How to Become a Bankruptcy Attorney
As the economy is struggling to return to its former state, there are hundreds of thousands of people and businesses that will be forced to file for bankruptcy. As such, there is an increased need for bankruptcy attorneys. While it may not hold the fascination of criminal law or offer the personal satisfaction of family law, bankruptcy law can be quite lucrative and helps clients get back on their financial feet.
A bankruptcy lawyer’s primary focus is to “assist clients through court proceedings to reduce or eliminate debt or to proceed forward with bankruptcy.” Bankruptcy lawyers have clients who are individuals, small businesses, or even large corporations. You will not only meet with clients and spend time in your office, you will also spend time in court meetings or hearings.
One of the benefits over criminal and family law is that it’s typically a 40 hour a week job, and you can leave the stress and worry about your cases at the office. In bankruptcy, no one goes to prison, there aren’t hard decisions like who gets the children. Bankruptcy is all about the client’s money and finances, so it’s easy to disengage and have a life outside the office.
However, bankruptcy attorneys often specialize in other areas of practice as well. Attorney Rachel Edmiston advises that you don’t limit yourself “to just bankruptcy. I made that mistake and ran up a lot of debt waiting for work to come in. Most bankruptcy attorneys seem to also practice estate planning and/or real estate law. That way you have income whether the economy is good or not.”
When you are making a choice about what to specialize in, bankruptcy law may be something you want to consider as a worthwhile option. But before you make that decision, educate yourself about this area of specialization.
Increase your Knowledge about Bankruptcy Law
As in any other profession, before you make a decision that will affect the trajectory of your career, learn as much as you can about it ahead of time. In bankruptcy law, you get to help clients get out of debt and have an overwhelmingly positive impact on their lives. Every day you get to help people, and that is not true of many other areas of the law. There is a real sense of duty not only to the client, but to the community as a whole, and there are many steps you can take to educate yourself about bankruptcy law.
Intern or find a mentor or take legal aid/pro bono cases
Interns help clients gather documents and information. They provide information needed to prepare cases for pro bono recommendation. Interns help to organize credit reports, asset information, income and benefit information, and tax returns. They also ensure that clients complete the pre-bankruptcy counseling and education required by law. Interns also assist in preparing bankruptcy petitions as well as going to Section 341 Meetings of Creditors. These activities will give you a sense of what a bankruptcy lawyer does on a daily basis.
Once you have your license, Attorney Setareh Mahmoodi suggests you “Ask an established BK attorney if you could work on their cases (sit in on initial client meetings, complete petitions, shadow at 341 hearings, prepare Ch. 13 plans etc.) free of charge in exchange for their feedback and supervision (esp. great for new attorneys).”
Join NACBA and/or State Bar Bankruptcy Section
The National Association of Consumer Bankruptcy Attorneys (NACBA) offers support to practicing bankruptcy attorneys. The mission of NACBA is to protect the rights of consumers in filing for bankruptcy protection. Their website offers information on current legislation as well as referrals, webinars, and the latest news in bankruptcy law.
“NACBA serves as the voice for debtors’ attorneys and their clients in the U.S. Congress. NACBA’s team of legislative advocates in Washington works with a coalition of allies who often join in our efforts, including organizations representing working families, women and children, the civil rights community, consumer groups, and others interested in preserving fair and balanced bankruptcy laws.”
Each state has its own State Bankruptcy Bar Section. These organizations offer members information on current state requirements, the opportunity to network with other bankruptcy attorneys, and community service information, such as budgeting programs for youth. And NACBA has annual and occasionally bi-annual continuing education conferences, where you can go, meet with other bankruptcy practitioners, and take continuing education seminars by other leaders in the field, thereby increasing your bankruptcy knowledge.
Read the Bankruptcy Code
Most students only take one course in bankruptcy during law school, so the intricacies of the actual code should be read thoroughly if you want to be a competent bankruptcy practitioner. The US Bankruptcy Code has 15 chapters that identify general provisions, how cases are administered, definitions, types of bankruptcy available, and access to the courts.
