M.J. Shanahan & Assoc. Inc. - Living with debt is like living in Hell!
                              Clients We Won't Represent

       There is a belief that lawyers will take any client that walks in the door. That is not the case. Most of the success of your practice is linked to knowing what not to take in the way of cases. You can avoid many problems by refusing a case that your instinct says will be a problem. Here are some examples of cases we have turned down.

Potential Client: 1

        The client calls and one of the first thing she tell me is that she had to go exempt on her taxes to pay her mortgage. That is not unusal. I hear that alot. It's not usually a good idea because you will owe taxes later on, but sometimes its the only way to make your mortgage payment. 

        So my first question is how much was her payment. The answer, about $3,000. For some parts of the country that is high. For Los Angeles, not so high. Next I ask if she has any children and find out they are grown and away. So what is her income?  $140,000 a year. Now I smell a problem. She grosses $11,666.66 a month, has no children and has to go exempt on her taxes to make her mortgage payment.

      The final question: Are you married? I find out she is. Her husband is working and guess what? He makes $160,000 a year. So this couple has a combined income of $300,000 a year and I find out only owes $65,000 in credit cards. They are grossing $25,000 a month, but have to go exempt to pay their $3000.00 a month mortgage and they want to file bankruptcy to avoid paying their $65,000 in credit cards. 

      Can you guess what my answer was?  You can bet I didn't take them as clients.


Potential Client: 2

      A client is referred to me to take over the case from an attorney who is no longer able to practice law. I'm always leery of taking over cases because you have no idea what people have been told or what their expectations are. In this case it is not an attorney problem, but a client problem.

      The potential client starts off by telling me about the "big bad bank." To even start a conversation like that demonstrates that this is going to be a problem client. Was it the "big bad bank" when they gave her the loan to begin with?

       This debtor is in a Chapter 11 which means she should be making payments on all her secured debt. She has been in the process for 2 years and owns a vacant lot, a condo and a single family home. I find out that for 2 years she has paid nothing. Also during this period she is supposed to be saving money. Instead she has a total of $4,000 in her accounts. Again not a good start.

        As we get into the discussion, I find out she wants to refinance one of the homes at the price the lender put on the proof of claim  when it was filed  two years ago. The problem of course is that for the last two years she has made no payments so interest continues to accrue. She thinks the bank is obligated to sell it to her at the price it listed on the claim that was filed with the case was opened.

        Of course after this discussion I find she has not made payments on the other properties either and at that point I defer from representing her. Life is too short.

Potential Client 3:

        Client calls on a Friday and tells me the home is up for foreclosure sale on Monday. I let him know we can stop the sale and then ask the questions I need to determine what type of bankruptcy petition to file. I find out the house has about $700 to $800K in equity and the potential client is $96,000 behind on payments. 

        I am told that he mailed the $96,000 to the lender but cannot get verification that the sale will be stopped. I would have to file a Chapter 11 to stop the sale because of the following:

        a.  If I filed a Chapter 7, the trustee would oppose any motion to convert the case and would sell the house to pay any debt.  While the potential client would receive the amount over and above the debt, he would lose the house.

       b.   If I file a Chapter 13, the court would consider this a bad faith filing since the potential client is over the debt limit for a Chapter 13. If the court concluded it was bad faith, the court would convert the case to a Chapter 7 and again the property would be lost.

        As a result the only filing is a Chapter 11. I quote a fee of $11,000 which is under half what another firm would charge considering it is an emergency filing; we would have to work all weekend to get it filed; and there were other properties which meant more work.

        The potential client argues over the fee and says he only wants to be in the bankruptcy a week to make sure the lender received the check. The problem I see is that he is complaining about spending $11,000, $1,213.00 of which is the filing fee, to  save $700,000 to $800,000. In addition if the bank were to stop the sale on its own, we would not know that until after we filed and then the potential client would ask for a refund which we would not give because of the amount of work that had to be completed in a short time, over the weekend and into the night.

        When the potential client continued to argue over the fee I made the  determination not to take the case. We did not find out if the property was saved or sold.

Potential Client 4:

         This is a perfect example of a client who just calls too late. Potential Client has paid someone $500.00 a month to keep him in his home while he tries to do a loan mod. The loan mod scam artist transfers the deed a few times, puts the client in a bankruptcy that is later dismissed and never completes the loan mod. 

         The lender forecloses on the property and the potential client loses almost $700,000 in equity because he did not call an attorney first. What can we do?? Nothing! A bona fide purchaser purchased the property at the foreclosure sale so he now has to move. Not only did he lose $700,000 on this deal but also more equity from another property that sold. 

         Some people just don't deserve to have money. 


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