The Bankruptcy Blog

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Why do we have a Bankruptcy Blog?

Why Bankruptcy?

Phone Calls

Our Offices

What to Avoid – Internet Lies – Rookie Lawyers – Too Good to Be True

Who Works in a Firm and Are They Legal?

Horror Stories

"My Money Went Where?"

Pro Se and Doc Prep Woes...

Fees After Filing

[General thought: If the objective is to say “be careful, consumers” it might be more effective to have a shorter piece on this. You’ve certainly thought all of the content through, but some of the editorial commentary you have will probably detract from your ability to make the overall point. It might be more effective to split this into two or three separate blogs to come out over the next couple of weeks. Anyway that’s my 2 cents]

Why do we have a Bankruptcy Blog?

I really only know about two things in life. I've worked my entire professional career as a high volume consumer bankruptcy filing attorney so I know consumer bankruptcy up one side and down the other. I spend what little time I'm not working in my shop working on Model Ts - specifically 1926 & 1927 Model Ts. As such, I feel pretty confident that I can answer about any question related to Consumer Bankruptcy or Model Ts that can be asked. However, I've learned over the years that no matter what you do there are always two ways to do it and a lot of what you will get depends on experience. There is the version you get when you see it for the first time and then there is the version told by those who have done it day in and day out for a very long time. When most of us go to a mechanic's shop, we try to describe the new sound our car is making or what it isn't doing correctly and, in doing so, often make brief fools out of ourselves. To a new mechanic, your car's problem might sound like a worn out alternator and the new mechanic can tell you how much it'll cost to fix or replace and about how long it will take to do it. However, a mechanic who has been replacing alternators for years can tell you why the alternator broke, which brands are more likely to break again amongst the available replacement brands, as well as which alternator is most likely to last the longest for what you have to pay. There is always a difference like this between folks who are new to something and those who have been doing it for a long time. Like the saying goes, "There is no substitute for experience."

That is a lot of the philosophy behind this blog. Specifically, that we've been drafting and filing consumer bankruptcies for so long that we've amassed a bundle of experience about what consumer bankruptcy really is, what people tend to worry about and what they really should be expecting. Of course along the way we've also collected a number of funny stories, horror stories, and other things that are worth repeating as well. That's what this section of our web page is about. It's here to give you, our visitor to the world of consumer bankruptcy, an insider's look at what really goes on in the world of consumer bankruptcy. As you find time, come back and check this page for new additions. We'll try to make it searchable so that if you have an interest in one particular topic, that you can find it easier, but on the whole we believe that something can be gained from all of it so there are worse things that you could do than to just grab a sandwich and have a read through as much as you can get through.

Why Bankruptcy?

True, most people in their 1st grade essay entitled "What I Want to Be When I Grow Up" did not list bankruptcy attorney as their anticipated occupation. I was no different and from what I've gathered around the office the rest of our attorneys and staff are no different either. So how did we all get here and why do we continue to do this for a living? I was born in Missouri (the Show-Me State) and went to college in Texas. I was a debater in high school and college and for a lot of competitive debaters it is rather assumed that you will eventually go to law school. I left undergrad and started a masters in philosophy, my undergrad work having been in political philosophy, but I soon realized that while this was my true passion in life, it was never going to lead me to a job. Seriously, when was the last time you saw a classified ad for a philosopher? Even a part-time philosopher? So I went to Law School in San Diego. I graduated and moved to Colorado to be closer to the mountains where I love to ride motorcycles and hike. Of course, like any new law grad, I had to get a job to pay the student loans.

An attorney I had met, as a friend of a friend, was working at a bankruptcy firm and asked if I was interested in an entry level attorney position there. I said I was, but I had no experience with bankruptcy. He didn't seem concerned with this in the least and that made me a little concerned. Within a month or two of working at this large bankruptcy firm, the "attorney" who had hired me had been fired for embezzlement and we (the rest of the staff and I) found ourselves alone, and quite honestly rather ignorant of bankruptcy law and what was going to happen to the firm in general, but more specifically concerning, to the clients. I started to realize that because of the former manager's embezzlement we had been kept in the dark about many things with the firm. For example, we did not know that after filing bankruptcies that this lawyer was doing absolutely nothing on the back-end (after filing). So I roughly estimated that between 500 and a thousand cases had been filed, that all of them needed something done to them to make them go through alright but that nothing had been done. So somewhere around a thousand cases (in lawyer speak, cases means families) needed to be saved from their former attorney’s neglect. Honestly, I just wanted to get the hell out right then and there. The problem was that I have a conscience and I was fairly sure that if I resigned after my 2 month tenure that this firm, who I had begun to suspect was not the most ethical institution I had ever run across, would simply let these cases go (do nothing), hire another attorney, and then go on as if nothing had ever happened. One might think that the clients would have complained to the Bar Association or otherwise made their displeasure know to the public, but this firm seemed to be designed to tell people whatever they wanted to hear and the sheer size of the firm probably intimidated a lot of folks from thinking that anything could ever be done.

I made a decision to stick it out. I chose to forgo sleep and learn everything that there was to know about consumer bankruptcy in an attempt to save these cases. For the next 6 months I did a very poor job of eating and sleeping and a very good job of becoming an excellent bankruptcy practitioner. I got to know every trustee in the state of Colorado as we had at least one problem case with all of them. I worked until I fell asleep at my desk and then would wake up and start again. During this time, I was hospitalized (counting ER visits) 3 times and according to the records I still have from the time, I checked out AMA (Against Medical Advice) each time and returned to the office. Following this 6 month or so ordeal, we were able to save every case in the firm and I had amassed a war chest of bankruptcy experience and knowledge that has served me in my profession ever since.

I started practicing law with a very simple philosophy: To do as well professionally as I could while doing the least amount of damage as possible. It sounds simple but in practice, for an attorney, it is harder than it seems. In almost every type of employment that an attorney can experience, you are pitted against one side or another. If you do your job well, then your side benefits and the other side is harmed in some way. In family law, you are either on the husband or the wife's side and you rarely get to choose which side. In business law, you tend to represent corporations and a great deal of your job ends up to be protecting corporations from their own customers. I looked at a lot of different areas of law, and even considered going back to school to pursue a medical degree to the extent that I self-taught organic chemistry, but in the end, I kept coming back to bankruptcy.

