Don’t Pay Your Bankruptcy Lawyer With Post-Dated Checks

14 Jul Don’t Pay Your Bankruptcy Lawyer With Post-Dated Checks

So you’ve found the cheapest bankruptcy attorney in the market. For only the price of $250.00 and the court costs, he’ll file your case provided you give him several post-dated checks for the balance of his fees. So you can file now and pay later. Great!!! (For you, not for him – read on to see why.)

A Florida Bankruptcy Court recently ruled that the practice of accepting post-dated checks in a Chapter 7 Bankruptcy case violates the law on several levels. The law firm has been ordered to stop the practice of collecting fees after a bankruptcy has been filed, to return all un-cashed post-dated checks for payment of fees and refund any money collect after the bankruptcy from clients.

First, the act of accepting the post-dated checks creates a claim or debt that is stayed by the filing of a bankruptcy. So when the checks are later deposited for payment, the act of collecting on the checks is a violation of the Automatic Stay. This makes perfect sense. When you write a check, that piece of paper is a contract to pay and an order to your bank to pay that contract. After a bankruptcy is filed, the Automatic Stay prohibits any attempt to enforce a contract without getting permission of the bankruptcy court first. So every time the attorney deposited a post-dated check, he was violating the bankruptcy stay.

Second, when the attorney waited to deposit these checks after the discharge entered, he violated the discharge. The discharge is a permanent stay against the enforcement of a contract or obligation to pay.

Third and most importantly, creating the obligation to pay the lawyer after the filing of the petition creates an irreconcilable conflict of interest because he cannot be both a creditor in the case and the attorney in the case. Common sense says if the attorney is owed money in the case, why should he use his best efforts to push the case to a discharge because that will eliminate any possibility of ever getting paid.

The problem here is that the practice really works to the disadvantage of the client. The attorney is encouraging the “buy now-pay later” attitude that caused the financial problems in the first place. The client becomes a debt-slave to the attorney when the client should be getting a fresh start instead. The attorney is taking advantage of the client who does not know better.

Sure, filing bankruptcy is expensive. A quality bankruptcy lawyer works very hard to get the best for his client. But when you shop for an attorney based solely on price, you will get what you paid for. And that can include a boatload of trouble for you in the future.

So if you can find a lawyer who will file a Chapter 7 bankruptcy and wait to get paid by post-dated checks after the case is filed, hire him! Then make sure you never pay him another cent because the Florida Bankruptcy Court says you have no requirement to do so.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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