UST v Upright Law, In re: Bishop, an index of the blog posts on the case

I have prepared a long series of blogs reprinting and reviewing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester). In the case the US Trustee through the Department of Justice is moving to bar the Chicago firm from practicing bankruptcy in its district, which includes the city of Buffalo.

Note that if the hyperlink does not work, that means the blog has not been published yet!

Click Here to Read Part 1.

This includes the Header of the Case and the UST’s introductory statements.

Click Here to Read Part 2.

This includes statements/introductions to the parties involved.

Click Here to Read Part 3.

Where the UST describes Upright Law and how their law practice structure.

Click Here to Read Part 4.

 

Click Here to Read Part 5.

 

Click Here to Read Part 6.

 

Click Here to Read Part 7.

 

Click Here to Read Part 8.

 

Click Here to Read Part 9.

 

Click Here to Read Part 10.

 

Click Here to Read Part 11.

 

I am intrigues by this case, being affiliated with Upright. Obviously I want to keep up-to-date on what happens next!

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

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In Re: Bishop – how does Upright Law practice law (per the US Trustee)?

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

 

You can read all of the parts (and by the time we are done there will be many) at this hub.

 

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

***

In this part of the Complaint the US Trustee describes what Upright Law is and how they practice. Remember this is a complaint against them trying to bar them from practice in the Western District of New York; they are not about to shower it with praise…

Note Paragraph 25 & 26: in the Southern District of Illinois the matter is different – the local attorney contacts the client right away – within a day or two – to introduce himself or herself, review the client’s situation, discuss the documents needed, the credit counselling classes required and their costs and answers questions. I encourage Upright clients to call me at any time during the process and even take creditor inquiries.

***

(the filed Complaint continues…)

 

  1. Upright’s Business Model

 

21) Upright solicits both prospective debtor clients and local attorney “partners” over the Internet, using the website “www.uprightlaw.com.” On its current website, it purports to have “Local Attorneys Nationwide” and provides that “all legal services are provided by affiliated and related entities.” The website goes on to provide: “By an Act of Congress and the President of the United States, UL/ACL is a federally designated Debt Relief Agency. Attorneys and/or law firms promoted through this website are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code.” It also contains a link to “Disclosures required under the U.S. Bankruptcy Code.” Finally, the website states that Edmund Scanlan is the “CEO” or “Administrator” of every entity allegedly providing the legal services to prospective debtors. On information and belief, Mr. Scanlan is not a licensed attorney.

 

  1. Solicitation of Debtor Clients

 

22) Upon information and belief, when a prospective debtor reviews the Upright Law website, he or she is asked to provide his or her contact information to learn if they qualify for bankruptcy relief. Thereafter, Upright agents — located in Chicago – call the prospective debtor. These agents, known as “inside sales representatives,” “closers,” “first responders,” or, at other times, “senior class consultants,” are not attorneys. These non-lawyer agents conduct the initial interview, ask the prospective debtor questions about his or her financial situation, and determine if there is an apparent ability to pay for legal services and a desire to “make a life-changing decision” regarding his or her financial circumstances. If the answer is yes, these non-lawyers give the prospective debtor legal advice, including, but not limited to describing the differences between a chapter 7 and chapter 13 proceeding. After advising the prospective debtor of the available options, the “closer” will ask the potential client to “self-select” what chapter is the best fit.

23) Following this “self-selection,” the “closer” will gather basic intake information such as income, sources of income, household members, expenses and assets and enter this data into Upright’s software. Based on this information, the non-lawyer consultant will advise the client whether or not to file bankruptcy and under which chapter, quote a fee to the prospective debtor client, and ask them if they wish to hire the firm.

24) Upon information and belief, if the prospective debtor agrees to hire Upright, the “closer” asks the prospective debtor to provide bank account information, which Upright can use to withdraw bankruptcy-related fees and costs. Generally, if the prospective debtor cannot pay the fee immediately, automatic withdrawals are set up to debit the prospective debtor’s account over time.

25) Upon information and belief, after an opportunity for discovery, the evidence is expected to show that in 2015, Upright did not refer prospective debtors to a local “limited partner” licensed to practice law in the relevant local jurisdiction, such as New York, until the prospective debtors had paid Upright in full. During this process, the prospective debtor is told to contact Upright in Chicago for questions or concerns. Only after the fees are paid in full, which can take several months, depending on the installment plan, and the client’s particular financial situation, is the client “handed off” to the local partner attorney to start collecting documents and preparing the actual petition and completing their due diligence.

