The past two years have seen a dramatic increase in the number of consumers filing bankruptcy cases. There has also been a dramatic rise in the number of attorneys who have never practiced bankruptcy law in the past, but are now advertising themselves as “bankruptcy attorneys”. However, bankruptcy law is a specialty similar to estate planning, criminal law, and tax law. In fact, bankruptcy law is one of the few practice areas that centers on a Code (the Bankruptcy Code) rather than common law. I know these statements may sound self-serving since I am a bankruptcy attorney. However, we would all agree that a general practitioner would not practice trusts and estates law, and a trusts and estates attorney would not practice criminal law, unless they have familiarized themselves with both the statutes and common law of each practice area.In the past year, I have seen many general practitioners filing Bankruptcy Petitions that actually end up devastating the debtor’s financial life.
Examples of the long term impact of poorly conceived bankruptcy strategies abound:
- A Chapter 7 bankruptcy case basically turns over the estate of the debtor to a Bankruptcy Trustee as of the date of filing. Chapter 7 bankruptcy cases can not be voluntarily withdrawn without a Motion for good cause before the Court.
- Although pensions and IRA’s are generally exempt from the creditor’s actions, inappropriate transfers in and out of the pension plans may expose a debtor’s life savings to his creditors.
- Inappropriate deed transfers may cause a forced sale of a home.
- Tax refunds may be jeopardized.
- A debtor’s business assets may be forfeited to creditors, thereby depriving the debtor of his very source of income.
Bankruptcy Law is a complex specialty with many nuances. And experienced attorney, who has filed numerous cases and understands the nuances of the law and the role of the Trustee can ensure that the Debtor ends up losing only his credit card debt – and nothing more.