Consumer Bankruptcy Does No Good?


“In 28 years of legal practice, I have rarely seen a consumer bankruptcy do a person any good.”  so says Stephen J. Dunn of Forbes.

So, it seems Mr. Dunn thinks I (picture on left) am a clown, like, say, Groucho Marx. (picture on right.

Groucho was one of the great wits of all time, so I would be happy with that comparison.  But that ain’t what Mr. Dunn means.

His column reads like a talk radio transcript, inviting the ire of consumer bankruptcy attorneys, incurring of whose ire his post boasts of having done.

From the same article: “I have previously posted my views on consumer bankruptcies. Links appear in the left margin. Not surprisingly, the posts have drawn the ire of the consumer bankruptcy bar, that esteemed group, as undoubtedly they will object loudly to this offering.

It seems that often the only person benefitting from a consumer bankruptcy is the debtor’s attorney, collecting a fee for the proceeding. Therein lies the impetus for this post.”

Oh, please.  To call this juvenile is to overestimate Mr. Dunn’s displayed intellect.

Precise inaccuracies in his article include:

(another clown)


   But the debtor probably could have done this without a bankruptcy, by contacting creditors and working out compromises. Often debts can be compromised for as little as 50 cents on the dollar, without interest.

So, my clients with no income, unemployment, or minimum wage jobs, could get out of their 50,000 in debt for only $25,000?  Gee, if only they knew that!  Mr. Dunn neglects to advise my clients where they will get this money.

He also leaves out that they will get a 1099C for debt forgiveness income from the creditor.      They may, or may not, be able to file more forms to avoid paying tax on that income, but it at least is another hassle and something that an attorney counseling anyone MUST mention.

The column is replete with unsupported generalities and subjective conclusions stated as facts.

“The debtor pays several thousand dollars to an attorney . . .”  Really?  My Chapter 7 bankruptcy fee ranges from $500 to $7,500, depending on the complexity of the case.  The vast majority are for less than $2,000 in fees.

“Often a consumer bankruptcy does not go as planned.”  Often?  Subjective.  Less than 2% of my cases.  What study, what law journal article, what statistics, support this ridiculous statement?  Well, Mr. Dunn is unable to cite any.

Again with the unsupported allegations.  “It is a fact that consumer bankruptcies have a high rate of legal malpractice.”
What does “high” mean?  Relative to other practice areas?  What is “high” or “often” to Mr. Dunn might not be so defined by others.  His failure to be specific only infers that he is talking through his hat, without having even done any research.  It must be fun to write this way, unbounded by facts.

One more:  “some attorneys accept payment of retainers by credit card”.  Well, some attorneys cheat on their wives, some use drugs, some steal client funds, some blow the statute of limitations.  How many is “some”?  More than often?  Less than high?

This post is nearly twice as long as my normal, so I will stop now.

But, remain happy to debate Mr. Dunn in any forum, or to google for the actual statistics, if any of you so request.


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One Response to Consumer Bankruptcy Does No Good?

  1. In fact when someone doesn’t be aware of after that its up to other people that they will help, so here it occurs.