26) Representatives from Upright have recently testified before other courts that Upright no longer waits for the client to pay the entire fee, and now cases can be referred to a local partner as early as the day the client first makes a payment to Upright or shortly thereafter so that the partner attorney can set up a “compliance call” with the client. On information and belief, the compliance call averages 15 minutes. During that call or afterwards, the local partner attorney has the discretion to reject the client unilaterally, despite the prospective client not being given any reason to believe they are not represented.

 

  1. Engagement Letters

 

27) Upon information and belief, during this process, Upright electronically provides an engagement agreement to the client to sign via electronic signature. Upon information and belief, Upright does not obtain wet signatures.

28) Pursuant to a partnership agreement with their various local “partners,” the local partner’s signature is affixed to the retainer agreement as well as other documents without the local partner necessarily reviewing the document with the prospective client.

 

 

(end of section reprinting the Complaint)

***

Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

***

Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

New York’s suit again Upright Law (part 2: the parties involved)

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

You can read Part 1 here.

Or use this Index Hub. 

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

***

This part of the Complaint tells us what the US Trustee alleges that Upright did that led to this Complaint. Keep in mind the US Trustee is trying to bar Upright Law from practicing in the district, so they will not exactly be showering them with praise.

“I come to bury Caesar, not to praise him.” Shakespeare, Julius Caesar, Act 3, Scene 2

***

(the filed Complaint continues…)

 

III. BACKGROUND

  1. The Parties

 Mr. Racki

7) Defendant Jason Racki is the debtor’s counsel of record. He represented on the petition that his firm name in this case is Allen Chern, operating out of 140A Metro Park, Rochester, New York. His ECF participant registration form and the docket in this case disclose his firm name as the Law Office of Jason Racki, 10314 Spook Woods Rd, Port Byron, New York.

8) Mr. Racki practices before this Court as a sole practitioner and also purports to be a partner in Upright Law LCC by virtue of a limited partnership agreement.

9) During the relevant period of time for this case, Racki also purported to be a partner of Voight Law or VL.

10) Mr. Racki is a “debt relief agency” as defined by 11 U.S.C. § 101(12A) and he provided bankruptcy assistance to Ms. Bishop.

Upright Law, Law Solutions, Allen Chern and affiliates

11) Defendant Law Solutions Chicago LLC is an Illinois limited liability company that does business as Upright Law LLC (“Upright Law” or “Upright”). It filed articles of organization with the Illinois Secretary of State on October 10, 2008. It is authorized to transact business in Illinois under the following assumed names: Jason Allen Law, LLC; Upright Law, LLC; and Allen & Associates, LLC. On its website, Upright Law lists its headquarters at 79 West Monroe, 5th Floor, Chicago, IL 60603 and, at the time Ms. Bishop contacted it, it purported to have “Local Offices Nationwide.” Upon information and belief, Upright Law has an office in Chicago and no local offices nationwide. It has an intake/call center at its Chicago office.

12) Upright’s connection to New York appears to be through services offered by “Allen Chern Law.” Upright incorporated in the State of New York on January 16, 2014 and does business in the State of New York as “Allen Chern Law” but under the umbrella of the national name “Upright Law” and/or “Upright.”

13) Kevin Chern, an owner and manager of Upright, is an attorney licensed by the State of Illinois to practice law. Chern is not licensed to practice law in New York. 14) Jason Royce Allen, an owner and manager of Upright, is an attorney licensed by the State of Illinois to practice law. Allen is not licensed to practice law in New York.

15) According to Upright’s website, Edmund Scanlan is the chief executive officer of “Upright Law,” and a manager of an entity named Upright Litigation, LLC. According to Upright’s website, “all legal services are provided by affiliated and related entities.” The website states that Scanlan is the “CEO” or “Administrator” of every entity allegedly providing the legal services to prospective debtors.

16) On information and belief, when Ms. Bishop contacted Upright, it employed no lawyers licensed in the State of New York at its Chicago call center.

17) Moreover, Allen Chern Law does not have a have a “brick and mortar” location as required in New York.

18) Upright Law is a “debt relief agency” as defined by 11 U.S.C. § 101(12A) and it provided bankruptcy assistance to the debtor, Ms. Bishop.

Ms. Bishop

19) Ms. Bishop is the debtor in this case and is an “assisted person” as defined by 11 U.S.C. § 101(3) because she has primarily consumer debts and the value of her non-exempt property is less than $186,825. Moreover, Upright’s website acknowledges its federal designation as a Debt Relief Agency.[1]

United States Trustee

20) Plaintiff United States Trustee is a Department of Justice official with standing to file this complaint under 11 U.S.C. § 307.

