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It costs a lot of money to go broke, literally.  Chapter 7 fees vary from case to case, but the average case filed in Nebraska ranges from $1,200 to $1,500 depending on the complexity of the case and the attorney hired.  Clients frequently ask if their case can be filed before all fees are paid.  The clear answer to this question is no.  Bankruptcy laws simply do not allow an attorney to accept payment of Chapter 7 legal fees after the case is filed.
A recent case involving Louisiana bankruptcy attorney Glay Collier underscores this rigid rule.  Collier advertised a “No Money Down Chapter 7” where he would charge $100 before the case was filed and then debit his client’s bank account for the remaining fees to be paid after the case was filed.  It goes without saying, an attorney can file a lot of cases for no money down, and Collier did just that.  Unfortunately, when a client failed to make the monthly payment Collier retaliated by failing to file necessary documents and the case was dismissed.  The client hired another attorney and sought damages. 

The Louisiana bankruptcy court imposed $40,000 of sanctions and damages against attorney Collier

In a thundering opinion, the Louisiana bankruptcy court imposed $40,000 of sanctions and damages against attorney Collier for multiple violations of the bankruptcy code.  The Court also referred the case to the Chief Judge of Louisiana for a determination of further sanctions and possible disbarment.  The Court ruled that the “Credit/Debit Authorization From” signed by the debtor prior to filing the bankruptcy case could not be used after the case was filed since that form became void the moment the case was filed.   Once the case was filed the bank account debits ceased to be voluntary and were thus deemed a violation of the bankruptcy stay.
The United States Trustee recently filed a complaint against Colorado attorney Kevin Heupel for his firm’s use of a “no money down” program.  Heupel doubled the price of his service for the No Money Down option and required clients to sign a bank account debit agreement before the bankruptcy case was filed.  Without any court authorization, Heupel zapped money out of his client’s bank accounts right after the bankruptcy was filed and failed to report the full amount of his fees.  The US Trustee’s complaint alleged that debtors were not informed that continuation of the payments were voluntary and required a court-approved Reaffirmation Agreement to be valid.  Heupel also did not inform his clients of the impermissible conflict of interest that prevents a bankruptcy attorney from being a creditor in his client’s case.  As a result of the US Trustee’s complaint and media attention to the case, Kevin Heupel recently filed for Chapter 11 protection.

This is a key point:  Chapter 13 cases can be converted to Chapter 7 at any time.

So what does a person do if they absolutely have to file a bankruptcy case now because 25% of their paycheck is being garnished?  The best answer is to file Chapter 13.  Yes, Chapter 13 is a 3 to 5 year payment plan, but a Chapter 13 case can be filed in Nebraska for as little as $75 down. (Local Nebraska bankruptcy rules require at least $75 of the $310 court fees to be paid when the case is filed, with the remainder due in a reasonable time.)  Also, if more than $600 of a debtor’s paycheck has been garnished in the 90 days prior to filing, that money can generally be recovered by filing a turnover action, thus providing the necessary funds to fully pay attorney fees to convert the case to Chapter 7.  This is a key point:  Chapter 13 cases can be converted to Chapter 7 at any time (provided the debtor was eligible for Chapter 7 when the case was filed). 
No money down Chapter 7?  Nope, can’t do that.  Pay $75 down for Chapter 13 and flip to a Chapter 7 after payment of remaining court fees and attorney fees are paid?  Yes, that may be an option.  If debts are out of control there is always a way to figure out the legal fees.  If lawsuits have been filed there are ways to delay the judgments.  If bank accounts have been hit with garnishments there are ways to exempt the funds.  Never assume you can’t afford to go broke.
Image courtesy of Flckr & Kevin Dooley.

Interesting development for Oregon bankruptcy clients trying to rebuild their credit after bankruptcy. No idea whether the product is really worthwhile, but Rent Track allows Oregon renters to have their rent payments factored into their credit scores. It requires only the renter and property manager to sign a form and the tenant them makes payments online either by e-check or credit card. The payment is then reported to the credit bureau with scores reflecting the on time payment.  
Apparently twenty percent of Rent Track users have seen an increase in their credit scores by 10 points or more. So far at least one study on Rent Track forecasts that percent of renters’ scores will increase. I guess the real question is pricing. Keep in mind that most credit scores recover exponentially after bankruptcy anyway.
The original post is titled New Product for Rebuilding Credit After Bankruptcy , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .

By Mireya Navarrro

New York City and state officials have thrown their weight behind an elderly widow fighting to keep her rent-stabilized lease from becoming an asset with which to pay off her creditors, arguing that it would undermine the safeguards that both bankruptcy and rent laws are supposed to provide.In a brief filed jointly this week with the state’s Court of Appeals, lawyers from the state attorney general’s office and New York City’s Law Department said that, under current law, a lease for a rent-regulated apartment is not property that can be sold. Such a lease, they argued, amounts to a public benefit, just like disability or unemployment benefits, that is exempted from a bankruptcy estate and cannot be seized as an asset in a personal bankruptcy.
The friend of the court brief filed by the state and the city underscores the importance of a case that bankruptcy lawyers say poses a major risk to New Yorkers who seek protection and happen to live in rent-stabilized apartments. The case, the brief argues, also threatens to circumvent rent-stabilization laws enacted by both the city and the state. It comes at a time of high demand for affordable housing amid the steady loss of rent-regulated apartments to market-rate conversions.
“Rent-stabilized housing provides millions of vulnerable New Yorkers with the guarantee of an affordable place to live,” said Matt Mittenthal, a spokesman for Eric T. Schneiderman, the New York State attorney general. “State law simply does not allow the benefits that come with that crucial program to be seized and sold in a bankruptcy.”
The bankruptcy case was brought in 2011 by Mary Veronica Santiago, 79, who has lived in a two-bedroom apartment in the East Village of Manhattan for more than 50 years and who sought Chapter 7 protection after accumulating a debt of $23,000, mostly in credit card bills.
Ms. Santiago was not behind on her $703 rent, but her landlord, who was not among her creditors, stepped into her bankruptcy case with an offer to buy her rent-stabilized lease and produce the money to pay off her debt. The bankruptcy trustee in charge of marshaling her assets, John S. Pereira, accepted the offer. But Ms. Santiago, fearing her eventual eviction despite an agreement to let her stay in her apartment, challenged that decision.
After both a bankruptcy court and a Federal District Court sided with the bankruptcy trustee, Ms. Santiago appealed to the United States Court of Appeals for the Second Circuit, which for the first time will weigh in on whether a rent-stabilized lease can be treated as an asset in bankruptcy cases, like a car or a piece of land.
But before ruling on the matter, the federal court sent the case to the New York Court of Appeals in March to decide on a question of state law: whether the lease is exempt from a tenant’s assets for the purposes of bankruptcy proceedings.
A lawyer for Mr. Pereira said that trustees, who get a commission on the assets they are able to gather, have an obligation to marshal all assets to get a debt paid. Under federal bankruptcy law, states can decide which assets can be exempted from an estate. Mr. Pereira’s lawyer argues that the state does not specify rent-stabilized leases in such a list of exemptions and that the State Legislature did not intend to include them.
“If the city and state now believe that these leases should be included, the appropriate way to deal with this issue is by enacting legislation addressing rent-stabilized leases in the context of an individual’s bankruptcy estate,” the lawyer, J. David Dantzler Jr., said.
But the city and the state said that such an exemption already existed, under public benefits, and that the “state law has long barred creditors from enforcing a money judgment against the value of a rent-stabilized lease.”
In their brief, the officials noted that rent-stabilized tenants have a median income “appreciably lower” than tenants paying the market rate, and that without rent law protections, “the result would be a metropolis largely consisting of the very rich and very poor.”
The trustee has proposed an arrangement in which the landlord would pay Ms. Santiago’s debt, pay the trustee and his lawyer, and allow her to live out her years in her apartment.
Copyright 2014 The New York Times Company.  All rights reserved.

