Could Lawyers be abusing the new BK law?

[PacificBlue]

Um, BIG thought here. I have ran the means test every way to Sunday, and though over the Oregon limit for income, we still pass. I even gave back a large portion that is very much needed and STILL passed. So, that means we can go with Ch 7.

Every lawyer we talked said we have to go ch 13. (meeting one on Wednesday that we think will actually work for us). In thinking this out, reading all the new laws and going blind crazy with all the info something doesn't look right.

Congress pass these new BK laws but gave amounts on the means test, that could "mean" the difference of going Ch 7 or 13. That being said.. it looks like lawyers are taking advantage of the higher pay they get putting people in a Ch 13, when they actually could have gone with ch 7.

Honestly, are lawyers funding their own bank accounts on the backbones of us people that are truly struggling here? Please some one enlighten me, on what else could be the possibility other then lawyers taking advantage of people.

[helpmeout]

As with any area of law practice, there are going to be lawyers who don't represent their clients as they should.

[justbroke]

This has been a common theme here on this BKForum and is the primary reason why we highly encourage debtors to consult with several attorneys, before deciding on one! Some attorneys/practices only do Chapter 13s, so everything smells like Chapter 13 to them. Likewise for some Chapter 7 practices.

The key is that most Bankruptcy Mills don't like to do Chapter 7s anymore because borderline Chapter 7s -- where litigation is highly probable -- costs too much money and time. This means that calling a larger firm, and being over the median, may immediately get you the "you need to file Chapter 13" canned response!

Those debtors willing to do their research, find an attorney, and perhaps spend a little more money, can find Chapter 7 debt relief.

The Bankruptcy law practice area is still pretty ripe after the October 2005 changes in the BAPCPA. The Chapter 13 firms can actually earn more money doing Chapter 13s because of the complex means test incorporation into the Chapter 13 Plan of Reorganization.

In the end, most law firms are in the business to make money. They may do some pro bono work from time to time to make themselves seem less capitalistic, but they are a business in the end! Some large firms require their staff attorneys to do pro bono at about 50 hours a year (according to the ABA). However, the ABA is finding that the larger "mills" make their staff attorneys work harder (more billable hours), so they don't have time for that.

[PacificBlue]

As with any area of law practice, there are going to be lawyers who don't represent their clients as they should.

Granted that, but there seems to be a GROSS over amount in BK. Like 100 lawyers will quote you a $$ for a divorce, or criminal means and they all vary in amounts.

BK lawyers have an option, ch 7 = from $900 to $1400. Ch 13 + $3500 to $5000. Right away a red flag goes up to me. Then taking the meas test and seeing I'm okay for a 7, but told "no, no, you HAVE to go 13 (with out even glancing at numbers) puts that red flag up a place on me that isn't too comfortable.

[PacificBlue]

JUSTBROKE: There really needs to be a SHOP FOR THE RIGHT ATTORNEY STICKY.

For certain lawyers are in it for the money. We all are no matter what we do for a living. However, certain titles like Lawyers, and Doctors there are (or suppose to be) doing whats best for their clients.

I feel 100% comfortable with the 9 lawyers I talked with on the phone, filing a complaint with the Oregon Bar, for throwing me under a potential buss. This isn't right, and lawyers that are doing this need to be held accountable.

[HHM]

I appreciate it...but at the same time, generally filing a bankruptcy, whether chapter 7 or chapter 13 is better than where you find yourself now. So in that respect, there is nothing inherently unethical about suggesting a chapter 13. But you are correct, many firms will simply file a case where there is least resistance.

As I previously mentioned in one of your other threads (I believe), ANY chapter 7 case filed where the debtor is above median will get an objection. Despite the experiences of a "few" people on this board, if you are above median, you will be a chapter 13 unless you have high secured debt or other special expenses beyond the ordinary. Thus, some people will need to accept the fact that if they want to be out of debt in 5 years or less, a chapter 13 is their ONLY option.

The main problem with chapter 13's now is that required length of time is too long. Even at 3 years, chapter 13's had a fairly high failure rate, but for 5 year plans, the failure rate has shot up.

[PacificBlue]

HHM, There seems to be a double standard then. IF the means tests show you are able to go with Ch 7, but it's rejected by a judge, then what is the test really for? Is it most people in this situation wont do some basic home work and math, and take on it on faith? I'm not asking my lawyer to file one or the other, I'm TELLING him to file a Ch 7. IF/WHEN I have to go before a judge on it, or it's kicked back to a 13 then and only then would I consider a 13. But not before I plead my case.

I refuse to let some one that stands to make a higher profit off me direct me what way to go. Congress gave ME (us all) the option in the means test to make it more "real". Yes I have a special circumstance that I can apply extra money to. BUT it is 100% on the up and up. NOTHING faked, or added that is not necessary to sustain life.

It boils down to lawyers "Maybe" abusing this situation, and the ones that are caught, need to be held accountable. If every lawyer KNEW that every person walking in their door, could or would go to the bar association with the same info.. I bet that most lawyers would put people in a ch 7 in the first place.

[lrprn]

It boils down to lawyers "Maybe" abusing this situation, and the ones that are caught, need to be held accountable. If every lawyer KNEW that every person walking in their door, could or would go to the bar association with the same info.. I bet that most lawyers would put people in a ch 7 in the first place.

