Creditors threatening to throw you in jail?

There seems to be a sudden outbreak in the number of panicked phone calls I’ve gotten from clients, complaining that their creditors are threatening to have them thrown in jail.
There are civil offenses and criminal offenses. Criminal offenses are characterized as being punishable with jail or prison time. Civil offenses, in comparison, cannot. Failure to pay a debt is not a criminal offense. Rest assured, therefore, that your creditors cannot have you thrown in jail for failure to pay a debt. It’s a cheap scare tactic.
On the other hand, fraud is a criminal offense. Difficult for prosecutors to prove in many cases, but if one of your creditors is alleging fraud and there’s some merit to it, then you might have something to worry about. Still, you can’t just be arrested out of the blue. Criminal charges have to be filed, first. If it gets that far (and it rarely does) then you would do well to avail yourself to a criminal attorney.

Debtors contacting the trustee or court when represented by counsel.

This issue seems to be coming up more and more often. I think, ever since the hearings for Chapter 13 debtors in Appleton and Oshkosh got moved to Wittman Airport, people have been using the hearing location as a reason to question the legitimacy of the trustee. So we’re starting to see more and more people who are distrustful of the trustee and demanding to speak to him directly. And then, of course, you get the garden variety client who sees the court as having more answers for them than their lawyer, and so they want to contact the court or the trustee directly for that reason.
If you are represented by counsel, you should never contact the court or the trustee directly. Your attorney is your liaison to those parties. Any questions you have need to go through your lawyer.
This is not about your lawyer hiding things from the court. Trust me, if you have a complaint about your attorney, or if you think your attorney is not communicating effectively, you have several options, but talking directly to the trustee or court is not the way to do it.
Why? There are two reasons debtors are asked not to contact trustees or judges directly. The first and most obvious reason is: they’re not your lawyer! They do not represent you, and they do not represent your interests. They cannot offer you legal advice.
The second reason is related to the first, which is: trustees and judges don’t want to hear from you if you have a lawyer. That’s what the lawyer is for. Again, if you feel your lawyer is not communicating effectively on your behalf, fire the lawyer and get a new one. The courts get very irritated when they receive phone calls from people who are represented by attorneys. If you’re going to be proactive and call a judge directly, then you’re basically telling everyone that you don’t need your attorney. And most lawyers I know (including myself) will immediately withdraw as counsel if you start communicating directly with the court.
In short, if you’re not satisfied with the attorney you’ve hired, you have several options for recourse, but contacting the courts directly is an inappropriate way to do it and can land you in trouble.
Also, for those of you who are having your 341 hearings at Wittman Airport in Oshkosh – I assure you, it’s all legit. The trustee is someone appointed by the Department of Justice. Hearings are being held at the airport because it is near the trustee’s office, largely unused, vacant, and finding available meeting space in other locations is hard to come by. There is no need to distrust the trustee!

Issue Spotting and Relevance

Continuing on this theme of why we, as lawyers, do what we do… Today, I want to briefly discuss issue-spotting and relevance as it pertains to bankruptcy.
Bankruptcy is a difficult issue for most people. They feel a lot of embarrassment or damaged pride. For many of my clients, their instinct is to tell me their entire life story, including all the reasons that led up to their financial misfortunes, and why they feel they need to file for bankruptcy. And most of the time, I let them, especially during the initial consultation. A wise attorney will let their clients talk and talk at length at the beginning to flush out as many potential issues as possible. When our clients give a narrative, sometimes they tell us important things that might not have been picked up from our standardized interview questions – often because the terms of art we sometimes use in our interviews doesn’t trigger certain memories in the client.
Many people think that lawyers learn what the law is when we go to law school. Not really. The real gift we receive in law school is training in issue spotting and knowing what facts are relevant (and which facts are irrelevant). Most people under-appreciate this fact, and that’s why a lot of people think that if they crack open a code book, they can represent themselves, and that’s not really true.
When a client tells me their life story, about 95% of it winds up discarded as irrelevant. As lawyers, we are trained to know what issues may impact bankruptcy, and which facts about a client’s case might trigger those issues, and which ones won’t. This can become a point of friction between a client and his lawyer – when they can’t figure out why the lawyer isn’t making certain arguments on the client’s behalf – the client doesn’t realize that the argument goes nowhere in a legal context.
In any legal scenario, you need to know what the standards and legal rules are. In bankruptcy, it’s generally a checklist of meeting certain qualifications, and the only facts that are relevant to the bankruptcy are facts that prove the debtor meets those qualifications. This is why I famously tell all of my clients, prior to their 341 meeting, to answer the trustee’s questions directly and to not tell their life-story. In 99% of cases, the circumstances that led someone to need to file for bankruptcy are irrelevant. In the 1% of cases where the circumstances are relevant, we can usually spot that when we pull the credit report or when you try to have a debt discharged that was incurred fraudulently. At any rate, our interviews are designed to flush those issues out early.
But let’s step out of the bankruptcy context for a moment and look at personal injury. To prove negligence, the standard is that the cost of precautions has to be less than the severity of the injury multiplied by the likelihood of the injury. So in a case where a landowner failed to put up a sign reading “Beware of Falling Boulders” to warn passers by of the same, the cost of the sign is relevant, the doctor’s report of the severity of injuries sustained by having a boulder fall on your head is relevant, and the frequency at which boulders have been falling is relevant. The fact that the landowner is a “mean guy” who yells at small children – not so much.
But this is why having a lawyer is so invaluable. We might not always know what the law is, but we know how to research. We know what the legal standards are and who has the burden of proof. We know which facts are relevant to proving the legal standard, and which are not. And we usually have a pretty good idea of whether your particular case and facts can meet those legal standards, assuming the judge isn’t having a bad day!
Anyhow, just to re-summarize my point. A lot of people think that if they can make the judge sympathize with them and give their sob story, that alone will help them win their case. That’s hardly ever true. Justice is predicated on a system of objective reasoning, and while it might not always feel like that is what’s happening, most players in the judicial system strive for that goal. We do our best to adhere to legal standards, and many times, what you think is important might be completely irrelevant to proving your case.

