Low cost bankruptcy is a slogan appearing in ads and billboards across Southern California. Is low cost bankruptcy the best way to get relief from creditors? This post answers this question in a way that might surprise you.
In the Business Section of the October 1, 2011 Los Angeles Times, Jim Puzzanghera reported:
In another sign of Americans’ economic struggles, personal income declined in August for the first time in two years, the Commerce Department reported Friday. Growth in personal income — an individual’s total earnings, including wages and investments — has been sluggish for months. But the drop of 0.1% from July to August was the first since October 2009. Personal income had risen 0.1% in July. The drop was driven by a 0.2% decline in wages and salaries in August.
And in the same Business Section Scott Reckard reported:
As the uproar swelled over Bank of America Corp.’s planned $5 monthly charge for debit card use, megabank rival Citigroup Inc. was notifying many Citibank customers that they soon would have to start paying for their checking accounts unless they maintained significantly higher balances.
Thus, on top of backpedaling on income, consumers are facing higher fees from the robber baron banks.
In light of all this cheery news, if you’re thinking about seeking bankruptcy protection, you might be entertaining the idea of going with the cheapest service provider. After all, isn’t bankruptcy the same whether you go with the more expensive, high-quality, experienced attorney, or the low-cost young pup who just finished law school, or even the non-attorney paralegal (who is prohibited by law from giving you any legal advice whatsoever)?
To help answer the question, let’s consider a very different context. You have appendicitis and need an appendectomy. Do you really have to use a highly-skilled, experienced surgeon, or can you go with the marginal doctor instead? After all, it’s a simple operation that involves cutting out just a little abdominal tissue. I mean, it’s not brain surgery. You may have even read about a guy that did his own appendectomy on his kitchen table. So it can’t be that hard, can it?
Things might work out for you, but remember the old adage: You get what you pay for.
Beware of low cost bankruptcy teasers that get you in and then add all kinds of additional fees for things you thought were included in that low price you were initially quoted. Oh, you wanted someone to appear with you at the hearings. That isn’t covered. Oh, you wanted us to file the papers for you. That isn’t covered. Oh, you wanted . . ., well you get the idea.
I freely admit that if you have a very simple bankruptcy you can probably get away with using an inexperienced attorney, or even a non-attorney paralegal, and still get your discharge without any problems. But if your bankruptcy involves any sort of complication, the discount store might not be your best bet.
On a semi-regular basis I receive calls from people wanting to hire me to repair the damage done by an incompetent attorney, or a non-attorney paralegal. Unfortunately, some kinds of screw-ups are irreparable. And even those that can be corrected frequently involve expensive lawsuits (called adversary proceedings) in the Bankruptcy Court. When that happens the total amount you end up paying – first when paying the incompetent lawyer, and then when paying the highly-skilled attorney to do the repair work – far exceeds what you would have paid if you’d gone with the skilled attorney in the first place.
Moreover, using a skilled practitioner who understands the subtleties of bankruptcy law can help you avoid unnecessarily losing your assets, or jeopardizing either your entire discharge, or the discharge of certain of your debts that could have been discharged with some careful pre-bankruptcy planning.
How can you tell if an attorney is sufficiently skilled and experienced to provide you with the kind of service that avoids these problems and leads to a discharge that maximizes the benefit you receive from the process? Hire a board certified bankruptcy specialist. The population of board certified bankruptcy specialists is quite small compared to the total number of practicing attorneys. In fact, as of this writing there are only 115 in the entire State of California. The complete list is available at the California State Bar’s website. If you prefer, you can also search for a list of the board certified bankruptcy specialists in your county, rather than sifting through the entire state’s roster. Unfortunately, some counties don’t have any – Riverside County being one of them.
Attorneys may advertise as certified specialists only if they are certified directly by the State Bar of California or an organization accredited by the State Bar to certify such attorneys.
Therefore, if you see an ad for an attorney who claims to be a board-certified specialist, check the California State Bar’s website to see if the claim is true. If it isn’t, that attorney should be prepared to face severe discipline.
- Passing a six-hour written examination.
- During the five years immediately prior to applying for certification, having been substantially involved in the practice of bankruptcy law. Substantial involvement in the area of bankruptcy law means the attorney had principal responsibility for representing, and personally appearing on behalf of, clients in 100 or more chapter 7, 11, 12, or 13 bankruptcy cases, contested matters, or adversary proceedings.
- Showing that, within the three years immediately prior to applying for certification, the attorney has completed at least 45 hours of approved education relevant to bankruptcy law.
- Getting written recommendations from: (a) three lawyers who practice in the same geographic area; (b) a bankruptcy trustee; (c) a judge of the United States Bankruptcy Court or District Court before whom the attorney has appeared as an advocate in bankruptcy proceedings within the five years immediately prior to applying for certification; and (d) two different opposing counsel in two contested or adversary proceedings conducted within the five years immediately preceding application.
In sum, someone who has satisfied these requirements is not an ingénue, but a highly skilled professional who will help you avoid the pitfalls that lead people in failed bankruptcies to call me asking for repair work. In the long run, it is frequently cheaper to hire the seasoned professional than to roll the dice with an inexperienced attorney – or even worse, a non-attorney paralegal.
All of this reminds me of the tag line Jimmy Dean had in his sausage ads: I would rather explain the price than have to apologize for the quality.