Massachusetts personal bankruptcy cases regarding student loans are guided by the strict law that says that there must be “undue hardship.” In a case decided recently, the debtor claimed that her financial condition, which included homelessness and a minimum wage job, qualified her as having an undue hardship. Undue hardship, if found by the Court, will qualify a debtor for a discharge in student loans in a Massachusetts personal bankruptcy. Unfortunately, the case gives us no new guidance; both parties filed motions for summary judgment. The debtor lost her motion because of a technicality – failing to file an affidavit in a timely fashion, and the creditor, Educational Credit Management Corporation, lost its motion because it relied on the availability of the Income Based Repayment plan, which cannot be the only factor in consideration.
The Federal Bankruptcy Court in Boston handed down a decision sharply criticizing an attorney with 28 years of experience for putting his two clients, an elderly widow and her disabled daughter, through duplicative bankruptcy proceedings and attempting to collect excessive fees for both. Judge Boroff stated that it had “particular dismay with respect to the type of conduct” of the attorney. Based on the Court’s decision, clients seeking personal bankruptcy attorneys in Boston need to be ever vigilant about the reasonableness of the recommendations by those attorneys.
The Court examined the Bankruptcy Petitions and determined that notwithstanding the Chapter 13 filings, the petitioners had simple, straight forward, Chapter 7 cases.
When personal bankruptcy attorneys are retained, their responsibility includes informing the client of the law, drafting the Petition and Schedules, filing the documents with the Court, and attending the Creditor’s Meeting, or §341 Meeting. In a recent case handed down by the United States Bankruptcy Court, a Boston attorney failed to appear at the Creditor’s Meeting for five different clients.
In fact, he sent his legal assistant, who was not an attorney. “The debtors [clients] were right to be indignant,” the Court stated. “The 341 Meeting is most often a debtor’s first exposure to the public face of the bankruptcy process and to the adversarial forces potentially arrayed against her…[the attorney] abandoned his clients at the moment they needed him most.” In addition, this attorney was aiding his assistant in what is called “unauthorized practice of the law” which is against both federal and state rules.