Specifically, there are different types of bankruptcies, referred to by their chapter in the U.S. Bankruptcy Code.
- Individuals can file Chapter 7 or Chapter 13 bankruptcy
- Municipalities—cities, towns, villages, taxing districts, municipal utilities, and school districts – may file under Chapter 9.
- Businesses file under Chapter 7 to liquidate (sell off assets to pay debts) or Chapter 11 to reorganize.
- Chapter 12 provides debt relief to family farmers and fishermen.
- Bankruptcy filings of parties from more than one country file Chapter 15.
Most often, bankruptcy attorneys deal with consumer bankruptcies in Chapters 7 and 13.
It is also necessary to review information about how to file in your local federal court. There are over 90 federal district bankruptcy courts across the United States. The process for filing bankruptcy is “governed by the Federal Rules of Bankruptcy Procedure (often called the “Bankruptcy Rules”) and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases. The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses.”
Read the Local Rules
As stated above, each district court has its own local rules for filing and processing bankruptcy claims. Attorney Sean Mays offers this advice: “Make friends with lawyers that know what they are doing! You will find that other lawyers will share their knowledge and experience with you, and it will save your butt once in a while.”
Local rules are complex, including dozens of codes on how to manage a case, privacy policies, how to file amendments, writing notices to creditors, assignment of and duties of trustees, filing deadlines, claims and objections, distribution and liquidation of assets, reaffirmation agreements, avoiding liens, and dozens of other codes.
Clearly, local rules are just as important as federal rules in properly filing for bankruptcy and serving your client well. Lcda. Frances Carballo-Pietri offered her experience to help new learners understand the importance of reading local rules:
“As a newbie, when I took my first back in 2005 I studied the Bankruptcy Code and because the person had cancer and needed a quick solution I just went ahead and filed Ch 7. From the Court I received a few phone calls making me aware of mistakes and to correct them. Surprisingly, my mistakes weren’t fatal, just didn’t comply with local rules which were correctable errors. After the first, the second and maybe up to the fifth I kept receiving phone calls, but for different mistakes, so I decided to make a ring binder containing all the mistakes and solutions, but soon I started to file and no phone calls anymore. So it’s a matter of reading the local rules and in doubt call the clerk of the court they always are willing to help when you’re a newbie.”
Get familiar with Bankruptcy Software (Best Case, NextChapter, etc.)
To aid in filing, Bankruptcy Software has been designed. Best Case bankruptcy software is appropriate for both the new and experienced bankruptcy attorney. It offers a user-friendly design, intuitive interface for preparation and filing, free training and support, court-compliant forms & schedules, fast and accurate electronic filing, unlimited number of jurisdictions, and access to workflow tools that simplify the bankruptcy process.
They also offer help from paralegals in preparing your case, along with helping you gather credit reports, direct clients to pre-bankruptcy classes, manage court notices, keep track of client intake, and handles notices to creditors.
With NextChapter cloud-based bankruptcy software, you have your own client portal that provides an online bankruptcy questionnaire for your clients, and then the form imports into NextChapter; the software saves and organizes court notices and schedules hearings to your calendar; experienced paralegals of the NextChapter team can help prepare your bankruptcy cases from start to finish; communicate with your clients with automated text reminders; and integrate NextChapter and Clio to power your bankruptcy practice.
NextChapter connects you with leads and helps you get more clients with the Modern Attorney Directory, provides everything you need to prepare Chapter 13 cases online, and seamlessly pulls and imports tri-merge credit reports. NextChapter also provides comprehensive support articles, step-by-step instructions, and answers to your questions.
These software examples give you a sense of not only how technology can aid in creating an efficient practice, but also how extensive the practice of bankruptcy is. These tools can help streamline your practice and save you both time and money. Both software options offer annual subscriptions for your practice. That way, anyone on your team can use the software to update cases, file forms, or communicate with clients.
Many bankruptcy software providers will let you use the software for free if you are filing a pro bono case, which would give you a free way to learn the software while filing a real case. You can contact a local free legal clinic to find pro bono clients.