Bankruptcy law is a unique practice area for an attorney. You always know that you will be representing debtors against creditors. Creditors are usually credit cards, taxes, medical bills, or deficiencies from repossessed cars or foreclosed houses - none of these are folks that you are going to lose any sleep over taking a piece or two out of. You realize quickly that your clients, the debtors, are just like you and me. These aren't people looking to get rich because someone tapped the rear bumper of their car. They aren't nameless and faceless corporations trying to squeeze another dollar out of their unknowing customers. Bankruptcy clients are your neighbors, your church members; they are your family and your fellow citizens. If you were to put a perfect cross section of society (people proportionately from each socio economic and other classification of person) into one room and then selected an equal number of our clients to put in another room I seriously doubt if the casual observer could tell one room from another. Bankruptcy is an indiscriminate thing. We are all capable of finding ourselves in a position where our only alternative is to file for bankruptcy. I liked that a lot. I got to represent regular folks - regular folks who were a bit down on their luck. And in representing them, I got to go against the likes of Visa Card, Chase Bank, Medical Billing, and those wonderful folks in the collection industry! If you know that as a lawyer to do your job right that you are probably going to have to make someone or something hurt, then what better target could you ask for than a big corporation or a harassment laden collection firm? I've seen enough over the years to not have an ounce of pity for any of them. The horror stories I've heard and collection activities that I've witnessed myself have left me with very clear moral lines in my practice.

I enjoy what I do. It’s rare that I get to initially meet any client when they are in a good mood. If they were having a good time or things in their lives were going well, then we simply wouldn't be talking. However, there is always some point in the representation where all of that changes. Some folks can get it at the first consultation and for others it takes a bit longer. For everyone though, there is a magical moment when they realize that the nightmare is truly over. For those reading this who think that the word nightmare is too strong, I'd suggest they need to go experience what it means to be in debt in America these days first hand. I like the inherent position as the underdog that debtor's counsel gives you. I like the idea that I get to stand next to one person (a regular human being) against dozens or hundreds of companies worth hundreds of millions of dollars and say, "Enough." While most folks do not dream of becoming a bankruptcy lawyer when they grow up, for most of us who practice this brand of law, we could have done a lot worse. We get to represent some very deserving people against some very aggressive corporations. We get to be the ones to knock down the wall between our clients and hope.

Phone Calls:

By far, the one thing most often complained of to the Bar Association about attorneys is a lack of communications. We opened our doors on October 17, 2005 - the first day of the new bankruptcy code (BAPCPA). We took several months planning just what this firm would be both as a law firm in general and more specifically as a bankruptcy firm. We knew clearly that we wanted to practice solely on the side of debtors, that we only wanted to practice consumer bankruptcy and that we did not want to end up like so many other large firms had ended up - unable to relate to their clients. We also did not want to repeat mistakes that other firms had made in the past. So we began to research Bar Complaints. None of us had ever had one, so we had to go to the Bar's On-Line Library to find out what folks who complained about their lawyers were actually complaining about. By far, a lack of communication from their attorney was the most common complaint. So we decided then to do our communications differently than other firms we had experience with so that no client would ever feel like they weren't heard or couldn't get a call back or meet with their attorney. And here's how we did it:

In our same office building in Downtown Denver we have a separate office for our phones. In this separate office, there are two full-time employees who do nothing but answer phone calls from our clients. When you call, you will speak first to one of these two ladies, you should never get a voice mail. If you wish to speak to a specific attorney or paralegal, then they will use our internal system to see if they are available. If the person sought is available, then the call is directly transferred; if they are not, then the phone room operators will take your name, number, and message to make sure that you get a call back at a number that you can be reached at that day.

When you leave a message at a lot of law firms, it has been my experience that you have entered a black hole. Your message may or may not reach the attorney and then the attorney may or may not return your call based upon how busy they are and what kind of a day they've had. None of this is acceptable at Morse & Associates, LLC. When you leave a message at Morse & Associates, LLC it is transmitted via email to our head paralegal. A little over half of the messages do not specify who they need to speak with so the head paralegal determines if the message will need an attorney or whether it is something that she can answer herself. If she calls the client back and finds out that they need a legal question answered, which she cannot answer because she's not a licensed attorney, then she will either ask a lawyer for you or electronically forward your message to a specific lawyer so that they can call you back. Our policy is to return all client phone calls within 24 hours, but in general, I expect all calls to be returned before the attorneys leave the office for the day. The reason for this is pretty simple. Until we actually speak with you, we can't exactly know what you are calling in about or how concerned you are – clients often do not mention in their message the things that they are truly concerned about or they may not know at the time that they leave the message what the true impact of the situation might be on their case. I see no reason why a client should be left uncalled to face a worrisome and sleepless night when a 5 minute call from their attorney could have solved all of their concerns.

We aren't perfect and in the past, we have had attorneys who did not return calls in this manner every time. This isn't to say that we ever had a real problem with clients not getting phone calls but our standards are high enough that what is acceptable lawyer behavior at a lot of firms will get a lawyer fired at our firm. All of these lawyers are now working elsewhere. If you are an attorney and you want to work at Morse & Associates, LLC you will return phone calls the same day or we will do our best to assist you in finding employment somewhere else - usually beginning with relieving them of the burden of the current job that they don't seem to want to perform. We just have no tolerance for attorneys not returning phone calls.

