It’s happened again:  there’s an email in Monday morning’s inbox from a client whom I first met weeks ago, who tells me they want to file before Wednesday’s mediation in state court!  I have no creditor information, representation agreement, money, or credit counseling certificate.   Just as inconvenient, I’m not sure I have staff who can drop everything (related to clients who planned ahead and played by our rules) to make this happen.

Clearly I’m not communicating to clients what is involved in getting even a skeleton petition on file.  Lots of clients seem to think that I may be able to file the petition without any involvement on their part beyond providing info and money.  Wrong.

The bankruptcy paperwork is filed with both the client’s signature and my signature.  We are both attesting to the accuracy of the information and the debtor’s eligibility for  bankruptcy relief.

The full filing is even more information intense:  budgets looking forward and backward; recent financial history; intentions with respect to secured debts.  All of it is doable, just not with a snap of the fingers.

Got to go:  got a skeleton to assemble before Wednesday.

We got a call about three o’clock the other afternoon from someone who wanted to come in that afternoon and file bankruptcy that day. When my partner hesitated, the caller responded, “Well , you are open now aren’t you?”

I had a mental image of one of those parking lot, drive up coffee vendors, selling “bankruptcy” instead of java. As Mike Doan writes about the information gathering for bankruptcy, would that it was that easy.

The general “bankruptcy bargain” is that the debtor provides full financial disclosure and the system provides a discharge of debts. (It’s somewhat more complicated than that, but that describes the overview).

We’ve experienced a spate of clients who think that because they’ve signed a representation agreement and provided us with some information, their work is done. Wrong.

Usually the information is incomplete, ’cause they either don’t read, don’t think about the “bankruptcy bargain” , or can’t believe that we really need all that information.

Believe me, we wouldn’t ask for it if it wasn’t necessary.

I need to be able to better convey the idea that staggering in our door and paying us money just gets you out of the starting blocks in the Bankruptcy Relay; the finish line is getting the discharge, and there are miles to run between those two points.

My great friend Doug Jacobs identified finding a lawyer you can talk to and listen to as important points in selecting a lawyer. He points out that the client will be disclosing lots of information normally held confidential.

But I would take it a step further: it’s not just a lawyer you can tell your secrets to. You need to find a lawyer whom you can question, over and over if necessary, until you understand the choices that you must make in filing bankruptcy.

Some things a client doesn’t have to truly understand to file bankruptcy: how the means test works, or doesn’t work, is one of them. The debtor need only validate some of the information in the form.

But other bankruptcy issues require the client to make choices and perhaps confront risks. Is the loan repayment to your parents a recoverable preference? Does the recent use of your credit card make you susceptible to the charge of incurring debt by fraud? Are you at risk of a UST challenge to your Chapter 7 case as an abuse?

Decisions surrounding these issues are, in the end, the client’s decision. The factors are complex, and in this day of “new” bankruptcy law,sometimes uncertain. The client needs to feel absolutely comfortable asking their counsel to explain the issue, assess the risks, and explore alternatives with them. The lawyer needs to be capable of explaining without jargon or presumption.

So I would add to the list of qualities in superior bankruptcy counsel openness to the layman’s questions and the willingness to restate and reanalyze the options until the client understands. A lawyer who is not capable of making you a partner in the conduct of the case may end up excluding you from considerations that rightfully belong to you, the client.

You never know just how a client hears your advice, until you hear yourself quoted back to yourself as the reason for a client doing something stupid. In my case, I’m unclear about whether the message received was really as reported, but it’s made me think about my choice of words.

I was asked in the initial consultation if gifts of money from the debtor’s parents in the past year presented “a problem”. No, I replied, thinking that such gifts don’t change the analysis, or the expected outcome of the case. The client now claims that my words were a license to fail to disclose the gifts. Huh?

For some clients, it is clear that full and complete disclosure is emotionally very hard. The fearful and the stressed somehow are simply sure that telling the whole truth imperils the bankruptcy, when just the opposite is true. Just as sunshine is the best disinfectant, disclosure in the bankruptcy paper work is the best insurance for a good outcome.

So, I will be looking for new phrases that will penetrate the understanding of those disinclined to hear what I’m trying to convey and reiterating that the client is the one ultimately responsible, under penalty of perjury, for the completeness of the schedules.

I keep encountering posts on internet bankruptcy boards from individuals who have “filled out the means test” and then proceed to announce their conclusions. Given the uncertainties in the legal community about how to apply the means best and the think and re-think I engage in preparing Form 22, I can’t imagine a non lawyer learning anything reliable from trying to do this themselves.

The tricky issues include how to deal with income from non filing spouses; from roommates or extended family member; and how to handle business expenses for the self employed. (One bankruptcy appellate panel recently decided that the judges who drew up the form did it wrong!) Then there is the dispute on the deduction side about operating expenses for paid for cars; allowances for older cars; debts associated with property you’re surrendering, and just what part of your telecommunication expenses go on the form.

