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Chapter 13 Trustee Thomas Gorman Thomas Gorman is a lawyer. He’s the Chapter 13 Trustee for the Alexandria VA Division of the US Bankruptcy Court. That’s a full time job. He was appointed in 2009. He runs your Chapter 13 bankruptcy hearing, called the “meeting of creditors.” Creditors hardly ever attend the meeting of creditors. […]
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If you are considering filing for bankruptcy, you should hire an experienced bankruptcy lawyer to help you manage the process. Bankruptcy laws are incredibly complex. A lawyer will make declaring bankruptcy easier, faster, and more successful.

Although you are allowed to file for bankruptcy yourself, it is often an expensive mistake. In this article, you will learn ten reasons why you should hire a bankruptcy lawyer.

10 Benefits of Hiring a Bankruptcy Lawyer

1) Hiring a lawyer increases your chances of successfully eliminating debt. An annual report published by the United States Bankruptcy Court for the Central District of California shows that individuals representing themselves (pro se) have a significantly lower bankruptcy success rate than individuals represented by a lawyer. In the case of Chapter 13 Bankruptcy, debtors represented by a lawyer are more than ten times more likely to reach a successful outcome than individuals representing themselves.

2) A lawyer can help you decide if bankruptcy is the right option for you. It is essential to evaluate and understand all of the options available to you when you are facing overwhelming debt. While it may seem like bankruptcy is your only choice, a lawyer may have a better solution for managing your debt without declaring bankruptcy.

3) You don’t know which bankruptcy option is best for your situation. An experienced bankruptcy lawyer will review your financial situation and explain your bankruptcy options. In Wisconsin, the two most common types of personal bankruptcy are a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy. Wynn at Law, LLC’s lawyers can help you identify which type best fits your current situation and guide you through the entire process. 

4) A bankruptcy lawyer will help eliminate all eligible debts. A bankruptcy lawyer will know which debts can be discharged and the best type of bankruptcy to use to discharge your debt. For example, a lawyer can identify and eliminate debts beyond the statute of limitations for collections. You will also save money by fully discharging your obligations and not having lingering debts after completing your bankruptcy. 

5) Experience is crucial to success. Do you know the U.S. Bankruptcy Code? Do you know Wisconsin District Courts’ bankruptcy laws? Do you know what property is exempt from bankruptcy? Filing for bankruptcy requires knowledge of the federal code and local case law. An experienced bankruptcy lawyer has worked on hundreds of cases and understands the intricate details of the process. A bankruptcy lawyer will be familiar with current laws, courtroom procedures, the bankruptcy filing process, and filing timeframes.

6) Hiring a lawyer saves you time. Hiring a lawyer saves you countless hours, as you no longer have to spend your time researching and reviewing bankruptcy information. In some cases, a lawyer can identify shortcuts and smooth out the scheduling process. Wynn at Law, LLC’s bankruptcy lawyers will guide you through the complicated procedures and keep you informed at every stage. 

7) You don’t have to handle the paperwork. Filing for bankruptcy requires accurate, detailed, and timely paperwork. It is crucial to have precise information and sufficient supporting documentation. While much of the information will come from you, a lawyer can help you complete the paperwork and provide legal advice on your disclosures, valuing assets, income, and expenses.

8) Lawyers have an established relationship with the bankruptcy court, judges, and trustees. A bankruptcy lawyer has gone through this before; they are familiar with bankruptcy courtroom etiquette. Lawyers have already built relationships with the people involved in the process, making communication easier for you. When the trustee asks for additional information or details, your bankruptcy lawyer will be prepared.

9) You get protection from harassment by creditors and collection agencies. Once you hire a bankruptcy lawyer, harassing phone calls from creditors will stop. Once a lawyer represents you, you can inform creditors or debt collectors and force their phone calls and letters to go through your lawyer instead. After you officially file, an automatic stay will be granted, which legally extends your harassment relief.

10) Lawyers offer you peace of mind and protection from uncertainty. Peace of mind goes a long way. You won’t have to worry about mistakes, losing your assets, or preparing for a court appearance. Your bankruptcy lawyer will advise you on what will happen ahead of time, complete your paperwork correctly, and sit by your side in creditor meetings or court. It is your lawyer’s responsibility to fight for the best outcome for you and protect your rights.

Do I Need a Bankruptcy Lawyer?

The logistics of bankruptcy paperwork, credit reporting bureaucracy, and collection agencies’ tactics can be challenging to manage without a lawyer. While you do not need a lawyer to file for bankruptcy – it is strongly recommended. 

Are you still considering filing without an attorney, even after reviewing the list of reasons you should hire a bankruptcy lawyer? If so, you should understand some of the risks of representing yourself (pro se representation) when filing for bankruptcy.