 

(end of section reprinting the Complaint)

***

Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

***

In this section we meet the parties involved:

James Racki is the partner or affiliate attorney with Upright, as am I and many attorneys across the country.

Upright Law and Allen Chern are a Chicago-based law firm who practice throughout the country.

Joyce Ellen Bishop is the debtor who hired Upright Law initially, then met with James Racki for local representation.

***

Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

[1] On its website, Upright holds itself out as a “debt relief agency helping people file for bankruptcy under the bankruptcy code.” See https://www.uprightlaw.com/terms-conditions

 

Complaint filed to bar Upright Law from practicing bankruptcy in New York (pt 1)

The United States Bankruptcy Court for the Western District of New York (in Rochester) has filed an action against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593, Adversary # 17-2007.

The Western District of New York is in the western part of upper New York and includes the city of Buffalo.

Note there has been no ruling on the case yet, only this Complaint and Upright’s response – no ruling has been made for or against Upright yet! I will keep you posted as any opinions and rulings are made.

This will be a multi-part blog, so use this hub to navigate through the Complaint and other court documents.

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois; I am paying particular attention to this case.

 

A ruling against Upright Law in the WDNY will likely not affect their reputation in the SDIL, but I will have to be particularly careful in representing their/our clients properly so that these issues do not take place!

 

Note that Upright has been brought before a District Court in Ohio regarding their fees. But here we are not talking about questioning what they charge – but barring them from practicing law in the WDNY Bankruptcy Court!

 

The first section of the Complaint states what the United States Trustee hopes to accomplish, the Summary Statement shows us the facts that the Trustee will try to prove, and the Jurisdiction and Venue section tells the Bankruptcy Court that they are given the right and ability to hear this Complaint under the law (as opposed to a county circuit court or a tax court).

 

COMPLAINT

William K. Harrington, United States Trustee for Region Two (the “United States Trustee”), by counsel, files this complaint to:

(i) cancel the debtor’s retainer agreement with Upright Law, LLC, and/or Law Solutions Chicago, LLC, and/or Allen Chern Law, and Jason Racki;

(ii) enjoin the debt relief agency defendants from committing future violations of 11 U.S.C. § 526;

(iii) impose appropriate civil penalties against the debt relief agency defendants;

(iv) prohibit Jason Racki, Upright Law, LLC, Law Solutions Chicago, LLC, Allen Chern Law, and Allen Chern, from practicing before this court whether directly or indirectly;

(v) to order damages and/or sanctions as may be warranted and

(vi) take such other action as the Court deems necessary to deter such misconduct and similar schemes in the future.[1]

  1. SUMMARY STATEMENT

This case exposes serious abuses of the bankruptcy process by a multijurisdictional internet law firm doing business as Upright Law. Ms. Bishop became a victim of Upright’s abusive practices when it failed to explain various documents executed by Ms. Bishop, including documents authorizing telemarketer calls as well as a power of attorney on Ms. Bishop’s behalf; when it failed to fully explain what services were included in the quoted fee and what services were add-on fees; and again when it failed to advise Ms. Bishop of New York law regarding stale-debt and mortgage deficiencies and the fact that this law would most like render Ms. Bishop’s bankruptcy filing unnecessary.

Upright operates through a series of “partnership agreements” with local “partner” attorneys who, upon information and belief, are responsible for almost everything with regard to the Petition, Schedules, and SOFA except for the collection of fees and disclosure of those fees, which is completed by Upright. Upright purports to help a debtor self-select a chapter in which to file, quote the prospective debtor a fee, and gather basic information such as bank accounts, household size, income, and amount of debt. Depending on the prospective debtor’s financial situation, the payment of Upright’s total fees can take several months. Only after all fees are paid is the debtor’s file “handed off” to the “local partner” attorney, at which point the attorney prepares the majority of the documents filed with the Court. It appears that little or no thought is given to the legal ramifications in the interim.

In this case, the local partner attorney, Mr. Racki, and Upright failed to perform the basic due diligence required by an attorney of record. As a result, Ms. Bishop’s schedules and other filed documents contained numerous material errors and omissions, including, but not limited to, the omission of a vehicle titled in Ms. Bishop’s name, the wrong household size on the means test form, inaccurate amounts of monthly income received from work and social security throughout the filed documents; inaccurate disclosure of the total fees paid by Ms. Bishop, what services were excluded and when those fees were paid and who received them. As counsel for the debtor, Mr. Racki and Upright each bear responsibility for filing accurate and complete documents. Most critical, however, is that due to Upright’s delay in referring Ms. Bishop to competent New York licensed counsel to discuss her scheduled foreclosure debt and whether bankruptcy relief was necessary in light of the age of her debt and New York State Law regarding debt resulting from a foreclosure, it is unclear if Ms. Bishop received adequate legal advice before filing.