Read the NCLC BK series of books
The NCLC (National Consumer Law Center) digital library is an amazing resource! Their books on bankruptcy cover every aspect of the practice and give you the most up to date requirements and regulations regarding bankruptcy law.
The definitive consumer bankruptcy book is updated with new case law, new Bankruptcy Code, new initial forms, rules effective December 1, 2019, and updated information. The book is filled with helpful information about becoming or being a competent practitioner of bankruptcy law:
- New official forms, effective December 2019, including sample filled-in forms for Chapter 7 and 13 cases, with annotations and instructions
- The new April 1, 2019, dollar amounts updated in the chapters
- Code analysis of recent Supreme Court decisions on discharge injunction violations
- Application of FDCPA to the bankruptcy claims process
- Analysis and pleadings concerning the requirements for mortgage servicers submitting claims
- Reprints of the Bankruptcy Code, additional bankruptcy statutes, the bankruptcy rules, fee schedules, bankruptcy regulations, director’s forms, etc.
- Automatic stay, the bankruptcy discharge, and remedies for stay and discharge violations
- Discussion of means testing issues and latest means test data
- Using bankruptcy to deal with a foreclosure, exemptions, lien avoidance, and secured claims
- Hidden fees and overcharges in creditor claims
- Attorney fees
- Litigating consumer cases in bankruptcy
- Non-dischargeability actions and Creditor reaffirmation abuses
- Consumers as creditors of bankrupt merchants, landlords, or lenders.
- Client questionnaire (in English and Spanish)
- Annotated sample of completed initial forms
- 170 sample pleadings
- A date calculator to compute 24 key look-back dates
- Forms to obtain client tax records and informational client handouts
- State-by-state analysis of exemption law
- Reprints of all other bankruptcy statutes and Bankruptcy Rules in effect for 2020
The series of books presented by the NCLC are invaluable tools for the practice of bankruptcy law. No attorney could possibly keep track of everything required in a complicated bankruptcy case. These types of reference guides are essential to have available for your practice.
Read the Argyle Publishing bankruptcy books
Argyle Publishing offers a series of four books that offer detailed information about bankruptcy law. Each title addresses a specific area of bankruptcy practice, with detailed explanations of the law as well as copies of forms and critical issues in bankruptcy practice.
The Bankruptcy Issues Handbook reviews 25 of the most difficult issues in consumer bankruptcy and Chapter 13 cases, including the vulnerability of a debtor’s retirement funds and IRAs in bankruptcy, dismissals for abuse under Section 707(b); the dischargeability of divorce-related debts, drunk-driving debts, unlisted debts, fraud debts, student loans, tax debts and penalties, and malicious injury debts; avoiding liens, and more.
The Attorney’s Handbook on Consumer Bankruptcy and Chapter 13 is the perfect practice guide for attorneys practicing consumer bankruptcy. The book includes a consumer bankruptcy practice guide for Chapters 7 and 13, sample Bankruptcy Forms, the U.S. Bankruptcy Code, Federal Rules of Bankruptcy Procedure, and bankruptcy exemptions for all 50 states.
The Attorney’s Bankruptcy Code and Rules Book is designed to serve as unannotated, in-court reference material for attorneys in the handling of any bankruptcy case. The text contained incorporates all changes in the U.S.C., Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Federal Rules of Civil Procedure through January 1, 2020.
The Attorney’s Handbook on Small Business Reorganization Under Chapter 11 has been newly updated for 2020, including several significant rule changes and the Small Business Reorganization Act of 2019. This Chapter 11 bankruptcy book contains everything an attorney needs to know to successfully handle a Chapter 11 bankruptcy case in any state or district.
These amazing resources are inexpensive, yet they give any attorney at any level of practice, the practical advice and information needed to be an effective practitioner of bankruptcy law.
Use the NACA resource page
The National Association of Consumer Advocates (NACA) online webinars and professional development packages offer the tools and advice that help you build your professional skills, improve your practice, and make you a fierce advocate for consumers.
