Common Mistakes Made by Bankruptcy Filers and Their Attorneys - #8

  8. Laziness can lead to disaster for bankruptcy filers.

We all have a lazy streak in us. It's just human nature. We want to get a job done with the least amount of effort. The attorney, who may have filed hundreds or even thousands of bankruptcies, begins to see them as routine or fitting into a common mold. So he begins to assume facts or take the word of the client rather than confirm them on his own. To do a bankruptcy correctly takes a lot of time and effort. Many times it may seem like a thorough review of every pay stub, bank statement, loan document or tax return is  a waste of time, but often this diligent scrutiny pays off and a serious problem can be dealt with rather than left to chance. 

Clients are lazy too. They hate to dig back through their records, if they even have any, to get the information needed to properly fill out the bankruptcy schedules. They often figure that if they don't have a record of it, nobody else will, so they can forget about it. Unfortunately, it doesn't work that way. The debtor has an obligation to fill out the schedules completely and the burden is on him to find the records if he doesn't have them himself. This means requesting records from the bank, credit card company or the IRS. 

I am amazed at the looks clients give me when I tell them I need a complete list of all their personal property along with a fair assessment of the market value of each. They often just stare at me like I have told them they have to travel to the moon for their 341 meeting. In actuality preparing a personal property inventory shouldn't take more than an hour or two and is a handy thing to have around anyway if you ever have a fire or other casualty loss. 

Another priceless look on a client's face is when you hand him his completed petition and schedules and ask him to review them carefully. Of course, the completed petition, schedules, statement of financial affairs, matrix, and means test can be several inches thick. The reality is most clients won't have the patience to read every question and then review his answer to for accuracy and completeness. This means the attorney must sit with the client and read every question out loud to make sure he understands them and has answered them correctly.

Clients may also be reluctant to ask questions because he really doesn't want to know the answer if it means he will have to do more work or disclose things he'd rather not deal with. He mistakenly believes his ignorance will be an excuse if the facts are later discovered. In this case the attorney must observe the client carefully so he can pick up on the signs of possible omissions that might come back to haunt both of them. 

Attorneys and clients are often tired and frustrated with the complexity of a bankruptcy filing and there is often a persistent urge to ignore possible irregularities or unwanted complexities. These urges must be resisted.

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