  1. JURISDICTION AND VENUE

1) This adversary proceeding relates to the chapter 7 case of Joyce Ellen Bishop, case number 16-20593 (the “Bishop bankruptcy case”), pending in the United States Bankruptcy Court for the Western District of New York, Rochester Division.

2) The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157 and 1334.

3) This complaint is brought pursuant to 11 U.S.C. §§ 105(a), 307, 329 and 526 – 528; Fed. R. Bankr. P. 2016 and 2017; and the court’s inherent power.

4) Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

5) This is a core proceeding pursuant to 28 U.S.C. § 157(b).

6) The United States Trustee has standing to file this motion under 11 U.S.C. § 307 and Federal Rule of Bankruptcy Procedure 2017.

***

Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

***

Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

[1] The United States Trustee reserves his right to supplement and or amend this pleading, seeking further relief should the discovery of new evidence or facts warrant.

 

Upright Law fees excessive in ND Ohio? (full opinion)

Read commentary of this opinion here.

UNITED STATES BANKRUPTCY COURT, NORTHERN DISTRICT OF OHIO, WESTERN DIVISION

In Re: Adam Vandesande, Debtor. Case No. 16-33708; Chapter 7

JUDGE MARY ANN WHIPPLE

After reviewing the Disclosure of Compensation Statement of Attorney for Debtor (“Fee Disclosure’) filed by Troy Hawkins, Counsel for Debtor, the court set a hearing on the reasonableness of attorney compensation given the exclusions set forth in the Fee Disclosure, as well as the cost of addressing excluded matters and the proposed hourly rate for doing so.  A response to the court’s hearing order was filed by the United States Trustee (“UST”).  Debtor and Attorney Hawkins appeared at the hearing in person and an Attorney for the UST appeared by telephone.

Counsel’s Fee Disclosure, under Rule 2016(b) of the Federal Rules of Bankruptcy Procedure, states that Troy Hawkins, Allen Chern Law LLC, received $1,250.00 for legal services on behalf of Debtor in connection with this Chapter 7 bankruptcy case.  It states that the services to be rendered include all legal services “to reasonably achieve the debtor’s objectives” unless specifically excluded in paragraph seven of the document. Paragraph seven then lists fifteen matters that are excluded, including matters that are basic Chapter 7 bankruptcy services often essential to achieving the goal of a fresh start, such as lien avoidance motions, motions for relief from stay, reaffirmation agreements, motions to redeem personal property, and amending schedules or other documents required to be filed with the petition. The Fee Disclosure further states that, with certain exceptions subject to a contingency fee, attorney fees for performing excluded services will be billed at the rate of $395 per hour.

Allen Chern Law, LLC, is specified as an affiliate of Upright Law, a law firm based in Chicago, Illinois. At the hearing, Attorney Hawkins explained that the fee agreement signed by Debtor was prepared by the Chicago firm for national use and sets forth the excluded services that he lists in his Fee Disclosure.

Attorney Hawkins represented to the court that he included them in the Fee Disclosure in order to be consistent with the signed fee agreement, but that, in practice, he does not and will not exclude basic bankruptcy services in Chapter 7 debtor representations, including in Debtor’s ongoing case. He also agrees that $395.00 per hour for the excluded services is unreasonable in a consumer Chapter 7 bankruptcy case in this jurisdiction.

Attorney Hawkins represented to the court that the firm will use a new fee agreement that provides that “[s]ervices include all representation to complete Client’s legal matter, except Agreement does not include representation in any objection to discharge, adversary proceeding or any heavily contested matter or Services that could not have been contemplated after reasonable diligence by Firm when this Agreement was signed (“Additional Services”).” He further represented that no more than $250.00 per hour would be charged for any Additional Services.