NACA’s curated on-demand webinar series’ provide real-world scenarios and solutions with the best practices for successful consumer advocacy law – including bankruptcy:
- Bankruptcy for Consumer Litigators: What You Should Know When a Bankruptcy Interrupts Your Case
- Reimagine Damages: Automatic Stay and Discharge Violations in Bankruptcy Court
- Litigating Adversary Proceedings in Consumer Bankruptcy Cases
The professional development package includes the following webinars to aid you in improving your bankruptcy practice:
- Litigating Adversary Proceedings in Consumer Bankruptcy Cases
- Managing Student Loans in Bankruptcy
- Student Loans: Is Bankruptcy the Right Choice
- Discharge Violations
- Reimagine Damages: Automatic Stay and Discharge Violation in Bankruptcy Court
Additionally, you will learn how to “file an adversary proceeding pursuant to the Bankruptcy Rules and Federal Rules of Civil Procedure, how and when to address student loans in bankruptcy, how to address discharge violations in bankruptcy cases, and how to develop automatic stay cases to maximize damages following the In re Sundquist decision.”
Opening your own Practice
When you have a few years of experience under your belt, and you are confident in your abilities, it may be time to start your own practice.
This is not a decision to be made lightly. Owning your practice is not just about the law – you will need to think about overhead (office space, equipment, utilities, costs for software and internet access, office supplies, etc.), hiring qualified employees, accounting, and many other considerations.
If you have a handle on the business side of running a practice, you then need to consider other issues that can either positively or negatively affect your practice.
Don’t limit yourself to just bankruptcy
While bankruptcy law can be lucrative, it is also unpredictable. The number of bankruptcy cases each year will vary greatly based on the condition of the overall economy. During years with economic unrest – such as 2020 and the COVID-19 pandemic – the number of bankruptcy cases will be high and continue to grow well into 2021.
But, when the economy is doing well, the number of bankruptcy cases will decrease – and this can negatively affect your practice. Many bankruptcy attorneys also practice estate law, business law, or real estate to ensure the financial stability of the firm year round.
Develop bedside manner
While marketing and advertising are key components to running any successful business, referrals are also a huge part of retaining new clients. Bankruptcy law is a very delicate practice. Day after day, a bankruptcy attorney is dealing with people who have hit rock bottom financially and are emotionally distressed. Or they are dealing with business owners who are having to close down and lose the dream they worked so hard for.
If you want to gain a positive reputation in the community, engage people with dignity and respect. Offer them comfort as they face their financial failures. Remember that even the best business or family can run into hard times leading to bankruptcy. Never judge someone who has to file. Usually, people who are filing for bankruptcy are devastated at the prospect and want to work with an attorney and staff who are compassionate and patient.
Prepare to spend time in the courtroom
There are two kinds of law: paper law and courtroom law. Paper law is any type of legal process that doesn’t generally require an attorney’s presence in the courtroom. Courtroom law will always require an attorney’s presence in the courtroom. Bankruptcy law may appear as paper law, but attorneys spend a great deal of time in front of judges, meeting with creditors, attending arbitrations, representing clients in mediation, or even going to trial over contested debts.
Bankruptcy attorneys do spend time in the courtroom, often as their clients’ only defense against predatory creditors.
Becoming an attorney is a noble aspiration. But many new law school graduates never consider bankruptcy law. New grads are itching for a fight with a corporate giant in a courtroom or are determined to represent criminal defendants. But bankruptcy law is a practice where the attorney and client are mutually interested in the best outcome. It is a real opportunity to make a positive change in people’s lives.
Once you have established your own practice, remember to send your clients to top of the line providers like www.ccadvising.com and www.beadviser.com for the mandatory credit counseling and debtor education classes required in bankruptcy. These classes help to educate consumers about the process of bankruptcy, how to achieve financial independence after bankruptcy, and what steps to take to curb spending and plan a reasonable budget.
Thank you to the following attorneys who provided advice in the creation of this article:
- John C. Colwell, NACBA Director and President
- Alex Hait
- LCDA. Frances Caraballo-Pietri
- Rachel Edmiston
- Sean Mays
- Marshall Entelisano
- Robert Keller
- Leressa Crockett
- Setareh Mahmoodi
- J. Whoopi
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