Some Light at the End of the Bankruptcy Tunnel
Even after dragging a foreclosure through state court, with the end in sight, there is frequently one last indignity – a bankruptcy filing. When the borrower is a married couple, two bankruptcy filings, the second one after the first one is complete, can make things even worse. A federal district judge, and then the United States Court of Appeals in Wisconsin, finally had enough with these tactics. The lawyer for the borrowers, who deserved a Nobel Prize installing, was suspended from the practice of law in federal court for six months and fined a relatively modest $2,500. This was on top of a one-year suspension approved by the Wisconsin Supreme Court.
Today’s Takeaway? The purpose of bankruptcy is to get creditors paid, not to thwart paying them. Sharp tactics by debtor attorneys often trick judges into forgetting that principle. If you are dragged into bankruptcy court while collecting a loan, the judge should be reminded of the true purpose of the Bankruptcy Code. Dilatory tactics by bankruptcy counsel should be met with requests for economic sanctions.