind of case you have.

I applaud the SC Bar for bringing this service a much-needed web-based component. This is exactly the kind of forward-thinking customer service measure I have embraced as my practice model.