In the past few weeks, I've received calls from several lawyers looking to get into the bankruptcy practice. Many lawyers left the field when the new law passed in 2005 because there was more work involved in filing cases and because the number of new cases had dropped off - clients thought bankruptcy was dead. However, because of the bad economy, there has been a small uptick in business for bankruptcy lawyers just as other fields of law have seen a decrease. Therefore, lawyers are suddenly getting interested in filing bankruptcies again.
I was interviewed on January 5, 2009 by a reporter from Lawyers USA on this very topic. The article appears on the web at www.allbusiness.com and www.dolanmedia.com. I pointed out that bankruptcy law has become more complex and is really not a field for amateurs or those who wish to only occasionally file a bankruptcy case to supplement their practice. I especially referred to Chapter 13 bankruptcies as "financial brain surgery." I have gotten cases from clients who were told by their previous lawyers that they flunked the means test only to find that the attorneys had only done part one of the means test - the median income test. The test has four parts which gives several chances to file a chapter 7 instead of a chapter 13 case if you know what you are doing. However, some lawyers just look at the median income tables and say, "You're above the median income, you can't file a chapter 7," which is not always true.
I'll be going to Washington, D.C. in February to talk to my senators about supporting the new bankruptcy bill. I'm not really happy that President Obama has chosen to separate the bill from his first financial stimulus package. This hurts the chances of the bill's adoption. I'm not really happy about how the stimulus has been weakened by giving in to Republican interests. I think they prefer President Obama fails even if it cripples the country - that's politics for you. I thought the Democrats won the election - I guess I was wrong. More on that later.
Citigroup has chosen, for now, to back the bankruptcy bill. This could change, just as they changed their mind about buying that new $50 million corporate jet with your bailout money. Maybe the Citi never sleeps, but they sure know how to spend, and charge. They just raised the interest rate on my attorney friend's credit card to between 20% and 29.9%, even though he pays in full each month. Paying in full must make him a bad credit risk.
Moral: Cash is king.