The Risks of Filing Bankruptcy Without a Bankruptcy Lawyer

One little mistake could cost you everything. If you file incorrectly or the filing is incomplete, the bankruptcy judge could throw out your case. If that happens, you may not be able to refile for any type of bankruptcy in the near future or if you can refile, you may lose protection from creditors taking action against you. Incorrectly listing assets could cost you not only your debt being discharged, but you could lose the possessions you sought to protect. Bankruptcy lawyers know how to protect your assets and successfully lead you through the process.

Mistakes could mean criminal charges for fraud or perjury. Committing fraud in a bankruptcy case can land you in jail. You cannot hide assets or income from the bankruptcy trustee or judge (even those that you haven’t received yet). Do you know the law well enough to avoid this serious situation? Did you sign over a vehicle, deed property, gift money, or other assets to a friend or relative? A bankruptcy lawyer will help you file your petition and truthfully list your assets in a way that protects you from criminal charges. 

You may end up paying more of your debt. When communications between the bankruptcy trustee and your creditors occur, can you respond without negatively impacting your bankruptcy discharge? If a creditor files a lawsuit or contests your discharge of debt – how will you respond? A bankruptcy lawyer can protect your interests, effectively communicate with all parties involved, and save you money in negotiating with creditors.

Get a Free Consultation with a Wisconsin Bankruptcy Lawyer

Meeting with a bankruptcy lawyer in the early stages of financial difficulty can allow you to explore all of your debt relief options. If you can’t make regular payments on your existing debt, filing for bankruptcy may be a solution. Wynn at Law, LLC’s lawyers will meet with you to discuss your financial situation and help you determine if bankruptcy is right for you.

Contact Wynn at Law, LLC for a free bankruptcy consultation: 262-725-0175

Wynn at Law, LLC has law offices in Lake Geneva, WI, Delavan, WI, and Salem Lakes, WI. Our lawyers provide legal advice and representation to residents throughout Southeastern Wisconsin. We are a debt relief agency that can help individuals or couples file for bankruptcy relief under the U.S. Bankruptcy Code. Filing for bankruptcy is an intricate legal process. The federal court in the Eastern District of Wisconsin oversees bankruptcy cases for residents of Walworth County, Racine County, and Kenosha County.

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The 9th Circuit Court of Appeals is the first court of appeals to rule on the issue of whether a bankruptcy court must approve a lease assumption.  See Bobka v. Toyota Motor Credit Corp, 968 F.3d 946 (2020).
What happened?
When Melissa Mather Bobka filed a Chapter 7 she was leasing a Toyota Rav4.  She wished to keep her vehicle and called Toyota Motor Credit to let them know of her intention to keep the vehicle.
Toyota Motor Credit sent the debtor a Lease Assumption agreement that was signed and filed with the bankruptcy court.  The next day the bankruptcy discharge was issued.
Payments on the lease went into default and the vehicle was eventually surrendered. Toyota Motor Credit then sought to collect the past-due balance and the debtor objected stating the debt had been discharged since Toyota failed to follow the requirements of a Reaffirmation Agreement outlined in 11 U.S.C.524(c).
Toyota Motor Credit countered that the requirements of 524(c) pertain only to auto purchase agreements and not to auto leases which are regulated under bankruptcy code section 365(p).
The debtor requested that all collection activity stop and that she be awarded $50,000 in damages.
What the court said.
The bankruptcy court and the district court ruled in Toyota Motor Credit’s favor and held that banks do not need to comply with the cumbersome requirements applied to auto purchase reaffirmation agreements.  The debtor then appealed to the Ninth Circuit court of appeals.
In rejecting the debtor’s appeal, the Ninth Circuit Court identified three reasons why a lease assumption agreement does need to follow the stricter rules governing reaffirmation agreements.

1. To apply the stricter requirements of reaffirmation agreements to lease agreements would render the language of 365(p) superfluous.
2. Courts should to apply specific statutory construction before more general provisions.  Section 365(p) specifically deals with lease agreements and should be applied before more general rules of reaffirmation agreements apply.
3. Other parts of the Bankruptcy Code suggest that lease agreements are not governed by reaffirmation agreement requirements.

Why is this opinion important?
A great deal of uncertainty has surrounded lease assumption agreements. Some creditors require that debtors sign reaffirmation agreements to assume a lease while others simply rely on one-page lease assumption agreements.
Reaffirmation agreements require court approval, while lease assumption agreements do not. And sometimes bankruptcy judges rule that it is not in the best interest of a debtor to reaffirm an auto loan that is beyond their ability to pay.
A ruling that court approval is not required makes it easier to keep a leased vehicle, although debtors and their attorneys should give serious thought to whether that is a good idea.
 
Image courtesy of Flickr and Dennis Elzinga.

