The Bankruptcy Is Not Dead

Welcome to my website. We are dealing with a new bankruptcy law and a new world now. As attorneys wait for court interpretations of this new law, we have to get used our new status as Debt Relief Agencies. While one courageous judge in Georgia has held that attorneys are not debt relief agencies under the new law, his decision is currently being challenged. Until we know for sure, we have significantly more disclosures to make to clients. For example, my former two page intake sheet is now up to 30 pages (and counting) due to all the additional disclosures I now am required to make. To comply with the new law, my new clients have to sign no less than seven times - and that’s before I prepare the petition. What a pain for all of us. We are even debating about whether we are allowed to staple the new disclosures or if doing so violates the law.

The good news is that bankruptcy is not dead. There are more hoops to jump through, but I can still get clients filed, and still get debts discharged. I have noticed an early trend of creditors getting more aggressive now. They always have tried to push debtors around, but they seem more agitated and more desperate than usual. There are a few new law firm players trying to play hardball. My opinion is – we shouldn’t worry about them. Skilled bankruptcy attorneys know how to deal with them. It’s just new faces, but it’s still the same old game.

I estimate that the majority of debtors in New Jersey will pass the new means test. It’s just more paperwork.

The new due diligence standards have spawned pocket industries of companies trying to sell attorneys their new products to comply with the law. In a few months, most of the new market entrants will sink or swim.

Credit counseling certifications will be a big mess. The US Trustee’s Office has certified some agencies that are not registered to do business in New Jersey. Also, some authorized credit counselors have already allegedly been caught giving legal advice during sessions. This too will work itself out within the year.

I think bankruptcy petition preparers (BPPs) will get slammed big time under the new law. BPPs will find it difficult to comply with the new standards without giving legal advice, and if they give legal advice, they will be engaging in the unlawful practice of law. Look for big changes in this industry.

I’ll keep you updated on relevant decisions as we go along. Stay tuned.

Marvin