You may wonder why we send phone messages electronically when most of the sending is all taking place in the same office? The reason for this is also simple. If there is a break down in our process of transmitting your message, then we want a written and an electronic record of where the breakdown occurred so that it can be fixed. When your phone message goes from the phone room to the head paralegal, there is an email record, which is never erased, that shows that your message was sent to her, and who sent it. When the head paralegal sends (assigns) the message to an attorney to return the call, then there is a written and an electronic record showing this as well. When the attorney calls you back, then he makes a note in your file which says what number he called, who he talked with, what you talked about, and anything that needs to be followed up. For example, if you called and needed to speak specifically with Mike Baetz (our managing attorney) and he was in a hearing, then your message would go to the head paralegal first and then she would send it to Mike's email. If I was to hear that you called and then did not get a call back I know exactly where to go to find out why. I first go to the head paralegal's email account to see when your message was delivered to her. If it is there, then at this point, it was her responsibility to get the message where it needed to go - in this case to Mr. Baetz. If I see your message going from her account to his, then I know that it was Mr. Baetz's responsibility to make the call. So I then check your case file to see if there was a note made demonstrating a return call to you from Mr. Baetz.

From time-to-time I do hear from clients that they believe they have made a call to their attorney that was not returned. I usually proceed as described above to find out what happened to their call. In a typical situation, I'll hear something like this: "My wife called 10 times yesterday and no one returned her call!" We also have software which logs every call made to the firm and from the firm. So the first thing I'll ask them is what number did she call from and when I run this through our software I usually find that of the 10 claimed calls about 2-3 were actually made that day. Of the calls that were made, I usually find that everyone has done their job in terms of getting the message to the person best able to help them. Inevitably, as in 99% of the time, I find that the lawyer did try to call them back but that they had to leave a voice mail. Very understandably, most people in the process of filing for bankruptcy have stopped answering their phone a long time prior to our having ever met because of the constant stream of harassment phone calls from their creditors. However, it is very important that you take your attorney's calls. We have had clients in the past that we have had to write letters to because they simply refused to answer their phones primarily because of creditor harassment. I can understand completely not wanting to answer your phone if creditors are calling constantly, but ask that every client please do what they can to know when we are calling. If you don't answer, then we aren't able to help.

Our Offices:

Over the years, we have changed our office in a few ways. Most notably, we added a couple of new locations to better serve people living on the Front Range. Even though the vast majority of our clients are willing to make a considerable amount of time for their bankruptcy, the simple fact remains that time is tight for everyone. In many cases clients want to stop by to ask questions and to drop off documents. If you plan to do this, then the location of the office is going to mean a great deal more for you. We started with our Downtown Denver office. It's conveniently located 8 minutes walking time away for the Bankruptcy Court House. We had a lot of clients making the drive from Colorado Springs to see us so we started looking into placing an office in Colorado Springs to lessen the driving times for our clients. For a couple of years, we operated a temporary office in Colorado Springs - it was open one day a week to meet with new and existing clients. Over time, we developed more and more clients in the Colorado Springs area and eventually we weren't able to see everyone that we wanted to see on one day per week. So we added a full-time office with its own full-time attorney in the heart of downtown Colorado Springs. Similarly, we have always had a presence in Northern Colorado. At present, we have an office in Loveland which does consultations for new clients on Thursdays and most of our existing clients, in that area, take care of their bankruptcy business then as well.

In the last several years, we have upgraded the technology in all of our offices to better serve our clients. For example, if you are a client in our Loveland office and you want to speak with someone immediately regarding your case, you can simply call the Denver office. Every bit of your file, our notes, the history of our conversations, etc... are housed on computers that we can access from anywhere. So if you are a client from up north and need to speak to someone about your case immediately, you don' t have to wait for a certain day of the week to do so - you can call the Denver office at any time and they have every detail of your case at their finger tips.

For now, this is probably all of the offices that we intend to open in Colorado. We did have some talk for a time about a Western Slope office or an office in the Mountains Communities, but anytime you open an office, you really have to ask yourself if this office will be able to operate to the same high standards that you have created in your other offices. The simple fact is that there are not enough intelligent and honest attorneys for us to hire - it is always the primary difficulty in obtaining staff for a new office. At present, we have the most talented and honest attorney staff that I've ever worked with and quite honestly probably in the state. All of our present attorneys are extremely knowledgeable and have a wealth of experience under their belts - we don’t have any "new" lawyers. So to open additional offices at this time would require us to find counsel to staff them that meet our standards. My experience is that folks of this caliber don't come along every day.

What to Avoid – Internet Lies – Rookie Lawyers – Too Good to Be True

Over the years, the way that Bankruptcy Law is practiced has changed. In fact, it would be fair to say that the way all law is practiced has changed significantly over the last 15 years or so. Probably the two biggest differences between the way we practice law today and the way that it was practiced just one generation ago is 1) the tendency to specialize in the area that attorneys practice; and 2) the internet.

I think that everyone is familiar with the image of a lawyer getting out of law school (all shinny, young, fresh, and ready to take on the world) and hanging up a shingle which just read "Joe Smith - Attorney at Law." You can imagine going to Joe's office with any legal problem from needing a will draw up to needing to get bail posted for your "fun" friend. By and large, those days are a thing of the past. If you can count on lawyers and Congress for anything it's to over complicate even the simplest of things to the point that not even a lawyer can truly be a jack-of-all-trades anymore. You certainly wouldn't have your spine operated on by a podiatrist (foot doctor.) It’s simply way too far outside of his field of expertise to allow him to perform such a delicate procedure in an area so unfamiliar. In all probability, the podiatrist wouldn't even offer the procedure - he knows that the risks outweigh what he could make from performing the procedure. Unfortunately, this basic, common sense, is often lacking from law practitioners. There are still many lawyers working in the world today who think of themselves as a one stop shop for all of your legal needs. The simple fact in today's legal world is that you cannot practice every type of law. As law, and the litigious nature of our country in general, evolve and complicate themselves there is simply no way that any one lawyer can legitimately claim to be able to practice in every field.