Under 11 U.S.C. § 329(b), if the compensation of debtor’s attorney “exceeds the reasonable value of any such services, the court may cancel any such agreement . . . to the extent excessive. . . .” The court finds that the fee agreement signed by Debtor provides for compensation that exceeds the reasonable value of services set forth therein because of the exclusions for basic bankruptcy services.  [1]

Footnote [1]:  After the hearing, the court had the opportunity to review the entire fee agreement signed by Debtor that was offered as Exhibit A at the hearing. In addition to the long list of excluded services and the excessive hourly rate to be charged for excluded services set forth in that agreement, the court has additional concerns regarding its terms, including an additional $100.00 fee for each “in office visit” with counsel. The court is at this time addressing only the issues raised in its hearing order, with no other particular issues with the Fee Agreement having been raised at the hearing. The $100 additional fee for an office visit is, however, one that the court construes as within the cancellation of terms set forth in this order.

Nevertheless, based on Attorney Hawkins’ representations to the court and Debtor’s testimony at the hearing, it finds that the $1,250.00 paid to him by Debtor is not excessive and is a reasonable fee in this case, provided that no additional hourly rate is charged for basic services needed to adequately represent him in this Chapter 7 case. The fee agreement signed by Debtor is cancelled to the extent that it does not require counsel to include within the $1,250 attorney fee paid by Debtor the following services: all representation to complete Debtor’s Chapter 7 case, except representation in any objection to discharge, adversary proceeding or any heavily contested matter, or other services that could not have been contemplated after reasonable diligence by Counsel when the Fee Agreement was signed, and with the hourly rate for excluded services not to exceed $250 per hour.

IT IS SO ORDERED

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

Upright Law fees excessive in ND Ohio? (summary)

Upright Law fees

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country. Fees are tricky things, and you have to be careful not to charge too much in your district!

Upright Law is a law firm based in Chicago that helps people around the country find relief under the bankruptcy code. In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois. Our attorney fee statement comports with the requirements of the district – some things do require an extra fee (adversary actions challenging your discharge in bankruptcy, for example). That is made clear from the beginning and the court has had no issues with it.

Bank ND Ohio: Decision on Attorneys’ Fees of Upright Law in Ohio

Allen Chern Law, LLC, is specified as an affiliate of Upright Law, a law firm based in Chicago, Illinois. At the hearing, Attorney Hawkins explained that the fee agreement signed by Debtor was prepared by the Chicago firm for national use and sets forth the excluded services that he lists in his Fee Disclosure.

Attorney Hawkins represented to the court that he included them in the Fee Disclosure in order to be consistent with the signed fee agreement, but that, in practice, he does not and will not exclude basic bankruptcy services in Chapter 7 debtor representations, including in Debtor’s ongoing case. He also agrees that $395.00 per hour for the excluded services is unreasonable in a consumer Chapter 7 bankruptcy case in this jurisdiction.

Under 11 U.S.C. § 329(b), if the compensation of debtor’s attorney “exceeds the reasonable value of any such services, the court may cancel any such agreement . . . to the extent excessive. . . .” The court finds that the fee agreement signed by Debtor provides for compensation that exceeds the reasonable value of services set forth therein because of the exclusions for basic bankruptcy services.

Nevertheless, based on Attorney Hawkins’ representations to the court and Debtor’s testimony at the hearing, it finds that the$1,250.00 paid to him by Debtor is not excessive and is a reasonable fee in this case, provided that no additional hourly rate is charged for basic services needed to adequately represent him in this Chapter 7 case. The fee agreement signed by Debtor is cancelled to the extent that it does not require counsel to include within the $1,250 attorney fee paid by Debtor the following services: all representation to complete Debtor’s Chapter 7 case, except representation in any objection to discharge, adversary proceeding or any heavily contested matter, or other services that could not have been contemplated after reasonable diligence by Counsel when the Fee Agreement was signed, and with the hourly rate for excluded services not to exceed $250 per hour.

 

You can read the entire decision here.

***

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

Riding the Circuit: Benton, IL Part 2; of Beatles, Charlie Birger and Bankruptcy

As a Mount Vernon, Illinois attorney, I travel throughout the state practicing law and meeting with clients on topics ranging from bankruptcy to estate law, from divorce to litigation. In my travels, I enjoy seeing the courthouses of our county seats. Occasionally in my blog I will stop to describe these wonderful buildings and the towns and cities in which they set.

***

Benton is a lucky town: it has two active courthouses. It is the county seat of Franklin County and has the circuit (state) courthouse in the town center. You can read about the courthouse and Benton in general here.

It also has the federal courthouse for the Southern District of Illinois Eastern Division. I have appeared at this courthouse on a near-weekly basis for over 21 years! This is the courthouse in which bankruptcy hearings in the eastern part of southern Illinois are heard.

