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Why you must make your Bankruptcy attorney your new best friend

I recently heard in a seminar that a good bankruptcy attorney learns more about their clients than any other type of attorney out there. Bankruptcy documents include everyone you owe money to, everything you own, your income for the last 6 months, a series of questions about your financial affairs that make some clients ask me "Why do they need to know that?", and various other items. It is because you have to disclose so much that I am such a big advocate for picking an attorney you feel comfortable with. If you are not comfortable talking to your bankruptcy attorney, you may make a mistake in the documents which could have serious consequences. One area that is frequently missed by clients and their bankruptcy attorney is potential and ongoing lawsuits. As stated above, in the bankruptcy documents you must list everything you own. If you have the right to sue someone (even if you have not actually sued that person or company yet), you own that right. It is an asset in your bankruptcy. Now clients have difficult with this idea. They believe that the things they own are tangible things they can touch like their car, chair, bed, etc. But you own potential lawsuits, retirement accounts, life insurance, and other intangible things. A good bankruptcy attorney must realize that clients tend to forget these types of items and try to set up safeguards to help clients disclose these items. I cannot tell you how many times in my years as a Waco bankruptcy attorney I have had a client tell me "Oh, that has nothing to do with my bankruptcy." The problem with that statement is that the "nothing" probably does have to do with your bankruptcy. The lawsuits and potential lawsuits is an area where I get into the most interesting conversations with my clients. I have spoken to clients about a wide variety of topics including car accidents, inheritance disputes, medical malpractice, employment discrimination, business disputes, and unfair debt collection practices, just to name a few. It is amazing what I learn about my clients and their lives. Now you might be asking why I am talking to my clients about these topics....am I just nosy? Hopefully not. I am asking these questions to help protect my clients' rights. If we fail to list these lawsuits or potential lawsuits in the bankruptcy, my clients will lose their rights to these lawsuits. To put it simply, you have to list any asset which includes any reason someone or a company might owe you money (i.e., lawsuits and potential lawsuits). Failure to list these assets is an admission in federal court that you don't own the asset. And amending your schedules after the fact will probably not help you. The 5th Circuit recently ruled on yet another case which demonstrates how important it is to have these conversations with your bankruptcy attorney even if you do not believe it has anything to do with your bankruptcy case. In Love v. Tyson Foods, Inc., No. 10-60106 (5th Cir. 4/4/12) (see http://www.ca5.uscourts.gov/opinions%5Cpub%5C10/10-60106-CV0.wpd.pdf), the Court held that the debtor failed to meet his burden of proof to show that his failure to list an asset (in this case a potential lawsuit) was inadvertent, so he lose his lawsuit. Here are the facts in a nutshell:

  • Willie Love was dismissed from his job at Tyson on April 2, 2008. He was dismissed for failing a drug test. He informed the company that he was taking antibiotics which might cause his test to show positive by mistake. The company refused to retest him.
  • He filed for a Chapter 13 Bankruptcy on May 1, 2008 and he did not list any potential claim against Tyson in his bankruptcy.
  • Love filed a complaint of discrimination with the EEOC on May 30, 2008.
  • Love received a right to sue letter from the EEOC on December 16, 2008.
  • Love filed a lawsuit against Tyson on March 12, 2009.
  • On July 16, 2009, Tyson moved for summary judgment (to dismiss the lawsuit) because Love failed to list the claim in his bankruptcy.
  • On July 22, 2009, Love amended his bankruptcy schedules to disclose the claim against Tyson.
  • The Court granted Tyson's motion for summary judgment (which means Love lost his lawsuit).

There are numerous issues with this case that I could talk about for hours. Here we have someone who are hurt but had not filed a lawsuit yet, who then files for bankruptcy and doesn't mention the hurt, who then file a lawsuit based on the hurt, and then tries to fix the bankruptcy as soon as he learns about the omission, but who still lost the lawsuit because the fixing of the bankruptcy schedules was too late. The Court focused on whether Love could prove that he inadvertently omitted the potential lawsuit. It is easy to see how that could have happened. Love had never filed for bankruptcy before. He didn't understand that he had a potential lawsuit that he needed to talk to his bankruptcy attorney about. Once he realized the error, he did his best to try to fix it. However, by that point the damage was done. I am not sure if I agree with the harsh ruling by the Court since he did try to promptly fix the error, but nevertheless, I have to follow this opinion. So what is the take home lesson for bankruptcy attorneys and my clients? Bankruptcy attorneys, you are detectives. Your clients will not tell you everything because they don't think it pertains to you, so you need to find ways to pry into their lives and get it out of them. This prying takes time and a relationship between you and your clients. Clients, if you are not sure if your attorney needs to know something, tell them. Better to bore them with too much information that miss a critical detail that you didn't know was critical. It is a reminder to me of how important it is to pick the right bankruptcy attorney. I am not the attorney for everyone out there and I do not want a client who is not comfortable with me. Shop around and find the right attorney for you. It can make a world of difference. I have previously blogged about tips to consider when choosing a bankruptcy attorney here in Waco, Texas (see http://thekehllawfirm.com/how-choose-bankruptcy-attorney-waco-texas/). Drowning in Debt? You are not alone. Call 254-633-2876 TODAY or email me at [email protected] for a FREE, no-obligation consultation to see what an experienced bankruptcy attorney can do for you. Let my family help yours! Photo Credit:  wolfgangfoto

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