Illinois Bankruptcy Lawyer Blog

In the last installment of My Law Office we outlined some of the reasons recent law school graduates and inductees to the bar would consider bankruptcy law as their area of concentration. Since then some readers asked whether too many lawyers had not already chosen bankruptcy as their area of concentration, and whether the field was already too crowded to be viable.

Good questions. After all, it"s well known that there are already too many lawyers, and a great many attorneys who"ve been in practice for years were "born again" over the past few years as bankruptcy practitioners. That means the supply of bankruptcy lawyers has risen and will continue to rise.

Surprisingly however, data gathered by the Public Access to Court Electronic Records service (Pacer) indicates that the demand for bankruptcy attorneys still exceeds supply and will do so for years. According to PACER data, the number of new cases filed in 2009 was 46% higher than it was the year before and due to the rising double-digit unemployment rate the number of filings will continue trending upwards through 2010 and beyond.

So get your bankruptcy credentials in order. You have a long and busy career ahead of you.

Part of the My Law Office series prepared exclusively by The Illinois Bankruptcy Lawyer Blog. For more information about starting a practice, bankruptcy law, or to contribute, contact us at mhedayat@mha-law.com.

This past Monday, President Obama delivered a speech urging banks bailed out by the Troubled Asset Relief Program (TARP) to start lending on a wide scale basis again.

Translation: it's about time the banks pay back the millions of taxpayers who helped them survive.

Immediately following, Bank of America stated that it would increase its lending to small and medium-sized businesses by $5 billion. With $41.9 billion in outstanding business loans as of September, Bank of America is currently the second largest small business lender.

Let's see if other TARP recipients heed the President's message and follow suit.

Source: CNNMoney.com

With the economy still reeling from the financial crisis and unemployment at over 10%, bankruptcy is one area of the law that is not suffering. Sure, the economy will recover eventually, but that does not mean that the need for bankruptcy attorneys will disappear.

Some of the reasons to consider bankruptcy practice include:

1. Length. Bankruptcy cases are relatively short. Most Ch. 7 cases last between 3 and 6 months from the date of filing. Compare this to litigation matters, which can take years.

2. Structure. Title 11 of the United States Code or simply the Code. Learn it. Love it. It will become your new Bible. In bankruptcy law, there are virtually no surprises. When you know what to expect, it makes doing your job that much easier.

3. Compensation. Guaranteed. Under the Code, an attorney is entitled to receive a portion of the assets as compensation for legal expenses.

4. Satisfaction. Because the 2005 Code amendments largely benefit the debtor, almost all bankruptcy cases are ruled in their favor. That's good for the debtor and for the attorney representing the debtor.

This blog entry is the first of a series of posts for The Illinois Bankruptcy Lawyer Blog called "My Law Office." These posts will be primarily geared toward practice management for bankruptcy attorneys.

Last week, the U.S. Supreme Court heard oral arguments on a case with the potential to radically change current bankruptcy law. At issue are three provisions of the 2005 amendments to the Code.

Petitioner, Milavetz, Gallop & Milavetz, alleges that an attorney is not a "debt-relief agency" and therefore §526(a), which prohibits attorneys from encouraging clients considering filing bankruptcy to take on more debt, is a violation of free speech. Petitioners claim that §528(a)(4) and §528(b)(2)(B), which require attorneys to make certain disclosures when advertising, also violate the 1st Amendment.

The Justices are set to make their decision in about 90 days.

In re Raymond Professional Group, 06-16748

Raymond Professional Group v. William A. Pope Company, 07-00639

Issued November 25, 2009

Judge Jack B. Schmetterer

Summary The Court denies debtor's Amended Motion for Sanctions since no basis has been found under 28 U.S.C. §1927, but grants counter-plaintiff's Motion to Compel Debtors to Pay Witness Deposition Fees in part. Counter-plaintiff is entitled to be paid fees associated with the deposition of Professor Hazard but not Professor Rapoport due to "manifest injustice" under Fed. R. Civ. P. 26(b)(4)(C)(i).

View and download the opinion in PDF format here.

In re Joseph E. Frontzak, 08-8580

Issued December 2, 2009

Judge A. Benjamin Goldgar

Summary Debtor's failure to give creditor heightened notice regarding Ch. 11 confirmed plan violates creditor's due process rights under Bk. R. 3017(d) and 2002. Therefore, the Court denies debtor's motion to enforce the confirmed plan and for sanctions against creditor.

View and download the opinion in PDF format here.

Last week, we discussed the Home Affordable Modification Program (HAMP). Currently, only 2000 of the 650,000 homeowners who qualify have been offered permanent mortgage modifications.

On Monday, the Treasury Department issued an ultimatum to lenders: no cash incentives until they make the mortgage modifications issued under HAMP permanent.

So how does HAMP stack up? Not well. Its track record includes:

Exorbitant fees collected by the lenders who "modify" the loans.

Focus on last year's problem of sub-prime mortgages instead of the root cause of mortgage delinquency such as job loss.

Too much red tape.

The fact that most mortgages are still owned by securitized trusts. Lenders often lack the authority to permanently reduce mortgage payments even if they want to.

Whatever the reason, at least the Administration has opened its eyes to HAMP's shortcomings; looks like the program's going to need a modification of its own.

Sources: Bankruptcy Law Network and New York Times.

In re UAL Corporation, 02-48191

Issued November 24, 2009

Judge Eugene R. Wedoff

Summary In the absence of a compelling reason to grant the requested relief, the Court denies the EEOC motion to file its untimely amendment. The Court's reasoning is that allowing the amendment would have raised questions of finality and impeded the Debtor's efforts to reorganize under Chapter 11.

View and download the opinion in PDF format here.