I practice solely in the field of consumer bankruptcy (Chapters 7 & 13.) It's all that I've done for my entire legal career (except for my first 6 months out of school when I represented children in Learning Disability Cases against their respective schools - I really loved that job). Even though I have worked in bankruptcy for almost my entire career and have handled literally thousands of filings, it can be a challenge to keep up with the changes in this one field. The case law and federal standards that affect the way that we practice bankruptcy law are always changing. If you are not on top of these changes, then you cannot adequately practice. When the law changed in 2005, we got the largest change to the bankruptcy code in 27 years. Coincidentally, about 75% of us who practiced bankruptcy law, at the time, left the field virtually overnight. There were so many changes to the way that you file, who can file, the evidentiary requirements, and yes, the increased liability on lawyers for filings, that 3/4 of attorneys who felt like they knew enough to practice the previous Friday left the field by Monday morning. There was a real choice for practitioners to make at that time. Namely, “Do I want to commit several months of my time to learning the new law with the understanding that I'm then going to have to commit several more years to relearning this new law as it is interpreted and changed by the Courts?” For most, the answer was a flat “No.”

I like bankruptcy law – I have from the beginning. So I undertook to learn the new code. The first thing that I realized was that most firms are not set up to practice under the new code and that if I thought that it was dangerous for other attorneys (not the regular specialized practitioners) to practice in this field before (we call them visitors) then it was absolutely irresponsible for these same people to practice under the new more complicated code. In the current world where bankruptcies are filed under the new code called BAPCPA, you need to make a choice as a lawyer. You are either going to practice bankruptcy law exclusively or not at all. I chose to just practice bankruptcy law and to get as good as I possibly could at this type of law.

I still see other lawyers today trying to dabble in bankruptcy and when they visit our courts, the results are pretty predictable. Their clients are often surprised and shocked at their hearings and they often lose a lot of property and assets that a more experienced attorney could have saved for them.

The internet has brought a lot of changes to nearly every walk of life and the law is no different. I hate to admit this, but my wife and I have reached the age where we frequently find ourselves in conversations about the way things "used to be." Most of these conversations entail us talking about the world that we grew up in as kids, definitely the pre internet age, and the world that kids are growing up in today. When we were kids, if someone needed to find an attorney, then they either asked around or they went to the phone book. They would call the attorney's office, set an appointment, and then meet with them. That's how representation began.

Today, the process is much different. The vast majority of our potential clients first learn about our firm from an internet search or some other form of advertisement that we've placed in to the world. That isn't to say that we don’t file a lot of friends of former clients. I read years ago that because a lot of folks are usually embarrassed about having to file for bankruptcy that they tend to not talk about it with their friends and thus, the number of filings that result from referrals in bankruptcy was usually around 5% for most firms. I can't tell you exactly how many of our filings are referrals but we've roughly estimated it several times over the last half decade and we usually end up with around 20% of our filings being from referrals.

For the most part, in today's internet world, most folks are finding your firm on the internet in the comfort of their home or office. The other thing that the internet has radically changed is the amount of information that people are exposed to prior to meeting with their attorney and not all of this information is always accurate or even applicable to them. In the past, you would set a day and time for your consultation and that was the first time you actually got any information about bankruptcy - from the attorney. Today, most clients have spent some time reading the information that you've supplied on your web page and even the web pages of others and they come into the consultation with some idea about what to expect of the process and what it will cost them.

The main problems that we have with the internet, at least as it relates to practicing bankruptcy, is that there is no mechanism to filter the good information from the bad information. I write almost all of the text that goes on our web site. Before I sit down to start writing, I usually do some internet searches, like a potential client might do, just to see what else is out there about our field. What I find, more times than not, is pretty discouraging. I see lots of old sites that have never been updated. I've even seen sites that seem to be oblivious to the fact that the law changed entirely - that was 5 years ago! Most commonly, I see old exemption limits being listed as fact and old income qualification for chapter 7 numbers. Both of these things can lead someone to falsely believe what chapter of bankruptcy they qualify for and whether or not they will be able to keep some of their assets. I cannot stress enough, to anyone who is researching bankruptcy on the internet that they should not trust what they read. A great deal of the information that is published on the net is outdated or in some cases it appears to be written by people without any real knowledge about how bankruptcies work at all.

My personal favorites are the “cut and paste” sites. Way too often, when you are thumbing through several sites, you'll start to notice paragraphs and sentences that are identical. This happens in two different ways. One of the toughest things to do when writing a web page is to come up with enough text to fill it up. Like any other "need" there is always someone ready to sell a solution. There are places on the net where bankruptcy lawyers can purchase text for their web sites. You can buy a few pages on Chapter 7s just like you can buy a few pages on Chapter 13s. You can get other texts, for fee which covers other areas of bankruptcy law. The problem with these purchased blocks of text is that they rarely have any more than surface level information. They often times include old or incorrect information as well. But as long as lawyers keep buying it, then the net companies are going to keep selling it. If you see a web site and you can tell that you've seen some of it before, then get away from it. If your lawyer doesn't know enough about bankruptcy to write their own text, then they probably don't know enough to file your case properly either.

Fees, promises, and on-line Chapter qualifications all go into the same category. A lot of bankruptcy sites will tell you that you can determine whether you are a Chapter 7 or 13 by taking their on-line survey or questioner. This is utterly ridiculous. I know a great deal about bankruptcy, I've done thousands of them. But I cannot tell you what chapter you should file until I’ve had at least 30 minutes to an hour to actually sit down with you and go over your income, your assets, and most importantly what it is you are hoping to accomplish from the filing. The idea that you could take a generalized survey, on-line, and come out with a clear legal answer to a federal filing is utterly wrong - it cannot be done correctly or responsibly.