In these hateful times I am leery of taking photographs and describing federal courthouses. So, the photo in this blog is from the internet – not my own (the photographs from the rest of this series are mine). The following description is from Wikipedia:

“The Benton Federal Building and U.S. Courthouse is located a block from the town square … . Constructed in 1959, the two-story building houses U.S. District and Bankruptcy courts. The Benton Courthouse was constructed in 1959 from steel and block with brick veneer and clip-on aluminum panels.”

For security and safety’s sake I will not describe the interior in detail, but I will say the courtrooms are large and grand – mostly decorated in bright colors (as opposed to deep brown and burgundy walls, for example) – with plenty of seating and stations for the clerks before the large judges’ benches.

The rest of the courthouse is not as ornate as, for example, the federal courthouse in East St. Louis – there is no large echo-y central lobby. Because it is a fairly new courthouse, there are no lines of portraits of former judges or historical features. On the other hand, it is not utilitarian either. It has been my home courthouse for over 20 years and I always feel safe and comfortable there.

It is the courthouse in which I learned of the attacks of 9/11. I never saw so much activity in the building than that day – there were more than the usual (always polite and courteous) guards and bailiffs. Some were dashing through the hallways. The judge (since retired) explained what had happened and said we would get through the docket quickly and then close for the day.

It was also the courthouse in which I was sworn into the federal bar.

I spent that morning at my uncle’s funeral. He died suddenly and was a shock to the entire family. He was beloved by all and we still mourn his passing.

That afternoon, while the family attended the dinner for us sponsored by our local church; I and two other friends/fellow law school graduates drove to the federal courthouse in Benton. We met our sponsor – a law school professor and good friend – and were sworn into the federal bar. The funeral dinner was wrapping up when I returned home.

But just before the swearing in, my friends and I walked through the swinging gate that separated the benches and the attorney tables in the main courtroom. I was the last of the four to walk through. The low swinging door swung back and banged into my left heel – I had not yet made it through the courtroom divider. The force was so great it split the back seam of my dress shoe and broke the skin of my heel through the sock (I did not realize it did that until I got home). It hurt like heck and I limped a bit but I made it through the swearing in. Later, a band-aid  and anti-biotic cream helped heal my heel. My shoe was ruined.

I lost my uncle, I lost a good pair of shoes. I gained a membership to the federal bar.

Hardly an even trade …

No offense to the federal bar, of course. In this courtroom bankruptcy, federal criminal and civil cases are heard. The website for the Northern District of Florida gives a good list: “Federal court jurisdiction is limited to certain types of cases listed in the U.S. Constitution. For the most part, federal court jurisdictions only hear cases in which the United States is a party, cases involving violations of the Constitution or federal law, crimes on federal land, and bankruptcy cases. Federal courts also hear cases based on state law that involve parties from different states. While federal courts handle fewer cases than most state courts, the cases heard tend to be of great importance and of great interest to the press and the public.”

It is one of the few courthouses I call home.

***

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Logan, West Frankfort, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

The Renewable Energy Case: representing more than one client …

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country.

This is a very involved case that I love sifting through. But it basically boils down to an attorney representing more than one client in a matter and creating a “conflict of interest” – he cannot do one thing for one client that may affect or hurt another.

Here is the first part of the case. Honestly? You can see the conflict coming a mile away!

 

UNITED STATES COURT OF APPEALS, TENTH CIRCUIT, Case No. 14-4001

In re: RENEWABLE ENERGY DEVELOPMENT CORPORATION, Debtor.

ELIZABETH R. LOVERIDGE, Chapter 7 Trustee, Plaintiff, vs.

TONY HALL; ELLIS-HALL CONSULTANTS, LLC; SUMMIT WIND POWER, LLC; SSP, a trust, Scott Rasmussen-Trustee; CLAY R. CHRISTIANSEN; DIANE E. CHRISTIANSEN; RICHARD D. FRANCOM; STEPHEN K. MEYER; BONNIE G. MEYER; DOES I-X; Defendants, and SUMMIT WIND POWER, LLC; KIMBERLY CERUTI, an individual, as Third Party Plaintiffs – Appellants, vs.

PARSONS KINGHORN HARRIS, a professional corporation; GEORGE B. HOFMANN; MATTHEW M. BOLEY; KIMBERLEY L. HANSEN; VICTOR E. COPELAND; LISA R. PETERSON; MELYSSA DAVIDSON, individuals, as Third Party Defendants – Appellees.

Appeal from the United States District Court for the District of Utah

GORSUCH, Circuit Judge.