I cringe when I ask a client to sign this form, as they cannot possibly validate all of the entries on the form.

While I won’t say “don’t try this at home”, I am certain you should draw no conclusions about the means test and your eligibility for Chapter 7 based on your efforts to take the test. Get an experienced bankruptcy lawyer involved.

My colleague Craig Andresen writes about the problem of debts repaid to family members within a year of filing bankruptcy. Craig suggested having the debtor recover the money before filing in the form of a new loan; after bankruptcy, the debtor is free to repay the family member without hindrance and the new loan is protected from avoidance by the “new value” exceptions to preference recovery.

This comes about because the Bankruptcy Code gives the trustee the power to recover the money from the recipient and distribute it to creditors according to the priorities of the Code. A payment to a creditor within the statutory period that allows them to get more than other creditors is a preference.

This came up in an initial consultation I had last week. My proposed solution was a little different than Craig’s: I pointed out to my client that the client, who has a fine job but an investment disaster on his hands, could fund the preference settlement with the trustee on behalf of his relative. After all, the trustee simply wants the value that went out to the family member restored to the bankruptcy estate for the benefit of all.

Fundamental lesson, though, is that your bankruptcy lawyer can’t find solutions if you don’t disclose all of the facts.

My colleague Jonathan Ginsberg writes about his reluctance to provide legal advice or second opinions by email. After all, he points out, it is our command of the law that is our inventory. Give it away and you go out of business.

I have a more profound reason to approach questions by strangers with caution: I have only the facts that the sender has chosen to disclose for purposes of my analysis. Often, the facts the writer thinks are central are either irrelevant or incomplete. Without all of the necessary facts, my opinion may be fatally flawed.

When I meet with a client, I have an opportunity to ask questions, develop the facts, and look for other pieces of the picture that either support or counter the facts the client has proffered. That back and forth allows me to establish the facts, then offer an opinion that is grounded in the complete factual picture.

Dana Wilkinson wrote about questions to ask a bankruptcy lawyer you are considering engaging. The questions are absolutely on point. What she didn’t address is the quality of the answers.

Bankruptcy is stressful. People considering bankruptcy are stressed. It’s complex (more so and needlessly so after the 05 amendments to the bankruptcy law). You need answers that you can understand. After all, both the decision to file and many decisions after that are decisions that only the client can make.

So, one of the criteria for selecting a bankruptcy lawyer ought to be the clarity of the answers you get and the willingness of the lawyer to restate or further explain things you didn’t get the first time through.

Know, too, that there are many questions about how the “new” law works that we simply don’t know yet. The law is poorly written and judges are just beginning to make decisions and write about how they think the new law ought to be applied. Ask about whether there are undecided points of law presented by your case.

Get a lawyer you are comfortable with; disclose everything; and move forward. While sometimes scary, bankruptcy relief can make all the difference in the world about your financial situation.

Susanne Robicsek and I must be lawyer twins, separated at birth. She suggests that those with financial troubles consult a bankruptcy lawyer sooner rather than later. Amen.

Countless times a caller has asked me, should I wait until all of my savings are gone to file bankruptcy? And these folks didn’t mean, until my net worth is greatly reduced; they meant, until my bank balance is zero.

One has to admire the resolve of those who propose to pay on debts that they can never repay up to the point when they literally have nothing left. My advice of course is “no”.

Bankruptcy allows you to keep a collection of assets necessary for a fresh start. There is no bankruptcy entrance requirement that you be destitute or even insolvent to file bankruptcy.

So often I wish clients had come to me earlier: before they borrowed against their retirement to pay credit cards; before they took bad home loans that imperil their home; before they borrowed from one credit card to pay on another.

Susanne is right: it can never hurt, and often help, to get sound advice as soon as you realize you have a problem.

At least three homeowners called my office this week with a foreclosure sale set in less than 5 days and wanted to file bankruptcy to stop the sale. What is with people who wait until the last minute to look for a solution to losing their home? When I’m tired and cynical, I think they must believe in the genie in a bottle, willing to give them three wishes.

But the stories got stranger still, as we talked to these callers: two of the three wanted to stall the foreclosure so that they could complete a short sale. The sale was going to result in no money to the homeowner and they would lose the home, yet they thought they were ready to spend money to file bankruptcy for the privilege of selling rather than being foreclosed.

Historically, we have found that people who wait til the last minute make difficult clients. They put off unpleasant tasks and fail to appreciate deadlines, or even that their lawyer is bugging them in order to make things better.

I decided that I am not willing to take on emergency bankruptcy filings for procrastinators unless there is something to save by the exercise. Enabling a short sale doesn’t measure up.