Fees are another source of misdirection on the net for people looking to file bankruptcy. Almost everyone, in our filed, charges a flat fee. In the law, this means that instead of the usual hourly charge for legal services, we forgo all of that billing and simply charge you a flat rate for the entire legal service. There are several reasons why this is so prevalent in bankruptcy but here are the main reasons. If we were to charge hourly for filing your bankruptcy, then it would cost, in most cases, more than twice as much as our flat fee rates. So instead of getting a bankruptcy for between $475 and $1,500 you would almost certainly be paying over $3,000. There's a very real practical problem with this high of a fee. If you, a potential client, are filing for bankruptcy, then you cannot afford to pay $3,000. The way we get around this problem is by charging a lot less for the flat fee. By not having to do billing on all of our cases each month, we save a lot of office time and that savings gets passed on to you. The other problem with hourly charges in bankruptcy is that the things that would cause a case to get more expensive are difficult to predict. Take two identical cases -the cases have identical income, assets and creditors. If the first client provides their documents to us (the documents that we need from the client to draft their bankruptcy petition) upfront and signed their petition quickly, and they take their Credit Counseling Course on time, then their case is going to go from our office to the Court house very quickly. That speed translates into less attorney’s fees being incurred. We price cases based on the assumption that the clients will be perfectly cooperative with document production and review. If the other identical case takes longer, then it’s going to incur a lot more fees in attorney time. This can happen if we have to write multiple letters requesting the same documentation - sometimes we end up writing over a half dozen letters to the same person asking for the same thing. Sometimes, folks legitimately have a tough time getting access to their records, be it from an uncooperative employer or boxes being lost in a move. Whatever the underlying reason, we cannot tell at the consultation which cases will get filed quickly and which ones we will be working on 2 years later. I have literally met a client, gotten their documents, drafted their petition, reviewed the petition with the client and had them filed with the Court in the same day. On the other hand, I currently have clients who I have been requesting the same information from for over 3 years. If I were to actually add up the hours that I have put in the cases that last for years, then they would probably be facing fees in excess of 6 or 7 thousand dollars fairly quickly. To avoid all of this, we charge a flat fee that anticipates that the client will cooperate completely and promptly with the process. The time we lose from clients not cooperating is simply a cost of business. If you are an attorney and you do not accept this, then you really should look into practicing in another field of law. In bankruptcy law, it simply goes with the territory.

The problem with the internet is that clients see a lot written about fees and come into the consultation expecting to have their expectations validated. I cannot tell anyone what their bankruptcy will cost prior to the consultation. Honestly, I cannot tell them until after the entire consultation. There are simply too many variables at play. To estimate a cost prior to the consultation would be a complete guess and that has a ring of dishonesty to it that I just don't want in my firm. Now, that isn't to say that you will not get an upfront price from plenty of other firms and web pages. I've seen some where they lay out a tiered fee structure. These usually have between 2-4 flat fees that they charge based either on where you live or exactly what legal services you are contracting for - the number of creditors, assets, or whatever they are hanging their hats on that week. Here's the problem with these types of fees: all bankruptcies are different and a flat fee is legally supposed to reflect the work that the attorney estimates will be required to do the job - not just what the attorney thinks that the client is willing to pay. When you have 2 to 4 flat fees that are supposed to fit all cases, all that you are guaranteeing is that half of the folks, at least, are getting screwed out of their hard earned money at a time when they can least afford to part with it. I despise these fee structures on a level that is difficult to communicate. I’ve done the research and of the firms out there that charge these fees, it is almost impossible to find a case filed in their attorney’s names that actually charge these fees. As you’ve probably guessed, the fees are usually much higher.

Say there are two firms, and firm #1's web page says "We'll review your situation at the consultation and tell you what it will cost once we know what's involved." The other firm, Firm #2's web page says "Bankruptcy for $498." It is the natural reaction for people to go with the firm that appears to lay out for them upfront what the bankruptcy will cost them. I know of a large firm in town that charges close to this amount - at least on their advertisements... I've researched their filings for several months and have yet to find a single bankruptcy where they have actually charged the amount listed in their on-line flat fee, that is filed under their name. Of their other 3 fee structures, I have only found a handful of filings, out of hundreds where their clients actually paid one of the amounts listed on their site.

You probably read things on the internet in other avenues of your life with a healthy bit of skepticism - not everything on the net is true of course. I suppose because it is a law firm's site, people believe that they can trust it, but I can tell you from research and experience that you cannot.

Like most things in life, the internet is a mixed bag of blessings and curses. It's a great platform to expose clients to what your firm can offer them and to impart or make available huge amounts of information. On the other hand, it is being used these days, in ever increasing numbers, to prey upon the ever growing number of well meaning folks who need bankruptcy services. The old adage, "If it looks too good to be true then it probably is;" has never been more true than in the world of bankruptcy web sites. My suggestion - Proceed with caution!

Who Works in a Firm and Are They Legal?

Law firms consist of far more than just lawyers. We staff our offices with paralegals, receptionists, office managers, and in our case, we have two full-time employees who do nothing but answer client phone calls all day. All of us work as a team to facilitate the drafting, filing, and administration of our clients’ bankruptcies. There are, however, many rules which regulate what each of us can or cannot do. Most notably, there are well founded rules which prevent anyone without a law license from offering a legal opinion to a client. This is called practicing law without a license and it is illegal. Sounds simply enough, right? Not exactly. There have been many cases in Colorado, in recent years, where bankruptcy offices have been opened and run by paralegals. In these illegal offices, the attorney effectively works for the paralegals and is usually just used to attend the 341 hearing. A particularly good example of this was prosecuted and convicted in Colorado Springs just last year. I've heard from several clients in the last couple of months that this is going on to a shocking degree in Denver as well. I’ve heard stories from clients, who had consultations somewhere else prior to meeting with me, that had I not heard the same story from several people (sometimes in the same day) I would have found difficult to believe. Most of the clients told a story about getting a phone consultation from these other firms. If you want to know just how much I despise phone consultations please read the topics above. Sufficient to say, phone consultations tend to only offer folks the most general of information about bankruptcy. No one I spoke with said that they felt that the consults they had gotten from this firm had told them much at all about their situation. They just wanted to get these people to sign a contract and pay money. More disturbingly in the case of this all male attorney firm, all of these clients said that their consultations were conducted with women. Denver is a small legal community and even smaller when you only consider larger bankruptcy firms. I have known of this particular firm for some time and I know that they only have male lawyers. They do however have and entirely female paralegal staff. Had I heard this from one person, it could have been dismissed. But when you hear it enough times in back to back consultations, then you start to give it some credence. Clearly, the clients with whom I had spoken had their consultations performed over the phone with paralegals, not lawyers as the law requires.