This case has but little to do with bankruptcy. Neither the debtor nor the creditors, not even the bankruptcy trustee, are parties to it. True, the plaintiffs claim they once enjoyed an attorney-client relationship with a former bankruptcy trustee. True, they now allege the former trustee breached professional duties due them because of conflicting obligations he owed the bankruptcy estate. But the plaintiffs seek recovery only under state law and none of their claims will be necessarily resolved in the bankruptcy claims allowance process. And to know that much is to know this case cannot be resolved in bankruptcy court. The bankruptcy court may offer a report and recommendation. It may even decide the dispute if the parties consent. But the parties are entitled by the Constitution to have an Article III judge make the final call. So the district court’s ruling otherwise — its decision to send the dispute to an Article I bankruptcy court for final resolution without their consent — violates the Constitution’s commands and must be corrected.

Conflicts of interest often spell trouble for lawyers. The rules are complex and missteps happen. And at least as the complaint in this case tells it, a misstep happened here. When Renewable Energy Development Corporation (REDCO) found itself facing Chapter 7 proceedings, the bankruptcy court appointed attorney George Hofmann to serve as trustee for the estate. REDCO was in the wind business and its assets included lease options with private property owners who agreed to allow wind farms on their lands. As trustee, Mr. Hofmann was eager to ascertain the value of REDCO’s leases so he consulted another client of his with expertise in the field — Kimberly Ceruti, the owner of Summit Wind Power, LLC. The pair eventually discovered that REDCO had failed to pay some property owners the consideration it owed them. As a result, Mr. Hofmann allegedly concluded that REDCO’s options were unenforceable and even encouraged Summit to pursue its own leases with the same individuals. Which it promptly did.

What started off sounding like a good idea and maybe even a win-win for REDCO and Summit soon yielded a rat’s nest of conflicts. On further study, Mr. Hofmann came to the view that the property owners couldn’t cancel their leases with REDCO in favor of Summit without first giving REDCO a chance to cure its nonpayment. And, in Mr. Hofmann’s estimation, the chance to cure was a valuable opportunity for REDCO and its creditors. So he asked Summit to forgo its new leases in favor of REDCO’s old ones. Summit refused. Things got so testy that Mr. Hofmann, yes, brought an adversarial proceeding in bankruptcy court against one client (Summit) on behalf of another (the REDCO estate).

Unsurprisingly, Summit responded with state law claims against Mr. Hofmann and his law firm, alleging legal malpractice, breaches of fiduciary duties, and a good many other things besides. Mr. Hofmann, by now irredeemably conflicted, was replaced as trustee.

 

This opinion is to be continued!

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, McLeansboro, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also find his website at http://www.mtvernonbankruptcylawyer.com.

 

Bankruptcy FAQs: Can someone refuse giving me credit?

Frequently Asked Questions about Bankruptcy

I help people file for bankruptcy throughout southern Illinois to help eliminate their crushing debt and protect their assets.  For almost 25 years and in over five thousand bankruptcy filings, I answer many questions people have about the process. I thought I would share some of the more common questions here.

“I paid off my loan and now they will not give me anymore credit, can they do that?”

You listed all of your debt in your bankruptcy filing. Some of those bills you wanted to keep paying, which is fine.

You wanted to stay in good standing with that loan company downtown and at first you did not want to even list it on your schedules, but you can’t leave off debt – you can’t tell the court you do NOT owe a debt when you do.

Remember that bankruptcy stops the creditors from collecting on the debt. It does NOT stop you from paying on the debt. You can keep paying the doctor or the loan company (as long as it is a small and reasonable amount).

Once that debt is paid off, though, whether the loan companies will still extend you credit is up to them. No one can force them to keep you as a customer. You may face this situation:

“OK, I’ve paid off my loan. May I have another advance>”

“No.”

“But I paid you off!”

“Yes, and thank you, but we aren’t going to give you any more credit.”

Loyalty should be a two-way street, but that is not always the case. If the local loan company doesn’t want you as a customer anymore, then don’t give them your business. And tell your friends not to, either. Seriously. Don’t make loyalty a one-way street.

***

About the author:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (probate, wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Salem, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

The Casner case: missing critical bankruptcy deadlines

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country. This case shows that a debtor cannot sit on his rights, a skilled bankruptcy attorney will have the implements in place to avoid critical deadlines!

Click here for commentary on this opinion.

