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Palm Springs Law Blog

Thursday, December 23, 2010

How To Make Your Life Miserable in One Easy Step

I am pretty sure I could remove my own appendix… but should I?  It takes years of study and training to make a person into a skilled surgeon.  If I had appendicitis, I definitely wouldn’t want an amateur doing the job.  I’ve had no medical training. I’m clueless when it comes to surgical techniques.  I think everyone would think I was crazy if I risked operating on myself. 

So, why is it that so many people think they can do it themselves when it comes to serious legal issues, tax problems or critical financial planning?  It takes years of training and study to become a lawyer, a CPA or a registered financial planner.  These professionals, like doctors, have acquired skills that other people don’t have.  But when there is a legal or financial crisis, people often choose to ignore the experts, and strike off on their own. 

I have noticed over the past few years that many people attempt to file bankruptcy on their own.  I explain to all my prospective clients that filing bankruptcy is a very serious matter, and there are many complex rules that have to be followed.  Every bit of income, every debt, and all assets have to be documented and verified.  Deadlines for filing various documents have to be met.  The bankruptcy petition itself is many, many pages of questions that have to be correctly answered.  There are the federal rules which must be followed, as well as local bankruptcy rules.   An experienced attorney knows how to navigate all of those rules, and understands how the system really works.  Wise debtors let an attorney handle their bankruptcy. 

However, all too often I have to pick up the pieces (if it’s possible to pick up the pieces) after “do-it-yourselfers” who think they know the law as well as an experienced lawyer.  The fall-out is always painful, and often ugly, for the client.  And worse, that person’s actions often affect family members and others.  I’ll tell you about two recent real-life examples which should serve as a strong reminder that legal work should be left to legal professionals:

 A prospective client called me. He was in a panic.  He told me he filed for bankruptcy pro per (meaning by himself and without the assistance of an attorney), and the bankruptcy trustee was selling his house because there was substantial equity.  He wanted me to jump in and “fix it.”  He desperately wanted my help, but it was too late.  In a Chapter 7 bankruptcy, once the process is started it’s extremely difficult to stop it.  This debtor did not understand the rules, and worse, he had relied on advice from his CPA, not an experienced attorney, on how to handle his house in the bankruptcy.  The CPA had little more understanding of the bankruptcy laws than his client.  The debtor’s decision to do it himself, and to rely on advice from a non-attorney, created a very unhappy situation.

 In another sad story of a pro per bankruptcy filer, a gentleman filed for Chapter 7 bankruptcy protection.  He did not properly list his income or his expenses, and used the wrong set of bankruptcy exemptions to protect his few assets.  There were so many red flags in his case that the United State’s Trustee took a keen interest, as well as the Chapter 7 bankruptcy trustee.  This led to numerous court hearings, examinations, and requests for documents.  The debtor wanted to have his case dismissed, to basically undo what he had done, but the Judge said no.  He was denied a discharge of his debts and prohibited from filing bankruptcy again for another year.  His case remains open though, and there is still the possibility that he will lose some of his assets.

 In both of these cases, had the pro per hired an experienced bankruptcy attorney, many of these issues could have been avoided.  In the first example, an attorney hired by the debtor would have immediately identified the equity in the house and the risks associated with filing.  The attorney could have advised the client to wait to file until the house was sold, or at least provided advice on what was likely to happen.  Timing can be everything.

 In the second example, an experienced attorney would have been well aware of all of the red flags.  The attorney would have used the correct set of exemptions and made sure that the income and expense calculations were accurate.  What became a nightmare of a bankruptcy could have been an ordinary, relatively simple route to a discharge of debts and a fresh start in life for the debtor.

 Doing it yourself sounds like a good way to save money and get the job done on your own time.  The first step may look easy…   but it’s all the steps that come after that can trip you up.  And those can be terribly costly and make your life miserable, for sure.


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