The problem here is that it's illegal. When your law firm is breaking the law in your initial contact with the firm, then you should probably take some note of this fact. You are about to enter into a fairly close relationship when you hire a firm to file your bankruptcy. The firm is going to see a lot of personal information about you and they are going to make decisions that could greatly affect your income, your home, and conversely your family. If they are committing an illegal and unethical act at your initial meeting, then it should be taken as the red flag that it is.

We have paralegals at our firm as well and I think that they do a great job. Most of our paralegals are college graduates who are planning to go to law school. We actually have a very impressive percentage of our paralegals go to law school. I always hate to see them go, but by that point it's usually very clear that law school is where they need to be. When you have your consultation, you will always meet with an attorney at Morse & Associates, LLC. The consultation is where the "game-plan," if you will, for your bankruptcy is laid out. It’s where we spot the majority of issues regarding your debts, your assets, and potential areas of concern. When you send in your documents, our lawyers draft your petition with typing asistance from the paralegal staff. Believe me, we've tried, years ago, to have to attorneys type the information in and for some reason it appears that attorneys are not particularly good typists. A typical petition at our firm goes through between one and three drafts and at each draft an attorney reads it (all 45 plus pages) from front to back. Every time a single piece of information is entered into your petition an attorney reads it in its entirety to make sure that one new piece of information hasn't had an affect somewhere else in your petition. In a lot of firms in the Denver area, your petition will be drafted and filed completely by paralegals. You may have met with an attorney when you had your consultation, but the odds are decently good that he will not have seen anything related to your case until he appears with you at the 341 hearing. All I can offer to folks at these firms is that I hope everything goes well because if it doesn’t, your attorney isn’t going to be familiar enough with the case to fix it if it can be fixed at that point.

This is not always the case and it’s something that folks looking to hire a bankruptcy firm should keep an eye out for. It’s tough to know for sure, as so many things are done at arm’s length these days, but if you know what to look for, then you should be able to spot it. If your firm always prefers talking on the phone and discourages you from coming into the office, then this is a giant red flag. If your firm never seems to be able to get an attorney to answer a phone call or to return a phone call, then this is a giant red flag. Believe it or not, there are several large firms in Colorado right now who have lawyers more for show than anything else. They might meet with you at the consultation and they might even sit with you at the 341 hearing, but rest assured that between the time that you pay your fees and your case is actually filed that you will not see or speak with your attorney at many firms in town. The reason is purely financial. Most bankruptcy firms operate with a very small profit margin. Because of this, they try very hard to reduce their operating costs. This usually means that they have far less staff than necessary to handle the number of cases that they take. The math is simple; hiring an attorney would cost the firm 4-5 times as much money every month as hiring a paralegal. So it is financially beneficial to the firm to only hire the minimum number of attorneys that they can get away with and whenever possible, to replace lawyers with paralegals.

The problem with operating in this way is that no matter how talented the paralegal is, they are not a lawyer. I've met plenty of paralegals that have worked in bankruptcy law for a long time. I think that when it comes to bankruptcy law and the code that many of them know as much as the lawyers do. In many cases, an experienced paralegal may know a lot more than a new bankruptcy lawyer and believe me, there are a lot of new bankruptcy lawyers out there. However, a lot of the issues that come up in a bankruptcy have nothing to do with bankruptcy. They begin as a bankruptcy issue but the real impact of the filing is on another area of your rights, like an inheritance, your mortgage, your banking situation, your job, or a host of other possibilities – the list of potential impacts on your rights are endless. The problem here is that if you do not have an attorney, someone trained and educated in all areas of the law, then these issues are likely to be missed and missed issues usually result in lost property, homes, and wages.

We see it all the time at the court house. Our clients go to their 341 hearings like anyone else but they do so knowing exactly what to expect. Our 341s are fast, simple and before you know it they are over. I still think that it’s hilarious when clients are laughing after the 341 because it turned out to be nothing nearly as bad as they had imagined. I've actually sat at the court house with my clients, after their hearings, a few times to watch other hearings. You can spot quickly the firms where the attorney wasn't involved with the drafting of the case. Every time the trustee references something in the petition, they have to quickly flip to that section of the petition - they are literally reading it, as the trustee mentions it, for the first time! They are also easy to spot at hearings when there's an asset issue in a case. An asset issue typically is an issue where the trustee has mentioned that they either are going to take some property from the debtor or they have an interest in doing so. If one of our clients has the potential for such an issue, then they would have been informed of it prior to the case being filed verbally and in writing. We want to make sure that our clients know all the facts prior to the final decision to file and we do not like to ever see one of our clients surprised at the hearing. Other firms don’t always follow this practice. When your lawyer is not involved in the drafting, they tend to not have enough familiarity with the case to adequately represent the case. In these instances, you will generally see the same look of surprise on the lawyer’s face as on the client’s face when the trustee makes a claim on property and there is absolutely no reason for this. If the lawyer had written the case, then he could have warned the client well in advance of the filing. If the lawyer had just read the petition, prior to attending the hearing about the petition, then they could have warned the client prior to the hearing. But you see it regularly at the courthouse - lawyers who could not make it any more obvious that they have never read the petition that they are appearing to represent. It’s sort of like getting hired to act in a play, but not expecting to ever have to read it - it just doesn't make a bit of sense.