 

In re: MARY EVELYN CASNER, Debtor. Case No. 16-00662 (Chapter 7)

MEMORANDUM DECISION AND ORDER

On January 13, 2017, Specialized Loan Servicing LLC filed a motion for relief from the automatic stay regarding the debtor’s real property located at 1332 Independence Avenue, SE, Washington, DC 20003. The debtor’s attorney seeks to continue the hearing on the motion to February 23, 2017.11 Under 11 U.S.C. § 362(e)(1), the automatic stay would terminate on February 13, 2017 (after the passage of 30 days after the filing of the motion for relief from the automatic stay), unless the court, after notice and a hearing, orders the automatic stay to continue pending conclusion of a final hearing.

___________________________

The debtor’s opposition to the motion hints that there is equity in the property. However, the debtor has claimed the property exempt under a District of Columbia statute that permits a debtor to exempt the entirety of the debtor’s residence.

The debtor does not actually assert that there is equity in the property, and a close examination of the debtor’s opposition reveals that there may be no equity. The debtor scheduled the property as worth $833,860 and does not state what she now believes the property is worth, aside from stating that “the stated valuation of the subject property is way below compatible properties sold in the neighborhood which is attached as Exhibit A.” According to the information in that exhibit, the lowest sale price of a neighboring property is $907,000. One ofthe properties listed in the attached exhibit, located at 1311 Independence Ave., SE, on the block across the street from the debtor’s home, sold for $988,500, an amount that, less typical closing costs, would not suffice to satisfy the debt in this case.

The mortgagee in this case claims that the debtor owes $1,564,690.77. The debtor asserts that the mortgagee has overstated the amount owed because “the arrearages calculated by Movant includes principal payments which are added back to the outstanding balance thereby overstating the principal amount due[.]” The debtor also questions certain fees assessed and included in the arrearages.

The debtor does not state what the correct amount owed is, but even if the entire $613,996.72 of arrearages were subtracted from the amount the mortgagee says is owed, $1,564,690.77, a debt of $950,694.05 would still be owed. If the debtor’s property were then sold at the same sales price as that of the nearby property at 1311 Independence Ave., SE, $988,500, factoring in closing costs charged to the debtor that would likely far exceed 4%, the debtor would likely realize less than $950,694.05; thus, there would be no equity in the property. Under 11 U.S.C. § 362(d)(2), relief from the stay would be appropriate because there would be no equity in the property and, in this chapter 7 case, the property obviously is not necessary to achieve an effective reorganization.

Although the time for objecting to the debtor’s exemptions has not expired, the chapter 7 trustee, who represents the interests of the estate and of unsecured creditors in this case, has not seen fit to file a timely opposition to the motion for relief from the automatic stay. If, for some reason, the debtor’s exemption of the property were to be disallowed, the trustee would still be entitled to seek to sell the property, and could seek injunctive relief against any foreclosure sale so that the trustee, using a real estate broker, could realize a higher sales price then might be realized at a foreclosure sale.

The debtor does not represent the interests of the estate and creditors, and having claimed that the property in its entirety is exempt, the debtor is not in a position to contend that the interests of the estate and of unsecured creditors warrants denying relief from the automatic stay. The Bankruptcy Code does not provide to a debtor in a chapter 7 case any tools to modify the rights of a creditor holding a consensual lien on real property. The automatic stay comes into effect when the petition is filed and it maintains the status quo while the parties and the court evaluate whether there is any bankruptcy-related reason to keep the automatic stay in place for the duration of the bankruptcy proceedings. When, as here, no such reason has been articulated, the automatic stay should be lifted.

In any event, the automatic stay has expired in this case.

As the debtor’s petition acknowledges, she filed a prior case in this court, Case Number 16-00333. That case was dismissed in September 2016, and the petition in this case was filed in December 2016. With exceptions of no relevance, 11 U.S.C. § 362(c)(3) provides:

[I]f a single or joint case is filed by . . . a debtor who is an individual in a case under chapter 7 . . . and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, .

. . —

(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt . . . shall terminate with respect to the debtor on the 30th day after the filing of the later case[.]

Although 11 U.S.C. § 362(c)(3)(B) permits a party in interest to request a continuation of the automatic stay beyond the 30-day period, § 362(c)(3)(B) provides that any hearing on such a request must be “completed before the expiration of the 30-day period . . . .” More than 30 days have elapsed since the filing of the petition in this case, and therefore the automatic stay has terminated.

It makes no sense to continue the hearing on a motion for relief from the automatic stay when (1) the debtor has failed to articulate any bankruptcy reason why the automatic stay ought to stay in place, and (2) the automatic stay has already terminated by reason of 11 U.S.C. § 362(c)(3)(B). It is thus ORDERED that the debtor’s motion (Dkt. No. 39) seeking to continue the hearing on the pending motion for relief the automatic stay is DENIED.

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com