A potential client calls a bankruptcy lawyer to set up and initial consultation. The lawyer’s receptionist tells the client the he can meet with the lawyer and provides a date for a meeting. The receptionist tells the client to compile a list of all creditors and amounts owed to those creditors. The receptionist also tells the client to expect an email with a questionnaire and requests that the client complete the questionnaire and send it back a few days prior to the meeting.

On the scheduled day, the client enters the office of the lawyer. The receptionist greets the client and asks him to have a seat in a small conference room nearby. A few minutes later, the lawyer appears and introduces herself to the client. She makes small talk with him for a few minutes. Thereafter, the lawyer and her client start discussing business.

The client relates that he does home remodeling work and has been in the business for several years. At times, business was very good; at other times, business was not so good either due to a slowdown in the economy, competition, or cost overruns that caused him to complete projects without making money on those projects.

He further relates that he had a string of projects go bad and he is suffering heavy losses from those projects. To keep his business afloat, he signed personal guarantees to cover loans in the hope that things would turn around. Despite his best efforts, his business sank further and further into debt. Because he provided personal guarantees, creditors will be after him for several hundred thousand dollars.

At this point, the client provides the lawyer with a list of creditors to whom he has personal liability. The lawyer looks over the list and then asks a few questions.

She asks whether he has health insurance, with a positive response. Is he involved in an ongoing criminal investigation? He says no. She pries further. Has he stopped working on home remodeling projects? He says that he told his workers that bankruptcy is imminent and they might as well not show up to their jobs.

Non-Completion of Repairs

State law requires that under most circumstances, people performing repairs must complete those repairs. This includes renovations. In addition, if the homeowner paid and did not get a completed job, the party performing home remodeling may be liable for theft. These crimes may be considered a felony.

Section 523(a) of the United States Bankruptcy Code provides that a bankrupt debtor will not achieve the coveted bankruptcy discharge if there is an ongoing criminal investigation against the debtor. Consequently, if the debtor does not complete a job and the homeowner files a complaint, bankruptcy will not help the debtor.

In the above scenario, it is vital that the debtor not be involved in a criminal investigation due to stopped work. If a customer paid for work and that work was not completed, the customer can go to the police and claim theft.

Considering bankruptcy? Speak with the Oakland bankruptcy attorney law office of Melanie Tavare.