The list goes on. Each of the assumptions above is false.

Some assume that they can do it themselves as “bankruptcy is just filling out forms”.? As a bankruptcy lawyer who winces at what untrained lawyers do in this field, that horrifies me.? Too much is at stake to represent yourself.

Those filing bankruptcy whose income is below the median are excused from the full-blown means test.? In fact, most individuals and families who are above median also qualify for bankruptcy, they just have to jump through more hoops to prove their entitlement.

Until November 1, 2011, the median figures for Bay Area? households based on size is as follows:

• 1 person – $48.009
• 2 people??? $62,970
• 3 people??? $68,670
• 4 people? ? $78,869

For cases filed on or after November 1, the median incomes are

• 1 person???? $47,683
• 2 people???? $61,539
• 3 people???? $66,050
• 4 people???? $74,806

The data for each state, now and next month, is found on the U.S. Trustee’s site.

If you are preparing to file, consider immediately how these changes effect you.? The bankruptcy process is easier if you are below median.? There’s a $4,000 difference for a household of four depending on where your bankruptcy case is filed on Monday, Oct.31 or Tuesday, November 1.

Then we have to ask ourselves, is this any way to run a legal system?

Image courtesy of luxpim

Other professionals should know better than to? advise people about the workings of bankruptcy.? And if they don’t know better, they should be made to pay, in? some exquisitely painful way, for the harm they inflict.

The terrified client in my office was told by her accountant that if she filed Chapter 13 to save her home, the court would not allow her to buy prescription dog food for an ailing 16 year old pet!? Further, the accountant went on to declare that in Chapter 13, the debtor could pay only for housing, food and gas:? nothing more.? No maintenance for the house, no insurance, no clothes, no medical care.

Of course, the accountant was dead wrong. Articulate but wrong.? So I explained the operation of Chapter 13, how the means test works, and the balance between the debtor’s reasonable living expenses and the claims of creditors.? And assured the client that she can provide for her treasured pet for the balance of its life.? Then I fumed.

I’m resigned in the age of the internet that new clients have encountered lots of bad information on the web.? There is no competency examination before anyone with a browser and an internet connection can opine on any subject.

But the source of this utterly distorted information holds a professional license in another field;? that license gave apparent authority to the tales of horror she told my client.? How was the client to know it was tripe, pure tripe?

It took me two hours to find and eradicate the externally caused fears in my client and the self generated terrors she’d nurtured based on bad information.

Can I count on my readership to bail me out of jail if I find the accountant providing worthless and harmful bankruptcy advice?

Image courtesy of Sandeep Thukral

I’ve adapted.? Chapter 13 became more like the alternative dumping ground if the means test closed off Chapter 7.? Often, the differing allowable deductions on B-22C meant the debtor foreclosed from 7 made minimal payments in 13.

But what galls me these days is the impact of the 9th Circuit BAP decisions of Smith and Martinez which disallow deductions for debt contractually due in the upcoming 60 months on liens to be stripped in the Chapter 13 and for property to be surrendered.? The result is that Chapter 7 becomes more attractive because there, the prevailing case law hews close to the statutory language that allows means test deduction for debts due over the life of a Chapter 13 plan.? What a blow to the sponsors of BAPCPA who were intent on forcing more debtors into Chapter 13 repayment plans.? (This has to be the only time I’ve mourned the thwarting of the intentions of the? BAPCPA proponents.? Remember the line from the Grinch Who Stole Christmas that the Grinch’s heart was just so many sizes too small?)

Very soon after BAPCPA was effective, I argued the Pak case to the BAP concerning whether the statutory look back period in B-22 was conclusive when the debtor’s future income was not only different but larger.? I argued that the law was to be applied the way it was written:? that Congress, in its infinite wisdom (and I tried not to giggle) thought it could write a formula to find the “can pay” debtors and that it intended to cut off judicial discretion to assess the allowance of expenses or the income to be available to fund the plan.? I lost and came away after oral argument with the sense that the judges on the panel wanted the old days back, when their judgment and good sense were the last word.? That was a perfectly fine world, but not the world after enactment of BAPCPA.? (Kagenveama from the 9th Circuit some months later vindicated the argument I made unsuccessfully to the BAP.)

With Smith and Martinez, I again sense that the BAP is chafing at the idiocy found in? BAPCPA. ? I chafe too, but I don’t want to see a legal atmosphere where the words of the statute can be ignored if the judges see a way to “get” a debtor or to return to a world where their judgment is valued.? I treasure predictability, and if? BAPCPA gets applied as written(mean though it is), then I’ll figure out how to get my clients the best deal available under the law.? If however we have courts finding interpretations that carry them back to preBAPCPA days, then I feel like the Light Brigade: ” canon to the right of them, canon to the left of them…”? hoping I can ride boldly and well,? into the mouth of hell,…

In the mean time, I’m filing more Chapter 7′s.