There is one other major problem with attorneys’ allowing paralegals to draft and file cases in their names. Namely, the problem is where you chose to spend your money. Check out the billing for bankruptcy petitions sometime. They are all billed out at the attorney’s drafting rates. Lawyers who know what they are doing in this field generally bill out at about $300 an hour – give or take a few bucks. I understand that this seems like a lot of money per hour but if you understand the differences amongst attorneys, then it makes sense. If you take a new lawyer who is unfamiliar with bankruptcy, he might take 4-5 times longer to draft and file the same bankruptcy. If he’s charging you the rate of $150 an hour, his excessive use of time quickly eats up any hourly savings that you were hoping to gain and you don’t even get the advantage of having an experienced attorney! Say it takes 10 hours to draft and file your bankruptcy – this is on the low side for many cases. Our hourly rate, as we are one of the ones who actually know what we’re doing, in total would be $3,000 (of course you never pay that here because we charge a flat fee which is usually substantially less than half of this). If you take the inexperienced attorney taking 4 times as long to do the same task at $150 an hour then you end up with 40 hours of work at a total of about $6,000. To boot, when we draft it at the lower total rate it is being drafted by attorneys who have drafted and filed thousands of bankruptcies – there really isn’t much left that they haven’t seen or done before. When you get the new attorney at the lower hourly rate, you end up paying more because it takes him longer and you get a drafting by someone who is learning on your case! It isn’t like medicine where the new doctors are being watched by an experienced doctor. We do not have (but probably should) an intern period for young lawyers in law. In law, the system allows lawyers to learn on your case. Don’t be the test bunny in their learning curve. I know that we all have to start out somewhere. When I started out, I sought out older attorneys who I thought had seen it all. I bought them dinners and hung out in their offices. I did anything that I could think of, including hanging out at the Courthouse watching other people’s hearings and trials for a very long time – I actually still do this when I can. My experience suggests that the way I went about it in my early years is rare. Most lawyers seem to have an allergy to reading or learning after school unless they are being paid for it. What a novel concept: That you would learn how to do something before you accepted money from someone for doing it!?!

In any event, the problem remains regardless of whether you hire a new or older attorney if neither is doing their own drafting. If they have their paralegal drafting and filing the petitions on their own, then you are paying for an attorney and you are getting a paralegal. There are some firms in town who take your money and then drop your file off at a document preparation place and have them draft it. Somehow, from what I’ve hear around the water cooler, this is in a grey area of the law, but I have a real hard time imagining how one can say it is fair and equitable for a client to pay a lawyer say $1,300 for a bankruptcy and then the lawyer pays a document preparation place a couple of hundred and passes off the document preparation place’s work as their own and pockets the rest of your money! I learned somewhere in kindergarten that you cannot turn in someone else’s work –they usually make you miss recess for this. Maybe some of the lawyers in Denver could benefit from being held in from a few recesses.

Did I mention that this process inherently means that your personal documents are being shared with folks outside of their firm? Law firms have very strict regulations and ethical codes which dictate how and when we can use your personal information. What do the document preparation places have? You’ve got me. I’ve never been in one myself but I can’t imagine that they have the same enforced code of ethics that attorneys do because there doesn’t appear to be any organization around whose jurisdiction they fall under. This is the wrong time in history to have your social security number and account numbers being delivered to folks you have never met.

Horror Stories:

An entire book could be written on this subject. There are simply so many inexperienced or uncaring bankruptcy practitioners out there that the number of bankruptcy horror stories is practically endless. I don’t mean to alarm anyone thinking of filing. All of these horror stories were totally avoidable had counsel done their job, but they are interesting none the less.

"My Money Went Where?"

When I was first hired into bankruptcy, I took a job with a guy who went to the same law school that I graduated from - I suppose I trusted him a bit more than most lawyers for this reason. It didn't take but the first week of working with him to realize that he was a compulsive liar. Not the kind of person who lied for gain necessarily but just someone who seemed to feel that the truth was too boring for him so he embellished everything. He was also one hell of a talker. This guy could sell sand in the Sahara. So I watched in amazement as he was hired by over 10 clients a day. Everyone who met him liked him. Fast forward two months and he's fired for embezzlement. Last I heard, he was taking the fees from his clients and instead of putting them into the firm's COLTAF Account (The trust account where all lawyers must keep client money prior to its being earned) he was putting it into his own pocket. He was filing the cases, but the firm was not getting paid. The firm fired him for this behavior but interestingly enough, they never turned him into the Bar Association, from what I heard. I thought that this was odd at the time, but I was up to my eye balls working an honest 18 - 20 hours a day trying to fix all of the cases that this guy had screwed up.

The mystery of why the senior partners in charge of investigating this guy's illegal activities never turned him into the Bar became clearer several years later. A year or so ago, this firm was caught operating without a COLTAF account at all. In almost every law firm, when a client pays their fees, these fees are deposited into their COLTAF account. When a benchmark is met, then the fees earned to the point of that benchmark are transferred from the COLTAF account into the firm's operating account - the money has been earned by the work the firm has done. When you don't have a COLTAF Account at all, but are simply putting all fees into your operating account, then you are putting money into your own account that has not been earned - you are stealing your clients’ money! This is supposed to be a disbarable offense - sort of the cardinal sin that an attorney could commit. The Colorado Bar investigated this situation for over a year. The firm admitted that the COLTAF account did not exist within the first month of the investigation. But after a year of further investigation, the firm never closed for a single day -in fact - they are still open for business today in downtown Denver. They still operate in what I believe to be the grey areas of the law. They continue to transfer all calls from their clients to an out-of-state operator. As a funny/disturbing note here, the operators that they hire to answer your calls are not paralegals or attorneys. They make every effort, from what I’ve heard, to hire actors – they are in a major US city so there are a lot of actors looking for jobs until they get discovered. Actors are better at playing the role of the caring firm and at defusing angry clients. The firm thus far, to my knowledge, faced no significant disciplinary actions. In fact, if you check the managing attorney’s name at the Bar Association’s web site, it will tell you that this attorney has never had any disciplinary action taken against him. He looks, on paper, every bit as clean as those of us who truly are attorneys with clean records.

This is all just to say that you cannot always trust what you read - even from a source as trustworthy as the Bar Association. You have to use your own common sense. If the attorney that you meet with is telling you just what you want to hear, then this could be the sign of a problem. I rarely have a consultation with a client that I don’t have to explain something that they didn’t want to hear. It’s not fun and it might mean that we don’t get hired (I'm sure this happens) but at least we’ve been honest and given the client the option of directly confronting their situation.

I used to know an older lawyer who used the same line every time he trained a new attorney. At some point in the training he would ask the young lawyers the same thing. He would ask them, "When a client walks in the door, what do you first tell them?" The young lawyer would search his memory and training for the answer and offer something like, "Welcome." The older attorney would always correct them. "The answer is: whatever they want to hear. We can sort the rest out after they've paid." This is the type of mentality that people looking for a bankruptcy attorney are bound to run into. You really have to be your own advocate when looking for an advocate.