Frankly, it's unusual for a well-above-median filer to be able to file Ch 7 rather than 13.

Since you've been having free initial consultations, the lawyers you speak with are not going to run the Means Test to ensure you do qualify for Ch 7 before you pay them a retainer. During initial consultations, most bk lawyers are going with the percentages which tell them your above-median-income case is most likely to be a 13.

Also just because you got a negative balance running the Means Test yourself doesn't mean you can automatically file Ch 7. There are many bk case law interpretations that vary from district to district - even local court to local court - that impact how the Means Test turns out. Since you aren't a lawyer, you likely aren't aware of those decisions.

It's too soon to be threatening to take the lawyers you are talking with to the state bar with complaints. IMHO the issue here is that you are expecting too much from your initial consultations.

[justbroke]

There seems to be a double standard then. IF the means tests show you are able to go with Ch 7, but it's rejected by a judge, then what is the test really for?

Again, it's not that simple. What you may use on your Means Test and Schedule I/J is subject to questioning by the United States Trustee (UST) and Creditors. Just because you included an expense, doesn't mean it's allowed.

This is not a double standard. to see this, just look up cases that are dismissed under 11 USC 707(b) "abuse" or "totality of circumstances". You'll see that it's the expenses that are questioned, and then when the expenses are reduced or eliminated, your disposable income goes up and you no longer qualify!

Blame Congress because they intended for more debtors to be in Chapter 13... by mandate and design!

Is it most people in this situation wont do some basic home work and math, and take on it on faith? I'm not asking my lawyer to file one or the other, I'm TELLING him to file a Ch 7. IF/WHEN I have to go before a judge on it, or it's kicked back to a 13 then and only then would I consider a 13. But not before I plead my case.

Most people don't understand the whole part of asking their attorney to represent their desires, not the attorneys desire to make life simpler. Of course, this comes at a cost and most people don't want to pay.

In the end, and in many cases, the attorney was right to immediately direct the client to a Chapter 13. The cost of litigating and then losing anyhow... is not what the client wants anyhow.

[PacificBlue]

What I'm expecting with my free consultations is not the hear the same thing over and over. "Your over, got to go 13". Not one suggested I go 13 they told me I HAD to. Big difference is suggesting and being told I have to. They don't want to run my numbers for free (takes about 10 mins) then fine, I will move down the list. It appears the shark feeding frenzy have been tossed more food.

I wouldn't threaten anyone to do anything. I would just do it period. Can anyone honestly say IF every lawyer knew for a fact each and every case was going before the bar association, they would handle it totally differently?

[justbroke]

I think this no different than "cheap" criminal attorneys who tell their client to plead out. If you want to litigate, you need to find a litigator. You need to start the conversation with "I really think I qualify to file for Chapter 7 and I want an attorney who will fight for me at my cost."

[PacificBlue]

The main problem with chapter 13's now is that required length of time is too long. Even at 3 years, chapter 13's had a fairly high failure rate, but for 5 year plans, the failure rate has shot up.

By your own posting, that is saying Lawyers are taking advantage of people for profit. If not why are 13's failing? Clearly if they are failing, they should have been 7's in the first place.

[nc73]

So find someone that will do what you ask.

[justbroke]

By your own posting, that is saying Lawyers are taking advantage of people for profit. If not why are 13's failing? Clearly if they are failing, they should have been 7's in the first place.

That is absolutely not what HHM wrote. Chapter 13s have been failing well before the BAPCPA enactments in 2005. A failed Chapter 13 absolutely, positively has nothing to do with any facts that a person "should have been" in a Chapter 7 to start with. Absolutely none whatsoever!

The fact of the matter is that Chapter 13s fail because debtors refuse to be on or stay on a budget (period). There is a percentage of those same debtors who fail through no fault of their own (job loss, long term unemployment, disability, underemployment).

As such, that absolutely has nothing to do with lawyers or your ability to qualify for a particular discharge under Title 11.

Quite frankly, as a Chapter 13 debtor, staying on budget is a pain. Expenses come up. You can't rely on credit because you have none. If you can't stay on budget and save for emergencies... you are doomed from the start. Even the Trustees know that it's only a matter of time before a Chapter 13 fails.

I'm only estimating, but probably a good 30% fail within the first year of being in their Plan. This is purely due to budgeting issues (not sticking to one) and wanting to still live like you did before filing.

Unfortunately, Chapter 7 is not an entitlement, but I'm sensing that you feel it should be.

[PacificBlue]

I don't expect to live as I have been but I expect to be able to live. In my search for an attorney I will find one that will either want to work for me, or they will not be my lawyer. I have enough brain power left that I can see where the abuse of this situation maybe a problem.

Lawyers are not in the most honest practice's there are. Even in my case, I'm wanting a lawyer that will bend rules in my favor, not in his bank account's favor. I'm not accountable to anyone if I mislead or misrepresent anyone other then my own admission. Lawyers on the other hand are.

One lawyer told me, "most cases are just kicked back when asking for a 7". I said, okay show me where. Show me the proof that THIS office had x amount kicked back. Even on the phone.. "oh the courts will just had it back in most cases, so lets just go 13." Okay, can you direct me to where I may see that "most" are kicked back.

Everyone can do what they want to do, not one's persons choice changes my choice. I'm fighting for what I have a right to fight for, I choose not to be tossed under a buss.