Typically, legal malpractice follows filing too late; here there may be legal malpractice in filing too early.  This situation is more common than one might imagine, and in the current economic circumstances, may re-occur needlessly.

The Southeast Texas Record reports the facts of a case similar to ones we have seen.  Plaintiff has a dischargable US tax debt and files a Chapter 7 Bankruptcy.  Problem is that the tax debt must have been in existence for a period certain, and too many attorneys calculate from April 15 of the tax year.  This may unfortunately not be the operative date, as the plaintiff may have filed for an extension, or in some other permitted way altered the onset of the tax obligation.

Result?  Tax debt not discharged.  Here is an example:

"Stacey R. Robinson Allison filed Chapter 7 bankruptcy on June 29, 2000, through attorney Frank J. Maida with the Maida Law Firm in order to discharge her 1996 federal income tax liability.

According to the suit filed Dec. 2 in Jefferson County District Court, the liability was created by Allison’s husband at the time, and the IRS determined she was a co-debtor.

Allison claims that Maida knew one of her main reasons for filing bankruptcy was to discharge the income tax liability, the suit states. Maida is board certified in consumer bankruptcy law by the Texas Board of Legal Specialization.

However, Maida improperly filed the Chapter 7 bankruptcy petition and failed to tell Robinson, she claims.

The bankruptcy was filed in federal court in the Beaumont Division of the Eastern District of Texas on June 29, 2000.

"On Oct. 24, 2000, the plaintiff’s Chapter 7 bankruptcy was finalized, and she was discharged by the Bankruptcy Court," the complaint states. "The defendants advised plaintiff that this discharge did in fact discharge her from the 1996 federal income tax liability, when in fact it did not."

After she began receiving letters from the IRS attempting to collect her 1996 federal income tax liability, Allison approached Maida who repeatedly told her she did not have to pay the bills, the suit states.

In 2006, Allison called another attorney to deal with the IRS, she claims.

Allison was told for the first time that her tax liability was not discharged because her Chapter 7 Bankruptcy Petition was filed too early, she claims.

It should have been filed after Oct. 15, 2000 — not as early as June 29, 2000 — for her tax liability to be discharged, according to the complaint.

"Even more incredible, the Plaintiff’s then husband had his 1996 federal income tax liability discharge in bankruptcy, because his Chapter 7 bankruptcy petition was timely filed," the suit states.

Because of Maida’s actions, Allison has sustained losses of at least $150,000, she claims.