bad decisionHe thought he got a great deal on his Chapter 7 bankruptcy. Coming out of the meeting of creditors, he realized just how much it cost him.

A few months back I was waiting with a client for their meeting of creditors to be held. It was the typical setup: lots of nervous people, a few lawyers scurrying around, and me – talking nonsense with my client.

He was prepared, ready to go, and all set. Petition reviewed, potential questions covered, and Social Security and driver license in his hand.

Another day in bankruptcy court. As I heard out of the corner of my ear, however, it didn’t go nearly as well for one of the other people sitting in that big room.

It All Unraveled At The Meeting Of Creditors

This guy’s sitting in front of the Chapter 7 trustee with his lawyer by his side. The lawyer’s face is bright red, and the client looks as if he’s ready to bolt.

The trustee’s asking the guy about his schedules, and the guy seems genuinely perplexed.

The value of the house? Gee, I have no idea.

Did I sign the petition before it was filed? Well, I did sign a bunch of stuff. No, I didn’t read it – my lawyer told me it was alright.

A car? No, the car that’s listed on those papers isn’t mine.

On and on and on.

Now It Gets Worse

So the guy walks out of the room at the end of the meeting (the Chapter 7 trustee tells him he’s got to come back another time) and asks his lawyer what happened.

What was the trustee talking about?

What’s the petition? Did I sign it? Because the papers the trustee showed me didn’t look like anything I’ve ever seen before.

The lawyer turns to him client and begins to berate him to making a fool out of him in front of the trustee.

Why It All Went Bad – And When

I took the liberty of pulling the bankruptcy petition from the bankruptcy court’s website. I had to figure out what the hell had happened in that room – and how things went so wrong for what appeared to be an honest guy.

The first problem was the legal fee. I’m not one to quibble with how other lawyers price their services, but this attorney had charged (according to the fee disclosure) the princely sum of $500 for the Chapter 7 bankruptcy case. I’ve never seen that low of a fee since sometime in 2004, so I dug a bit deeper into the attorney’s history.

Looking at this record with the court, he’d been filing bankruptcy cases for about six months. Newbies are welcome, but this guy was going full steam ahead. In less time than it takes for the calendar to come full circle, he’d filed over 100 Chapter 7 bankruptcy cases. This looked to me akin to a huge marketing machine rather than someone who’d been around the block for long enough to have built up a steady referral base.

Hitting the state bar’s website my suspicions were confirmed – he had been admitted to practice law for less than a year. As someone who’s been admitted to practice law in the State of California for less than a year, I’m aware the the attorney may have had a huge career elsewhere before setting up shop. Unfortunately, his website showed someone who’d obviously come out of law school recently.

The Docket Reveals More

I went back to the court’s website and read the rest of the case docket, which was so bizarre as to qualify as fiction.

The client sent in a letter to the court indicating that he’d never signed the petition, nor had he been given the opportunity to review it. To his knowledge, it was signed and filed by a paralegal.

His attorney never took his calls, and since the meeting of creditors had dodged every attempt at contact.

The attorney filed a notice to withdraw from representation.

The Chapter 7 bankruptcy trustee filed a motion to dismiss the debtor’s case and prevent him from filing for bankruptcy again.

In sum, it was all a giant storm of badness.


You’re probably wondering what this guy was thinking. The lawyer was clearly terrible, the process convoluted, and the client’s future jammed up in a big way.

And if you’re thinking about filing for bankruptcy, you’re convinced you’d never be a sucker like THAT guy was.

I sure hope not, but let’s untangle the knots before armchair quarterbacking this one.

The person looking to file for bankruptcy went with the lawyer who was clearly offering the lowest price. Not terrible in and of itself, but still a red flag.

The lawyer’s credentials were clearly never investigated.

The client wasn’t clear on how the process would work – including the filing of papers with the bankruptcy court.

Nobody prepared the client for the meeting of creditors. If someone had done so, he would have realized that the whole, “sign your bankruptcy petition before filing,” thing was something he should know about.

Don’t Be That Guy

Talk with a bunch of bankruptcy lawyers before you decide who to hire.

Check out their credentials with the state bar (my California bar information is here; my New York bar information is here).

Once that’s done, Google them. Then look at review sites such as Avvo to see what other people say.

Finally, ask a bunch of questions. And if you don’t get every single one of them answered in a way that makes you trust the attorney … walk out the door.

Image credit:  Wickerfurniture