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Horror Stories

Stories of debtors who worked with inexperienced attorneys, presumably in order to save on attorney’s fees.


A Southern District of Florida bankruptcy trustee recently rejected a debtor’s claimed automobile exemption which his fledgling "bankruptcy attorney" asserted in an effort to protect the $9,000.00 equity the debtor had in the vehicle. While it was a "nice try", it seems the attorney mistakenly believed that Florida debtors have the right to select between Federal and Florida exemptions (protections of assets from the claims of the Bankruptcy Court). Accordingly, he chose the more liberal Federal exemption. However, unfortunately for the debtor, there is NO such option in Florida! We are not able to operate under most Federal exemptions. This slight "inadvertence" will cost the debtor either his car or an additional sum of $8,000.00. Don't worry about the debtor, though. He very well might have saved a few hundred dollars when he retained his attorney!


At the end of 2010, another inexperienced attorney filed a bankruptcy for a married woman while excluding the woman’s husband from the filing. While this is perfectly permissible, it is required that the existence of the marriage and the income of the non-filing spouse be disclosed to the bankruptcy trustee. Unfortunately, the woman’s attorney, who had no doubt only very recently started practicing bankruptcy law, failed to make these disclosures. Consequently, what the debtor wife was likely told would be a “simple chapter 7 bankruptcy” (of which there is no such thing), quickly became either a very expensive Chapter 7 or Chapter 13 bankruptcy. While it is impossible for me to know exactly how much this little “faux-pas” will cost the debtor, based on what I observed during the questioning of the wife, and the large disparity of incomes between her and her husband , it is believed that this little slip-up will, cost the debtor MANY MANY thousands of dollars. Again, don’t worry about the debtor . She very well might have saved a few hundred dollars when she retained her attorney!

"MI CASA ES SU CASA" (My house is your house)

In a very literal translation, the house of the debtor likely became the house of the bankruptcy estate when another of the new inexperienced attorneys in south Florida declared a debtor’s house to be “totally exempt as his homestead”. While this may have been a correct conclusion to have reached years ago and the home could, at that time, have been protected, certain time-lines and contingencies as of the 2005 law change must be abided by in order to completely exempt (protect) the home from claims of the bankruptcy trustee and the debtor’s creditors. The debtor’s attorney apparently was unaware of these requirements. As a result of this unfamiliarity with the law, and after determining the value of the house, the mortgage debt on it, and the protection that the debtor was, in fact, afforded under bankruptcy law, it is estimated that the debtor would have been required to pay in excess of $150,000.00 to the bankruptcy estate in order to keep the house. At this time, it is not known whether the money was paid to the trustee OR the house surrendered. The really ironic and sad part of this story is that if the attorney had simply delayed the filing of the bankruptcy by about 45 days, the home would have been fully protected!! Once again, you need not worry about the debtor. He very well might have saved a few hundred dollars when he retained his attorney!


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