Perhaps Preferential Transfer Litigation is Not Worth the Cost- two tiny adjustments in that direction.

Although the primary thrust of the Small Business Reorganization Act of 2019 which was signed by the President on August 23 is to provide relief to reorganizing small businesses, the act has two provisions that are intended to provide  some relief from the threat of questionable and small dollar bankruptcy preference claims. One of the preference aspects of this new law requires bankruptcy trustees and post confirmation trustees and debtors in possession and others who initiate preference actions to: consider, before commencing suit, an alleged preference recipient’s statutory defenses based on “reasonable diligence in the circumstances; and taking into account a party’s known or reasonably knowable affirmative defenses.” (punctuation added) The second preference aspect of the new law amends a bankruptcy venue provision that, if applied to preference suits, may reduce the number of small (under $25,000) preference cases filed.

Although the avoidance of preferences has been part of US Bankruptcy law for over two hundred years and has generated considerable litigation, there is virtually no empirical research into the actual operation and impact of American preference law. 

Bankruptcy and Mindfulness

The practice of mindfulness and other types of meditation are growing on the coasts and within the law school and lawyer communities. Perhaps these practices can provide meaningful benefits to bankruptcy clients, bankruptcy lawyers and bankruptcy professors and judges. The essence of "mindfulness for lawyers" efforts begins with the notion that the adversary system can take a toll on home life, friendships and our own notions of who we want to be. A meditation practice can help us concentrate and be the best lawyers we can be and also the best friends and family members we want to be; and perhaps even help us to be the kind of persons we want to be. It is a mix of focusing more fully on the present, mixing that with lovingkindness to ourselves and others, and observing what is going on in our minds, all without judgment.

Consumer bankruptcy debtors, creditors, practitioners and judges are constantly faced with problems for which the legal system is at best a partial solution. In most cases there are a few true winners and a host of partial winners, partial losers and complete losers. Mindfulness can help us keep a focus on the matter in front of us and also help us maintain our passion for life and practice.  On the business bankruptcy side, our duty of loyalty combined with the zealous representation ethic can allow the day-to-day fighting to change our character and perhaps even our values. In every community there are a host of ways of starting such a practice.  The book 10% Happier by Dan Harris is an easy entry point and in most communities there is a Mindfulness Based Stress Reduction course available.  More and more law schools and bar associations are providing such opportunities. Mindfulnessinlawsociety.com and themindfullawstudent.com are excellent resources.  I am enjoying teaching mindfulness to law students as well as faculty and staff at Saint Louis University Law School. 

 

 

The Community in Which Consumer Debtor Lawyers Reside

Just as tax and estate planning lawyers are part of a network of helpers that includes accountants and financial planners, consumer debtor attorneys should ideally be part of a network of able and responsible helpers. Sadly, since prospective consumer debtors lack financial resources, the availability and quality of their non lawyer helpers is suspect.  There is a network of credit counseling agencies but critics have long attacked the effectiveness and loyalty of their services. Many CDFI's and some neighborhood centers provide quality help, but they are very limited in number.  One of several reasons for these weaknesses is the "chicken and egg" dilemma, that the career line for these potential helpers is very limited and thus the training system for their preparation is likewise very limited.  

Hope for Helping the Prospective Payday Loan Customer

Short term (payday) loans and high interest consumer installment loans continue to deplete low income households of micro dollars and their communities of macro dollars. Although the CFPB seems intent on supporting the depletions, a good number of states have provided some relief.  Even in states without interest rate limitations there are a couple of ideas that can help.

Who Teaches Bankruptcy Law?

A survey some years ago showed that bankruptcy was one of the law school courses most often taught by adjuncts rather than full time teachers. This has several impacts on the teaching of bankruptcy law. Full time teachers often have contact with one another and may meet at AALS or other professional meetings but  the adjuncts who teach bankruptcy may not have much interaction with other bankruptcy teachers. In addition,  although some of the adjuncts are judges, more of the lawyer- adjuncts are likely to be business bankruptcy lawyers and fewer to be consumer lawyers. Another survey years ago indicated that there were a number of chapter 11 courses being taught, but almost no advanced courses in consumer bankruptcy. At one time there was a sub-committee of the ABA Business Bankruptcy Committee focused on the teaching of bankruptcy in which full time and adjunct teachers met to talk about these topics. Recently the ABA created a new committee to study the role of adjuncts in legal education.