Tales from Bankruptcy World

I have been a bankruptcy lawyer for 35 years. I have felt good about saving people’s livelihoods and giving them fresh starts. But there are times when I am not proud to be part of the system. It can be frighteningly flawed. In the posts ahead, I will share with you the good, the bad, and the ugly from my continuing journey through Bankruptcy World.

The Glory Days are Over

If you are considering filing bankruptcy right now you may be in for a world of hurt. Let me explain why.

About 10 years ago, Congress was under pressure from the credit card industry. “We need to deter bankruptcy”, they said. The perception at the time that anyone who filed bankruptcy must be a scumbag. Congress was were referring to you, the newly cancer-stricken. You, the divorcee buried in alimony. You, the poor uninsured. You the downsized. You the outsourced.

So Congress threw out the old bankruptcy code. They made it way more complicated for people to file for bankruptcy. As the new law approached, the public assumed that bankruptcy was going the way of the dodo bird. They start pouring into our office. It was raining bankruptcy clients. We joked that we should have installed one of those deli counter line ticket dispensers.

In those days there were not many lawyers who were all that excited about calling themselves bankruptcy lawyers. To do so was kind of like carving the Scarlet letter “B” into your forehead. You were seen as the bottom feeders of the lawyering business. There weren’t that many of us doing it. The few of us who were doing it, had been doing it for a long time. It’s all we knew, so we figured we better figure out this new law. Learn or die.

We studied it. We reinvented our systems. We started making some serious dough. We sarcastically refer to the new laws as the “Bankruptcy Lawyer Relief Act”

A few years later, the Second Depression arrives, and with it we hear the thud of very expensive and now useless law school degrees landing in the laps of thousands of law school grads. Useless degrees because these newly anointed law school grads must storm a job-market beach now riddled with dead or dying businesses; businesses that were no longer be able to hire law firms who consequently could no longer afford to hire new lawyers.

So if you were one of these grads, what did you do? You had $100,000 in school loans and your parents, spouse, kid, or maybe all of the above are counting on you. You decide that to survive your must capitalize on the fall of capitalism. “Bankruptcy Lawyer It Shall Be”, you would pronounce.

And that’s what they did. Literally thousands of newly minted never- having-practiced- a day-in- their-lives- lawyers hung out shingles with the flashing neon words “Bankruptcy Lawyer”

Now here we are a few miles down the road, and on virtually every street corner, bus stop, and billboard there is a bankruptcy lawyer smiling at you enticingly, inviting you to pay a bargain price to “Save Your Home” and “Get a Fresh Start”. Just to be clear, this smiling lawyer is one who, to call themselves a bankruptcy lawyer, need not have demonstrated a single day of experience in confronting a single one of the several hundred bad things that can happen to a person who files bankruptcy. This lawyer may never have seen the inside of a bankruptcy court. Sooner or later they will. Something will go wrong. And this lawyer will have zero experience in appearing before a bankruptcy judge to defend or explain why you should not have your world turned upside down.

I don’t know about you, but I like my pilots to have flown something other than a glorified video game. I like my surgeon to have had to stem a few unexpected hemorrhages. OK, so a lousy bankruptcy lawyer won’t kill you. If you are lucky, the worst that will happen will be a permanent death sentence to your credit. If you’re lucky.

Coming soon: Tales of Bankruptcies gone Bad