By Richard K. Gustafson

I feel compelled to write about this issue because yet again I received an email from a person about a very bad experience she is having with her bankruptcy lawyer. I won’t bore you with the facts, but suffice it to say that the Chapter 7 case has turned into a mess. The trustee in this person’s bankruptcy case is suing her mother to recover some property she allegedly transferred to her mother prior to filing the bankruptcy. Evidently the trustee’s actions are a surprise to her. This is where the breakdown in representation, in my opinion, occurs.

While I don’t believe it is the attorney’s fault that this debtor entered into a transaction prior to filing because this transaction probably took place prior to her hiring the attorney, it is the attorney’s fault for not asking enough questions and providing enough advice to prepare his client for the possibility of what has happened.

This debtor says that she chose her lawyer based on his 30 years’ experience. There are other things the debtor revealed to me that leads me to believe that while her attorney may have been practicing law for 30 years, the attorney did not demonstrate sophisticated knowledge about areas of law important in representing someone in bankruptcy.

So how can someone tell what they are getting prior to hiring an attorney? That’s a good question and one that doesn’t have a clear and easy answer. In most states, it is unethical in attorney advertising to compare services with other lawyers. I think this is unfortunate as the public really has very little way of separating out good lawyers from average or poor lawyers. At the risk of giving you a sales pitch (I try to avoid that in this forum), I feel compelled in future posts to point out some helpful factors you should consider when making your decision about how to hire a bankruptcy lawyer. You can also take a look at this article on how to select a bankruptcy lawyer.

By Richard V. Waple

As a practicing bankruptcy attorney, I have consulted clients from all walks of life and seen first-hand that financial hardship does not discriminate. Individuals with different income levels, races, ages, nationalities, and backgrounds all may need a bankruptcy at some point in their life, even celebrities. Some of the numbers are staggering and today’s blog will highlight a few of the statistics from celebrity bankruptcy filings;

Mike Tyson:

Mike Tyson filed for bankruptcy, despite earning millions during his boxing career. Court records show that Iron Mike had about $27 million in debt, including debts owed to the IRS ($13.3 million); a limousine company ($308,749); a jeweler ($173,706); a law firm ($382,028) and a Ferrari dealership ($60,603) Tyson’s assets include two houses, multiple cars, and miscellaneous other personal property.

Toni Braxton:

Toni Braxton’s most interesting bankruptcy schedule is “Schedule J – Current Expenditures of Individual Debtors.” She lists monthly expenses of; Rent ($4700); Telephone ($4,800), Makeup & Beauty ($600), Clothing ($2,000) and Flowers ($1000) totaling $43,800 in total monthly expenses! Toni also lists assets including a Condominium Unit ($725,000); a Porsche Carrera Cabriolet ($45,000); and Musical Awards/Personal Effects ($20,200)

Burt Reynolds:

Burt Reynolds filed for bankruptcy in 1996, listing assets valued over $6,000,000, including his dog ($500.00) and Real Property ($6,045,000) and liabilities totaling over $12,000,000, including Edward Katz Hair Design ($121,796.62) and CBS Studio Center ($9,802.82).

Gary Coleman:

The former “Different Strokes” child star, and onetime owner of a multi-million dollar estate, filed for bankruptcy protection in 1999. His personal property had dwindled to less than $20,000 according to his bankruptcy schedules. Gary Coleman listed approximately $72,000 of liabilities and reported a salary generating $1499.33 in net monthly income.

There are many more celebrities who have filed for bankruptcy in the past, and not unlike the typical consumer, many of these celebrities have used their fresh start to get back on their feet and rebuild their careers and financial fortunes.

An emailer recently asked me if he must pay a title loan company that is holding title to his vehicle if he wants to keep the vehicle. The short answer is that if this emailer files a Chapter 7 bankruptcy, he must continue to pay the title lender in order to keep the vehicle. The year, make and model of the vehicle is irrelevant.

Basically, bankruptcy does not eliminate liens. I usually tell my clients that if they want to file Chapter 7 and keep their vehicles and/or houses, they need to continue to pay the lienholder(s).

There could be options available on reducing the amount that must be paid to the title company holding a lien against a vehicle in both Chapter 7 and Chapter 13, but until those things officially get approved by the Court, the debtor should continue to make payments to the lienholder to avoid a repossession.

I received an email the other day from someone who filed Chapter 7 bankruptcy on her own. The emailer is facing a problem in that she doesn’t know how to enforce her bankruptcy rights.

Many people think that they are paying a lawyer to do paperwork. That’s only part of what a good lawyer does for you. In addition to preparing the documents for you, the lawyer is there to give you advice and, most importantly, the lawyer is there to defend your rights and make sure that situations like this emailer faced are resolved immediately. The emailer ended her email by saying “Wish I had a lawyer.”

The bankruptcy world is a hostile world for debtors these days. Don’t take the plunge without a experienced bankruptcy attorney to represent you!