BANKRUPTCY BLUES With Reforms on the way, Lawyers in the field mull their future. |
| Back to News & Announcements |
|
By Keith Griffin Law Tribune Staff Writer The number of attorneys who handle personal bankruptcy cases could plummet signifigantly once controversial bankruptcy reforms take effect on Oct. 17. However most bankruptcy lawyers in Connecticut aree taking a "wait-and-see" attitude before deciding whether continuing in the field of law is fiscally worthwhile. Barbra H. Katz, chairwoman of the Connecticut Bar Association's Commercial Law and Bankruptcy Section, said the aspect of the new law that has attorneys most worried is the requirement that they sign off on all bankruptcy petitions and schedules. The signature will be an indication the attorney has verified all the information presented to the court. While agreeing it's no different than what's required under corrent federal practice rules dealing with good faith pleadings, "it seems to convay an additional oblication to confirm the information the client suibmits" said Katz, a bankruptcy trustee whose practice is in New Haven. "How far does the inquiry go? Where do y ou draw the line? The statute doesnt make it clear." she said. Avon solo Gary Joseph Greene, who estimates that bankruptcy work accounds for nearly half of his practice, has similar concerns. "Nobody knows what's going to happen," he said. "I'm probably going to require all my clients to bring a CD in with digital pictures of everything in their house." THe new requirement will force attorneys to raise their fees, Katz predicted. "Because if you're certifying the information, you're going to have to do an inquiry.. Shge added, "I havent met an attorney who likes this law." Hamden solo Robert M. SInger said he has pondered whether or not he will continue to practice bankruptcy law. "The workload is going to increase greatly," he said, adding that the new guidelines will force more people into Chapter 13 bankruptcy. "Chapter 13 is alot more work than Chapter 7," he added. "Attorneys who are doing Chapter 7 now can get a fixed fee and do a reasonable amount of work" for it. Connecticut's chief bankruptcy judge, Alber s. Dabrowski, speaking before a sold-out CBA bankruptcy seminar June 24, said he doesnt know what the effect of the due diligence requirements on attorneys will be. One thing the Bankruptcy courts in Connecticut won't do, he said in repsonse to a question from the audience is offer attorneys a general loophole-in the form of a standing order - around the new provisions requireing them to verify information contained in petitions and schedules be "wenn grounded in fact." "You might see those kinds of [safe harbors] set forth in [an individual] matter litigated before the court," Dabrowski said. But such protections from liability "wouldnt be on other judges." The potential liability concerns SInger, who said 10 percent to 20 percent of his practice is bankruptcy work. "I have to be more paper sensitive," he said of the need to review much more information from clients. "I don't want to get sanctioned." Singer said he doesnt want to get whacked in the wallet, either. If a creditor lodges a successful objection to a bankruptcy filing, the attorney would be liable for the creditor's attorney fees as well as the cost of the bankruptcy trustee, he said. Last Minute Filings Torrningon Bankruptcy practitioner Audrey Blondin said the passage of the Bankruptcy Abuse Prevention and Consumer Proctection Act of 2005 has lead to a declinein filings nationwide for the first quarter of this year. Connecticut filings are almost statistically identical with last year, with 2,921 total filings for the first quarter of 2004 and 2,910 for the first quarter of 2005. Blondin said many debtors assume the new law is already in efect and they are no longer eligible for Chapter 7 relief. Greene and Catz, however, have a different perception. Both said they have seen a recent increase in filings. "Everybody's trying to file before the deadline," Greene said. "Everybody is rushing to get it in." Once the law takes effect, "it will be impossible except for the most desperate circumstances to file Chapter 7 bankruptcy," asserted Blondin, who has been practicing bankruptcy law for 25 y ears. "All of us [bankruptcy attorneys]," she added "are going to have to examine the issue of personal liability before deciding if any of us are going to continue to practice." Blondin predicted there will be less attorneys practicing bankruptcy law in the near future. "People won't be able to do it on a casual basis," she said. "It would be gross malpractice not to be fully prepared and up to date on all aspects of the new law." U.S. Bankruptcy Judge Robert Krechevsky, speaking at the June 24 seminar, is a noted historian on the country's bankruptcy system, but demurred when given the opportunity to put the new bankruptcy law into his historical perspective. "I can't answer that without showing some prejudice," he said. Dabrowski, however was not reticent about expressing his disappointment with the lack of resources accompanying the new law. He lamented his days as the stat's top federal prosecutor when Congress would mandate action, but not provide the tools to carry it out. "I'm very frustrated about what happened here," he said. "With the number of changes, additional resources should have been allocated. Non were and that is classic government." The comment is in line with a flaw Greene and other bankruptcy lawyers are quick to point out. The new law places an emphasis on pushing consumers away from filing for Chapter 7 bankruptcy towards Chapter 13 bankruptcy, which requires the repayment of unexcused debt within five years. But the state has only one Chapter 13 bankruptcy trustee, Molly T. Whiton, who works out of the federal courthouse in New Haven, Greene noted. "She has over 4,000 active cases," He added. Another odd twist in the law is a requirement that attorneys practicing bankruptcy law advertise themselves as debt relief agencies in all general media, as well as when the host seminars. "Even a creditors attorney probably has to list themselves as a debt relief agency just to proctect themselves," Greene surmised. |
| Back to News & Announcements |