I'm just finishing my first year of law school, and am kind of embarrassed to ask this. I entered a debt settlement company, and they were lousy. I now have three accounts left, and with interest they are now in upwards of $30,000. I'm leaving the company, but the three account left are with citibank. I asked them to bring the balances down to what they were when I entered the settlement program which would be about $15,000. I then said I would give them a $4,000 payment, and then make payments of $700/month until the balance was paid. They said they wanted lump sum payments of eighty percent, or they're taking me to court. I just can't come up with that money. My question is, "If I get a judgement against me, or am forced to go bankrupt, how with that impact my ability to get into the bar and find employment?" My family's from Wisconsin so that is where I would hope to practice.

Hi,

What is the value of your debt? $15,000/30,000 as stated in this thread or $7,000/14,000 as stated in the other thread: https://www.askmehelpdesk.com/showthread.php?t=19111



Anyway,
Perhaps now is NOT the time for you to declare bankruptcy. Wait until you graduate from law school because odds are you will incur more debt within the next 2 years. And as for whether you will be employed (yes, many people have filed bankruptcy). Whether it is a restriction on the bar, that I don't know, but I would assume it is not.


I don't know if Ontario and Wisconsin law is similar but here in Ontario, lawyers/doctors/accounts…ie, professionals have unlimited liability for their actions in regards to their professional lives. That is why they have barrels of insurance to cover themselves. So if that is true in your state, then you will get loads of insurance and therefore I don't think it would be a problem for you to get admittance to the bar.

What I tried to say in the previous paragraph is if/when a lawyer declare bankruptcy, all debts will be discharged, except for any outstanding claims of malpractice from clients. Therefore, having insurance would be a good idea. So, I don't think it's a restriction.

In the one post, I was speaking of one account. In this one, I was lumping them all together, thus the discrepancy in the figures. What about if they take me to court, and I have a judgement on record against me? What do you mean by insurance? Insurance for what? I know lawyers have to have malpractice insurance, but what does that have to do with my credit?

By insurance... I meant malpractice insurance.

Yeah, they can sue you, get a judgment against you. But you are a law student, odds are you don't have a massive income right now.

And who knows, in 2 years, perhaps you will have been able to shrink that debt even more and you won't need to declare bankruptcy.

If you do plan to declare bankruptcy, do it before your income is more than the mean income of your state so you can claim Chapter 7.

Thank you for the advice. The problem is that I'm married, and my wife and I make decent money. She has taken a new job, making more money than when we entered the debt settlement program. We started with around nine accounts and are now down to three. Since she's been making the extra income, we've been able to save some (which is how we settled most accounts), but Citi won't take what we can afford as payments, or what we have as a settlement. I'm just worried that they'll take us to court before we can save enough to settle. I was worried how that would play with potential employers (having a settlement against me, and if it came to garnishment, if I had to look into bankruptcy.)

I don't think most employer do credit checks on you unless you will be responsible for handling a lot of money.

So odds are, future employers won't even know about it unless they are told to garnish your wages (but that will only happen AFTER they hire you).

Thanks. I didn't know if they did background or records searches. Because if I did get taken to court, it would appear on a records search and they would know. I feel a lot more relieved. Thanks!

Ok, what has not been addressed that I could see,

Part of being admitted to the bar is also the ethics and the finicial responsibility issues. They will do a complete credit check and criminal record check on you. So even if you "pass" the bar exam ( which you know is hard, often only a 50 percent pass on the first round in many states) they will also do a background to see if there is any reason for finicial or criminal issue not to admit you.

Even a list of non paid bills, or suits can cause them not to admit you.

Remember they are considering if you have money troubles, and you are the guardian or over a trust, you could be tempted.

I would discuss this with your advisor at law school and/or a couple practicing attorneys in the state you want to practice at.
Of course I am sure some states have lower standards than others.

Not what you wanted to here but yes judgements and bankruptcy can stop you sometimes from being admitted to the bar.

You definitely need to speak to a practicing attorney in your state about your situation. In fact, it might be a good idea to contact your state's Board of Bar Examiners to find out their criteria when reviewing bar admissions. In NJ after passing the bar exam every applicant has to be reviewed by the Character Committee to see if there is anything in their background that might affect their ability to practice law. And while a bankruptcy might not prevent you from being admitted to the bar, it is very likely that you will have difficulty obtaining malpractice coverage. Contact the Board of Bar Examiners, give a very brief overview of your situation (you're a law student with personal financial difficulties and you're wondering how a judgment or bankruptcy on your record would affect your chances for admission to the bar) and they may give you advice directly, or they may direct you to an individual attorney who serves on the board and is able to give you a consultation. Whatever you do, speak to an attorney before taking any action.