Mid Week Bankruptcy Case Review – Issue 02

DEBTORS NOT REPORTING ASSETS AND AN ADVERSARY IS FILED

The case review this week is a clear indication of why attorneys need to pre-qualify their debtors before accepting them as clients. Not only do you need to protect yourself from accepting fraudulent cases but also from cases that cost you a great deal of time and money. This is necessary to build a strong law firm that is not only profitable but beneficial to the community it serves.

Unfortunately, many attorneys that are new to the field of bankruptcy have never learned these pre-qualification skills. About the only way to learn them is through a seasoned bankruptcy attorney or by trial and error, which is what happened to the attorney who decided to represent clients who were participating in unethical behavior.

THE CASE OF HAL AND JILLIAN DEBTOR

Prior to filing the petition and during the intake process, we discovered the debtors had a lawsuit against them that was not reported on the debt sheets. The debtors claimed it was for a Promissory Note but there was no collateral attached to the loan. We questioned this explanation because the loans were for large sums of money ($60,000 and $80,000). It seemed illogical that someone would just hand over $140,000 in cash and not ask for collateral so we made a note about it for the attorney.

However, the attorney was busy and did not read the notes; so the bankruptcy case was filed without this issue being properly addressed. Marlin, the holder of the Promissory Note immediately filed an adversary proceeding within days of the case being filed. The complaint alleged that the debtors placed several pieces of personal property (furs and jewelry) as collateral for the loan. Unfortunately, Marlin did not possess these items and hold them while the loan was being repaid. Instead, he made the mistake of allowing Hal and Jillian to keep the collateral and trusted them to pay the money they borrowed. Like many people, Marlin thought the Promissory Note was good as gold.

So, to show you the type of character these debtors have; they took advantage of the situation and basically stole $140,000 from Marlin. When the attorney called the debtor’s to discuss this with them, the debtors claimed that they had in fact placed their furs and jewelry up for collateral; but by some mysterious reason, they no longer had any of this stuff. What happened to it? Of course the debtors did not know.

The attorney was very upset with the debtors after he talked with them on the phone and called me to discuss the case. He knew the debtors were lying and he knew they had acted in an unethical manner. He was also upset with himself for not pre-qualifying the debtors in the initial intake interview by asking the right questions. This would have definitely saved him a great deal of time, money and headaches.

SUGGESTION

As an attorney, you can easily understand that having good intake skills and the knowledge of how to quickly check facts before accepting a client are very valuable skills to have. Realizing the great need for these skills, I in the process of incorporating the training of these skills into My Bankruptcy School. However, to meet your needs now, Sonya Banks and I also offer personalized assistance to all Chapter 7 and 13 law firms at very reasonable, down to earth prices. In addition, we also provide intake services (whereby the client is interviewed by telephone as well as through online forms) even up to and including complete Chapter 7 and 13 petition preparation.

We will work to establish consistency as well as profitability for your law firm. Need references? Visit: http://www.bankruptcylinks.info/about/attorney-references

REFERENCE LINKS

Pre-Qualification Forms for Debtors
http://www.bankruptcytrainingproducts.com/home/initial-intake

Over 300 Pages of Creditor and Debtor Bankruptcy Templates
http://www.bankruptcytrainingproducts.com/home/complete-bankruptcy-motion-package

Bankruptcy Petition Preparation Service
http://www.virtualpetitions.com/

Talk to you next week ….

Victoria Ring
Colorado Bankruptcy Training
http://www.coloradobankruptcytraining.com

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