Bankruptcy Malpractice: You May Be Next

Thinking of filing bankruptcy? You might want to think twice. The incidences of bankruptcy malpractice are on the rise. This is evidenced not just anecdotally by an increasing level of complaints from bankruptcy trustees about the ineptitude of the lawyers, but it is also seen in the statistics. Last year, for example, the incidence of discharge denials increased by over 15% in my jurisdiction. While bankruptcy filings are down, the incidences of actions by trustees and creditors seeking to deny discharge have gone up. Why? What is going wrong inside the bankruptcy system?

It has to do with simple economics. In the Great Recession, law schools continued to churn out thousands of unemployable law school graduates. For those unable to seek gainful employment with existing law firms, opening a solo bankruptcy law firm seemed like their best option. Overnight, a glut of newly minted lawyers sprung forth, and above their doors hung flashing neon “Bankruptcies Filed Here Cheap” signs.

There is no special requirement to be a bankruptcy lawyer, other than getting admitted to the federal court in your area…which involves nothing more than paying a fee and filling out forms. But the bankruptcy system itself is fraught with landmines for the inexperienced lawyer, and on an ever-increasing basis, they are blowing their own legs off and taking their clients with them. You can read nightmare stories about bankruptcy malpractice at Tales From The Bankruptcy World. If you are thinking of filing, and want advice on how to avoid those landmines, you can go to Bankruptcy Alligator Pond.