Pro Se and Doc Prep Woes...

Most Trustees/Courts still formulate their dockets the same way. Our dockets take place every half hour. There are usually 5-8 cases per half hour - this probably has a lot to do with why the hearings are always running behind. In order to lessen the wait time, trustees usually take the debtors with attorneys first (these go faster) and then the pro se filers (folks who filed by themselves) second and the debtors who used a document prep service last. The reason for this is that pro se filers and doc prep filers tend to take more time in this order respectively. I'll admit that as a lawyer, I tend to at times have a bit of a dark sense of humor about things. My wife is an ICU nurse and apparently, they have the same type of humor which works well for our marriage but not necessarily for dinner parties. On slow days, I’ve sat up at the courthouse to watch pro se and doc prep filers’ 341 hearings. In fact, it’s not uncommon to see lawyers in the hallway calling other lawyers into the hearing room when we hear that there are pro se or doc prep filers getting ready to go up for their hearings just because of the spectacle that they regularly cause. I usually have sympathy for the pro se filers as they probably filed this way simply because they did not have the money to hire an attorney and were desperate. The doc prep folks though are people without law licenses essentially practicing law in plain view of the world and as a lawyer I despise this both for the blatancy with which they violate the law and because of the conscienceless damage that they seem to cause.

I remember seeing one elder woman who clearly had gone to a document prep place to get her petition drafted. No doubt, she was probably lured into the place by advertisements which promised her a bankruptcy petition for what seemed like practically nothing. She seemed to get what she paid for. By the end of the hearing, she had lost three vehicles and two pieces of land. There is a common misconception that you can file a bankruptcy and then, if you don't like how it is going, you can just dismiss it and walk away. This is actually not always the case. Once you have filed, like the lady in our story, you have created a bankruptcy estate which consists of all of your assets. Your creditors have a right to get paid from the sale of some of these assets. This poor woman, who appeared to be at the age when she should be enjoying her retirement and grand children, was now facing the loss of her two tracts of undeveloped land and three vehicles. One of those vehicles was a Plymouth Hot Rod which I don't believe was really hers; though it appeared from the records to be in her name. I sat back watching all of this and just wondered how in the world someone could have put her in this position just to make less than $300 off of her. Really, there is no amount of money to be made which would justify putting someone in this position but clearly here, someone had made a conscience decision that it was more important for them to make less than $300 than it was for them to be honest with her and send her to some place where her interests could be protected. I sat back and within 5 minutes figured out a way that she could actually keep everything and still get rid of her debts. If my memory serves, I had to go to another hearing before her hearing was completely over. Otherwise, I intended to talk with her. I never saw her again but I often think about her case. It's just typical of the things that unfortunately happen at the courthouse every day with doc prep companies and pro se filers.

Fees After Filing

There is a decent amount of controversy right now regarding firms who are illegally accepting payment of fees after a chapter 7 has been filed. By way of background it'll help if you know why this is illegal. When a chapter 7 is filed, there is an automatic Court order call the Automatic Stay Order that is issued. This order is generally a good thing because it means that if you are being garnished at the time that your case is filed then the garnishment must end. It is also the same order that allows us to stop foreclosures and other collection types of activities that might be taking place against our clients. There is flip side to this though. Most clients do not have a lot of disposable cash when they go to hire a lawyer to represent them in their bankruptcy filing – its common sense. This problem is made a lot worse when the client is being garnished (25% of their take home pay is being seized) or they are on the very of being garnished. We often want to allow people to pay later, we certainly trust them, but the law is very clear on the point and it has a solid foundation for being the way that it is. If you still owe your attorney money after you file, then your attorney becomes one of your creditors. In essence, when you file a bankruptcy with a lawyer, it is you and your lawyer against the creditors. When your lawyer is also one of your creditors, then this simple drawing of lines becomes much more difficult. Your attorney then is in a conflict of interests where they are your debtor's counsel and a creditor - these two thing conflict, they have completely different interests. If the debt remains unpaid, and the installment payments that they set up usually does this, then the same debt to their attorney also later violates the discharge order as well.

Ironically, the case that finally made taking fees after the filing clearly illegal in Colorado took place in 1996. The law firm, who it was decided against, from what I've heard, still does it! So they were charged with unethical behavior by the US Trustee's Office, successfully prosecuted for the behavior and then continued to do it. You see things like this way too often in law. Last summer I had a client bring in their contract with this firm – they were looking for a new lawyer. Right on this firm’s contract, from last summer, was a provision for accepting fees after the filing. To me, that's nothing short of amazing! I don't know if I just have a guilty conscience or not, but if I was operating this way, I'd never sleep. Nevertheless, they are still doing it. If you read the section above about the firm who charges flat fees that never match up with their advertising, then you have already met another firm who charges fees after the filing as well. If it makes the public feel any better, it's my understanding that these firms are being investigated for this behavior right now. Of course, having seen how unsuccessful the prosecution (even though they won) was at stopping the behavior last time I'm a bit cautious to think that they are really going to solve the problem. Recently, I’ve been approached to be hired by a Trustee's office to do the prosecution. I normally do not ever practice outside of my own firm with the exception of occasionally working on other firm’s adversarial proceeding (lawsuits within a bankruptcy) and this is just because I enjoy it – I’ve never accepted money for it. When I practice under my own flag, I have control over the way that I practice; there are no outside pressures on me to proceed in a manner that I might not agree with. It's one of the benefits to having your name on the door. But I'm considering it. Well, I've done a bit more than consider it. I've done some research on my own to see if the problem is as bad as I believe it is and every indication at this point is that the problem is much worse than I originally thought. To you the reader, I can only offer a word of caution. Do not allow someone to represent you if they are taking fees after the filing. It simply isn't worth it to have your filing jeopardized because your lawyer was trying to make a fast buck. It is illegal and the powers that be are cracking down. If I'm involved, I'll prosecute the entire representation wholly just to make sure that I've done my best to ensure that it never happens to someone else again.