"The recent Middle District of Florida decision in In re Nabavi, 2014 WL 3939595 (M.D. Florida, August 12, 2014) made reference to the 11th Circuit Court of Appeal’s longtime adoption of the "civil plain error rule" - an exception to the general rule that an appellate court will not consider an issue not raised in the lower court.  In the In re Nabavi  appeal to the District Court from the Bankruptcy Court, the creditor raised arguments which it had failed to before the Bankruptcy Court. The District Court held that the creditor thereby waived its right to bring the arguments on appeal as the “civil plain error rule” exception did not apply.Preservation of ErrorThe U.S Supreme Court held in Hormel v. Helvering, 312 U.S. 552 (1941) that “[o]rdinarily an appellate court does not give consideration to issues not raised below.”  Justice Black explained that [O]ur procedure scheme contemplates that parties shall come to issue in the trial forum vested with authority to determine questions of facts. This is essential in order that parties may have the opportunity to offer all the evidence they believe relevant to the issues which the trial tribunal is alone competent to decide; it is equally essential in order that litigants may not be surprised on appeal by final decision there of issues upon which they have had not opportunity to introduce evidence.According, the 11th Circuit held in Narey v. Dean that "appellate courts generally will not consider an issue or theory that was not raised in the district court."  Civil Plain Error ExceptionBut the Supreme Court in Hormel held that its general principle is not unyielding and “[t]here may always be exceptional cases or particular circumstances which will prompt a reviewing or appellate court, where injustice might otherwise result, to consider questions of law which were neither pressed nor passed upon by the court or administrative agency below.” Justice Black added that Rules of practice and procedure are devised to promote the ends of justice, not to defeat them. A rigid and undeviating judicially declared practice under which courts of review would invariably and under all circumstances decline to consider all questions which had not previously been specifically urged would be out of harmony with this policy. Orderly rules of procedure do not require sacrifice of the rules of fundamental justice11th Circuit In view of the Hormel decision, the 11th Circuit reviewed in the case of In Re Lett, 632 F. 3d 1216 (11th Cir. 2011)  that the 11th Circuit adopted the “civil plain error rule,” which permits consideration of a pure question of law not raised below, if the failure to consider that issue on appeal would result in a "miscarriage of justice."  The In Re Lett Court cited prior 11th Circuit decisions which explained  that a “miscarriage of justice” is a decision or outcome of a legal proceeding that is prejudicial or inconsistent with the substantial rights of a party. Another prior 11th Circuit case explained that “[a]ny wrong result resting on the erroneous application of legal principles is a miscarriage of justice in some degree.”
Bankruptcy ContextThe In re Lett Court explained that the “civil plain error rule” is particularly true in the bankruptcy context. The Court stated that “[o]rdinarily an appellate court does not give consideration to issues not raised below” because “bankruptcy cases are to be tried in front of bankruptcy court.”  The Court cited a prior decision that related that it is within the court’s discretion to resolve an issue decided in the bankruptcy court “if the record thoroughly presents the issue”  but “if the record reflects an issue that was presented in a cursory manner and never properly presented to the Bankruptcy Court, the issue is not preserved for appeal.” This decision further explained that “it is not enough that the record provides facts which may permit the resolution of an issue; rather the record must be adequately developed, to the point that the Bankruptcy Court could have passed on the issue …”
The recent case of In re Biscayne Park, LLC,  540 Fed. Appx. 952 (11th Cir. 2013) cites In re Lett and further explained that where a party does not raise an issue below, the Court will evaluate it under the "plain error rule", which allows consideration of an issue not raised in the lower courts under five circumstances:

1. it involves a pure question of law and if refusal to consider it would result in a clear miscarriage of justice
2. where the appellant raises an objection to an order which he had no opportunity to raise at the lower court level
3. where the interest of substantial justice is at stake
4. where the proper resolution is beyond doubt
5. if the issue presents significant questions of general impact or of great public concern

Certain Bankruptcy Code Provisions Never Waived?The author of a 2011 post on Weil Gotshal's "Bankruptcy Blog", wrote that the In re Lett decision suggested that certain provisions of the Bankruptcy Code may never be waived, such as in the context of a chapter 11 confirmation order, even if the party could have raised - but did not raise the argument before the bankruptcy court.  The blog post points out that the In re Lett Court "ultimately concluded that the district court had actually erred in relying on the civil plain error rule in declining to address whether the plain complied with the absolute priority rule."   The author relates that 11th Circuit in In re Leff concluded that the confirmation related issue had been preserved for appeal because the requirement of section 1129(b) had "sufficiently present[ed] the absolute priority rule in the bankruptcy court as to preserve the issue for review..."  and that the debtor himself had placed the absolute priority rule squarely before the court when he proffered compliance with section 1129(b) and sought confirmation of the chapter 11 plan.

References
As related in this short video,  preservation of the record can make the difference between life and death in a criminal proceeding.  

Jones Day blog post on In re Lett. 

Rogers Towers blog post.  (implications of substantial consummation as barrier to appeal)Attached: Untitled documentGoogle Docs: Create and edit documents online. Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055