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BAPCPA Case Roundup

Courtesy of King Bankruptcy Media
In re Robinson, 06-10618-SSM (Bankr. E.D.Va. 2007)
Fees Reduced: Failure to Provide “Clear” Fee Agreement

Citing §528(a)“s “requirements for debt relief agencies” the bankruptcy court severely reduced a chapter 13 attorney”s fees because his fee agreement, while “detailed and comprehensive” was apparently too dense and hard to read (visually dense, small type, disorganized). The court basically held that if a consumer didn”t know what to expect they would probably think that the $3,000 fee prominently displayed in the document was all they would ever have to pay.

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In re Gutierrez, 356 B.R. 496 (Bkrtcy.N.D.Cal. 2006)

Fees Disgorged: Failure to Follow BAPCPA Disclosure or Written Fee Agreement
Bankruptcy Court found that debtor”s attorney failed to provide “Bankruptcy Truthfulness Notice” prescribed by §527(a)(2) within 3 business days of the first offer of bankruptcy assistance. Court ordered $700 retainer disgorged plus $675 in legal fees. Debtor”s attorney was also accused of failing to provide the disclosure required by §342(b)(1) (describing the difference between various chapters) within 3 days of first offering assistance, but the court ruled that disclosure was adequate as long as it was given prior to the filing. Finally, Court held that attorney failed to provide written fee agreement within 5 business days of first consulting with the client as required by §528(a)(1).

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In re Ott, 343 B.R. 264 (Bkrtcy.D.Colo. 2006)
Case Dismissed Due to Attorney”s Failure to File Payment Advices

Debtor failed to file “payment advices” within 45 days of filing the petition as required by per §§521(a)(1)(B)(iv) and 521(i). Debtor’s counsel informed court he may have inadvertently failed to inform debtors of the requirement. Case was nonetheless automatically dismissed (as required by the BAPCPA). Debtor moved for relief based on counsel’s mistake. The Court observed that by passing the BAPCPA Congress had determined that debtors in bankruptcy were “the moral equivalent of shoplifters” so the Court could not extend the 45-day deadline (See Judge Keith Lundin’s treatise on Chapter 13 — dismissal is automatic and requires no action).

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In re Ginsberg, 354 B.R. 644 (Bkrtcy.E.D.NY 2006)
Case Dismissed Due to Attorney”s Failure to Order Credit Counseling
Debtor filed a Chapter 7 case but was not advised by Counsel to complete credit counseling as required by §109(h) or, in the alternative, to file a certificate of exigent circumstances to extend the time in which to get counseling or seek a permanent exemption based on disability, etc. On the date the Court issued an order to show cause why case should not be dismissed, the Debtor completed credit counseling and filed a certificate. The Court nonetheless dismissed the case and promptly hung the Attorney out to dry, noting that: “… if a debtor suffers adverse legal consequences as a result of attorney error the debtor”s recourse is against the attorney …” Ouch.

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In re Nichols, 2007 WL 456635 (Bkrtcy.S.D.N.Y.)
Debtor Not Punished For Attorney Failure to Seek Waiver of Credit Counseling Requirement
Attorney filed debtor’s petition using outdated forms and failed to indicate that debtor had completed pre-petition credit counseling; attorney then failed to seek extension to complete counseling. Trustee moved to dismiss. Court said that it construed §109(h) to provide that credit counseling must be completed and submitted within 45 days of filing and debtors had reasonably relied on their counsel (which had misconstrued the provision).

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