When people realize that their debts exceed their assets, they often panic, overwhelmed by their fears for the future. Likewise, anyone who provides a loan to a seemingly trustworthy borrower will be upset if the borrower becomes unable or unwilling to pay off that loan.
What Bankruptcy Law Is and What Bankruptcy Lawyers Do
Bankruptcy law is the system of rules that govern unfortunate situations where individuals or organizations possess an overwhelming amount of debt and are seeking a way out.
“Bankruptcy law is about equity,” Sheereen E. Middleton, founder of the Middleton Legal law firm in Maryland, explained in an email. “It’s about balancing the rights of the consumers to receive relief and the rights of creditors to receive their payment.”
A great bankruptcy lawyer can intervene during this state of crisis and provide level-headed legal guidance based on an understanding of the many complex statutes that govern bankruptcies. The work involves a combination of strategy and empathy and requires a mix of legal writing skills and oratory ability, experts say. Creative problem-solving is also a must in this field, as are financial literacy and the ability to compromise.
Bankruptcy lawyers can represent either creditors or debtors. Their job is to effectively advocate on behalf of their clients, whether they are conducting an informal negotiation with opposing counsel or delivering an oral argument in court. Bankruptcy attorneys may also serve as an impartial intermediary whose job is to ensure that the bankruptcy process is fair whether he or she is a judge, trustee or regulator.
Corali Lopez-Castro, a partner with the Kozyak Tropin & Throckmorton law firm in Florida, says bankruptcy attorneys like herself are akin to firefighters. “You’re putting out fires all the time,” she says.
Lopez-Castro says one of the most fulfilling moments of her career was when a client wrote to her and described sleeping soundly despite a bankruptcy because Lopez-Castro made the client feel protected from harm.
The accomplishment Lopez-Castro takes the greatest pride in, she says, is when she prevents clients who are on the edge of bankruptcy from actually filing. She sometimes negotiates deals between debtors and creditors wherein the debtor no longer needs to file for bankruptcy because she convinces creditors that they can get a better deal out of court than in court.
The Rapid Rise in Demand for Bankruptcy Lawyers
Due to the current economic downturn, many large and prestigious law firms have begun recruiting bankruptcy attorneys. Multiple legal recruiting agencies identify this legal specialty as the one with the highest demand and where corporate law firm headcounts are increasing the fastest.
One reason for this spike in hiring is that many business executives have become interested in debt restructuring and desire the assistance of bankruptcy lawyers, according to experts.
Attorneys with expertise in corporate restructuring and reorganization can earn hefty salaries. According to LawCrossing.com, a legal job website, the average annual salary among U.S. financial restructuring attorneys is about $118,000, and salaries in major metropolitan areas are significantly higher.
Bankruptcy attorneys anticipate a giant influx of business in the near future for a variety of reasons.
The coronavirus pandemic and the quarantine policies enacted as a result have had negative financial implications for both individuals and businesses. Although many people and companies that have struggled economically as a result of COVID-19 have received some relief from the government, that relief may not be sufficient to prevent bankruptcy.
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Further, many stimulus relief benefits are temporary. Once moratoriums on evictions and collections expire and enhanced unemployment insurance is no longer granted, many families may not have enough cash to pay their bills. Meanwhile, many small businesses and large corporations are teetering on the edge of financial insolvency and relying heavily on government assistance, without which they might collapse.
Other factors are at play that have nothing to do with the pandemic. Several federal laws enacted in the months prior to the COVID-19 crisis have significant legal implications for individuals facing the prospect of bankruptcy. Those new laws include The Small Business Reorganization Act of 2019, known as the SBRA; the Honoring American Veterans in Extreme Need Act, also called the HAVEN Act; and the Family Farmer Relief Act.
Since each measure significantly changed federal bankruptcy laws, individuals or organizations may decide to consult an attorney so that they can get expert advice on the new rules.
In addition, debt limits for Chapter 13 bankruptcy filings increased in 2019, expanding the number of people and businesses that are eligible for this type of bankruptcy.
Moreover, given more discussion among lawmakers and policymakers about massive student loan debt and possible forgiveness options, it may soon become possible for people with this sort of debt to routinely receive partial or complete forgiveness via bankruptcy. That would be a big change, given that it is rare nowadays for someone to be able to clear student loan debt via bankruptcy.
“There is a huge, huge problem with student loans, and it’s multi-generational,” says Robert Rock, a partner with the Albany office of the Tully Rinckey PLLC law firm.
How to Find the Right Law School for a Bankruptcy Law Career
Future bankruptcy attorneys should find out whether their target law schools have bankruptcy law clinics or legal aid programs that help indebted individuals and companies, since participating in those activities can be a way to gain marketable skills, experts suggest.
Another thing to investigate is whether a school offers courses that specifically focus on bankruptcy law. The greater the number and variety of these sorts of courses, the better, according to experts, who note that it’s ideal if these classes are taught by faculty who are well-regarded bankruptcy attorneys.
Jonathan Carson, co-CEO of Stretto, a company that provides technology and administrative assistance to the corporate restructuring and consumer bankruptcy industry, advises aspiring bankruptcy attorneys to check whether a law school offers a course called “accounting for lawyers,” since understanding how to read a balance sheet or a profit-and-loss statement is essential in the field.
A trial law class is also beneficial, since it allows J.D. students to cultivate litigation skills they will need if they become bankruptcy attorneys, Carson says. Other experts suggest that future bankruptcy lawyers should participate in moot court competitions to gain public speaking skills.
During law school, experts suggest, anyone who hopes to become a bankruptcy attorney should aim to secure a bankruptcy law internship to get work experience in the field and to learn from an experienced attorney. Aspiring bankruptcy lawyers should also consider completing a judicial clerkship with a bankruptcy judge, experts say.
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