Case Law, Precedent, & Strategy

It’s not every day that I go to bat, defending the honor of other attorneys. But in recent weeks, I’ve received a few complaints from clients who don’t understand why other lawyers that they have talked to won’t take certain cases, whether it’s a personal injury or malpractice claim, or some legal theory in bankruptcy law that they want to push.
While it is true that we, as attorneys, have a responsibility to our clients to represent their interests and be fierce advocates for their positions, it does not mean that we have to test out every theory that one could possibly dream up. There are several reasons why we might pass on litigating certain issues. One of them, frankly, is business reasons. It costs us time and money to litigate issues, and we don’t always have the resources at our disposal to invest in a case that we are reasonably certain is a loss right from the get-go.
But there are also less selfish, altruistic reasons why we might be picky about which cases we litigate. I’ll give you a great example. Recently, I had a case come across my desk of illegal discrimination when it came to bankruptcy and employment. As far as I was concerned, it was a clear-cut case of discrimination. I collected as many of the relevant facts as I could, then set to work on researching the case law and the standards that I would have to prove to win the case. When I dug around in the case law, I discovered two things. First, that there was very little case law on the subject, and even less that was binding on my district. Second, that the case law that did exist imposed Draconian standards to prove the discrimination and obtain any sort of compensation for it.
Although I felt strongly about the case and hoped I could get a judge to reverse the case law, I had to pass on litigating this particular case because the fact scenario was not ideal. You see, even if a judge personally feels one way about a case, in a common law system like ours, judges will resist deviating from established case law to the extent possible, and will hang their hat on anything. That’s why when you’re litigating novel or controversial issues, attorneys ideally like to look for “the perfect case” to use as a test pilot. What happens if I use a less-than-perfect case as a test pilot? Not only would my client have a higher chance of losing his case, but remember what I said earlier about there being next to no case law on the subject that would be binding in my district? If I pursued the case, then I would have created binding case law. And in less than perfect conditions, the case law that I would have established would probably not help clients who follow in the future with similar problems.
And while I’ve brought up the subject if precedence in my district… For those of you who like to do your own legal research, bear in mind that in bankruptcy court, there are only three courts whose decisions bind your judges. If you find case law from a different court, that decision, though persuasive, is not binding. Bear that in mind before you run to your lawyer excited over something you find on the Internet that you think helps your case. I promise you, we know how to look up case law, too, and we know which cases are binding and which ones are persuasive. For the record, cases that bind the judges in the Bankruptcy Court for the Eastern District of Wisconsin come from (1) the District Court for the Eastern District of Wisconsin, (2) the 7th Circuit Court of Appeals, and (3) the U.S. Supreme Court. Also remember that bankruptcy operates in the federal court system, not the state court system. Decisions from Wisconsin state courts do not bind our judges, either.
And now for something different. Down in Milwaukee, there is a Pro Se Help Desk for debtors who cannot afford attorneys, headed up by Chapter 7 trustee Andrew Herbach. The help desk is staffed by attorneys, working pro bono who assist individuals in completing their schedules (however, they cannot offer legal advice in this setting). I am pleased to announce that me and a few of my colleagues are now in discussions to bring a similar program to the Green Bay area. Services would likely be restricted to individuals who are at or near the federal poverty guidelines. Likely, the budget management seminar that I developed (which has been on hiatus for a little while) would be integrated into that program. Although we would be offering the Pro Se Help Desk to help those less fortunate, we do have to remind you that it is still a good idea to hire an attorney if you intend to file for bankruptcy. Although many of the forms are relatively simple to navigate, it is important to have legal representation, at minimum for planning your exemptions (Schedule C) and preparing the Means Test (Form B22A).