Rambling thoughts on the impact of the 2020 elections on the practice of bankruptcy law.
Unless both Georgia senate runoff races are won by the Democratic Party candidates, it appears that the United States Senate will still be ruled by the Republicans and Mitch McConnell.
Why does this matter? Because if the Democrats take control of the Senate you can expect Senator Elizabeth Warren to lead up a crusade to overturn the Bankruptcy Reform Act of 2005.  Senator Warren has campaigned to make several changes to the bankruptcy laws, including:

• Making student loans dischargeable through bankruptcy again.
• Eliminating the bankruptcy “Means Test” that has driven up the cost of filing bankruptcy by imposing tremendous paperwork burdens.
• Eliminating the requirement of completing a Credit Counseling course prior to file bankruptcy.
• Reducing the amount a person has to pay to file a case by allowing debtors to pay attorneys after the case is filed.
• Increasing protection to homes by creating a larger and standardized Homestead Exemption law.
• Allowing debtors to “cramdown” auto loans to the value of the vehicle.
• Streamlining the bankruptcy process to make it easier and less expensive to file.

But if Republicans continue to control the Senate by winning one or both runoff elections in Georgia–something that is more likely than not–then it is doubtful any radical changes will be made to the bankruptcy laws.
The election results makes a big difference when advising new clients, especially clients with large student loan debts. “Are you sure you want to file a case now under the current law when student loan debts may become dischargeable if the Democrats take control of the Senate?” That is the question I have been asking clients in recent months, urging them to see if they could delay the process until we knew the results of the election. Well, now we know a lot more, and it doesn’t appear that much if anything is likely to change unless upsets are achieved in the January runoff elections..
Even if the Republicans stay in control of the Senate, it is possible that newly elected President Joseph Biden will spearhead an effort to reform the bankruptcy laws he helped mess up in 2005. Biden has pledged to reverse the bankruptcy amendments he championed in 2005.
Bankruptcy reforms we can all agree on now.
Regardless of who controls Congress in 2021, here are some suggestions that both Democrats and Republicans should agree upon right now:

• Student Loans.  Student Loans should be dischargeable in bankruptcy after a certain period of time.  Can we all agree that these loans should be dischargeable after 20 years? Gosh, that is a very hard position, but it’s a lot better than the one we have now that they can never be discharged unless an extreme hardship is present.
• Means Test. Abolish the Means Test. This is a silly requirement that has never achieved its intended purpose other than to make filing bankruptcy more expensive and difficult.
• Attorney Fees.  Allow attorney fees to be paid after the case is filed. Too many low-income debtors continue to be garnished because they cannot afford all the upfront fees to file bankruptcy.
• Eliminate Credit Counseling.  The courses debtors must take to file and complete a case are worthless. No real education occurs and the courses do not cause debtors to avoid filing.
• Communications with Banks. Prohibit banks from canceling online access to borrowers who file bankruptcy and require mortgage lenders to speak to borrowers who call them after filing bankruptcy. Banks often take the unreasonable position that they are not allowed to speak to customers in a bankruptcy case, and I would agree that banks should not hound borrowers in bankruptcy with collection calls, but there is no reason they cannot speak to customers who call them. The refusal to speak to their customers in bankruptcy is shear madness.
• Standardize Bankruptcy Exemptions.  Standardize bankruptcy exemptions by not allowing states from opting out of the federal exemption scheme.
• Video/Telephone Court Hearings.  Continue the telephonic and/or video meetings with the Trustees that started during COVID-19.  Ever since COVID-19 hit we have been conducting required meetings with the bankruptcy trustees via telephone conference calls.  Guess what? They work just as well as in person meetings.  Instead of driving hundreds of miles in the Nebraska snow during winter to attend meetings that typically last about two minutes, debtors are able to call in to answer the routine questions asked by trustees over the telephone. I do not notice any decrease in the effectiveness of the trustee’s examinations, and in some cases their effectiveness may be increasing since they have their full computer systems before them.  The US Trustee’s Office should begin work on a video conferencing system similar to Zoom to handle all trustee hearings going forward. The ability to share computer screens and to view debtors over a camera system works great. A system with a Zoom “waiting room” that allows the trustee to interview one debtor at a time without the distraction of a crowd of debtors waiting for their turn at the table would be ideal.
• Digital Signatures: Make permanent the use of Digital Signatures that began in Nebraska in 2018 and extended all all bankruptcy courts during COVID-19.  The use of Digital Signatures has been a tremendous success that greatly decreases the burdens on debtors and the court without spending a single extra taxpayer dollar.
• Chapter 13 Debt Limits:   The chapter 13 debt limits were designed to keep complex business cases out of this streamlined repayment program.  However, with student loan and medical debts, the debt limit (currently set at $419,275) frequently prevents debtors with simple cases from filing chapter 13.  This problem could be solved by not counting medical and student loan debts towards the debt limit.

The 2020 elections tell us that radical bankruptcy reform is off the table. But practical reforms are very possible if our leaders focus on what they can all agree upon instead of dwelling on what divides us.
 
Image courtesy of Flickr and Anthony Quintano