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Bad Advice: Bankruptcy Attorney Suspended and Client’s Discharge Risked

George Sadorus could have been more careful when he hired an attorney over the internet to file his bankruptcy case. However he really should have been suspicious when his attorney told him to lie to the Trustee about why he could not attend his 341 Meeting of Creditors.

Sadorus was advised by a paralegal that $8,000 he had in a bank account would be exempt in his bankruptcy. His attorney later filed his case not disclosing the account holding the $8,000 because the paralegal hadn’t informed the attorney of the account. Once the attorney realized his mistake, he advised the client to not attend the mandatory 341 hearing and to lie about his reasons for not attending. The theory was that if the client’s case was dismissed, he could spend the money on reasonable and necessary living expenses and then refile.

The attorney then refiled the case without discussing whether any funds were remaining in the client’s account. $5,000 remained in the account when case #2 was filed. This time the client attended the 341 hearing, disclosed to the trustee what had gone on and fired his attorney. The trustee, surprised by the revelation sued the debtor for the contents of that account as well as the lawyer for sanctions and discouragement (refund) of his fee. The attorney was suspended from practicing law in that state upon the condition that he take educational courses in ethics and general practice and was forced to return to the debtor his retainer fee.

Unfortunately, because the retainer fee was returned to the client while in bankruptcy, the money became property of the estate and was subject to collection for the benefit of the debtor’s creditors. So, because the debtor chose an attorney who gave him poor advice and then followed that poor advice by lying, he lost the $5,000 in his account and lost the $1,000 he’d paid the attorney (he paid it, had it returned, then had it garnished for the estate). For more information, see In Re Sadorius.

We all would be tempted to hire the least expensive attorney we can find, but all to often we get what we pay for, which can sometimes cost us more than we anticipated. If you are considering bankruptcy and want to meet with an attorney who you can shake hands with and trust, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.

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