Central District Consumer Bankruptcy Attorney's Association

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I never allow bankruptcy clients to pay me with a credit card. I accept them for family law cases, and will allow a family member to pay a BK clientising a client to incur a debt we all know will not be paid when they use a credit card to pay us?
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Vernon L. Ellicott, Esq.
Certified Family Law Specialist
California State Bar Board of Legal Specialization
Law Offices of Vernon L. Ellicott
100 E. Thousand Oaks Blvd., Suite 147
Thousand Oaks, California 91360-8125
(805) 446-6262 Phone
(661) 222-2922 Phone
(805) 446-6264 Fax

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Everyone:
remember the restrictions on debt relief agencies. There is still a dispute that attorneys are debt relief agencies, but Section 526(a)(4) restricts any debt relief agency from advising a client to incur debt to pay attorneys fees. The resultant violation means all fees can be ordered disgorged, for damages, etc, etc 526(c)(2).
Worse, the use of a credit card when the debtor does not intend to repay the debt is fraud. You, as an attorney cannot advise a debtor to commit fraud, your license is at risk.
I just got a complaint to determine debts to be nondischargeable from a credit card agency. I represented the debtor as a creditor in a case where the creditor was trying to collect a debt from a debtor and took fees from the client's credit card. After the debtor in the first case refused to pay (a large amount of money), my client had to file bk. The credit card company is disputing the first fee paid to me when the client was not anticipating bankruptcy. That first charge went right trough my merchant account and was easily traced, different from getting a cash advance, but I wouldn't want a client on the stand telling a bk judge I practice before regularly, "he told me it was ok to get a cash advance to pay him."
I don't want anyone's stolen money.
Be careful out there.
dennis
Everyone:remember the restrictions on debt relief agencies. There is still a dispute that attorneys are debt relief agencies, but Section 526(a)(4) restricts any debt relief agency from advising a client to incur debt to pay attorneys fees. The resultant violation means all fees can be ordered disgorged, for damages, etc, etc 526(c)(2).Worse, the use of a credit card when the debtor does not intend to repay the debt is fraud. You, as an attorney cannot advise a debtor to commit fraud, your license is at risk.I just got a complaint to determine debts to be nondischargeable from a credit card agency. I represented the debtor as a creditor in a case where the creditor was trying to collect a debt from a debtor and took fees from the client's credit card. After the debtor in the first case refused to pay
(a large amount of money), my client had to file bk. The credit card company is disputing the first fee paid to me when the client was not anticipating bankruptcy. That first charge went right trough my merchant account and was easily traced, different from getting a cash advance, but I wouldn't want a client on the stand telling a bk judge I practice before regularly, "he told me it was ok to get a cash advance to pay him." I don't want anyone's stolen money.Be careful out there.dennis---

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Ive thought of this over the years as well. I dont think it would put the
discharge at risk. At least not any more than other recent cash advances
would. Moreover, given that it is a cash advance, theoretically what it is
used for is not particularly relevant.
I also dont think disgorgement is the issue because who would it be
disgorged to? The victim is the creditor that gave the cash advance. A
court isnt going to order a payment to one unsecured creditor.
In my opinion, nothing bad will happen to your client, other than probably
having that portion of the debt be nondischargeable. The potential
problem for you is one of damaged reputation with the courts and OUST, if it
is discovered. There may not even be anything specifically wrong with it,
but it looks bad.
On the other hand, Ive had numerous clients borrow money from relatives to
pay my fees, or even have the relatives pay me directly. Ive never had
this questioned and, if it is a loan, the relative is listed on Schedule and the source of the payment is shown on the attorney compensation
statement; Ive never had an issue with that. Analytically, thats not
really any different than a cash advance on a credit card, except for the
obvious one that relatives rarely ruin the debtors life with
post-bankruptcy collections actions.
Well, those are my thoughts
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at

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Great question. I would assume the charge is per se nondischargeable, but
under what theory could the fee be disgorged? Well, the UST mighht think of
one. I have allowed a debtor who was an authorized signer on his mother's
account to charge the fee to her account.
James R. Selth
Weintraub & Selth, APC
12121 Wilshire Boulevard, Suite 1300
Los Angeles, California 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
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One of my clients asked me this question:
What is the worst thing that can happen to me if I take a cash advance on my
credit card to pay my bankruptcy legal fees and filing fee?
My response was that the amount of the advance might not be dischargeable,
but I am not sure if there is anything worse that could happen. Could I be
forced to disgorge the fee? Would that place the discharge at risk?
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Message
One of my clients asked me
this question:

What is the worst thing
that can happen to me if I take a cash advance on my credit card to pay mybankruptcy legal fees and filing fee?
My response was that the
amount of the advance might not be dischargeable, but I am not sure if there is
anything worse that could happen. Could I be forced to disgorge the
fee? Would that place the discharge at risk?

David A.
Tilem
Certified Bankruptcy
Specialist*
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