Walton v. Clark & Washington, P.C., 454 B.R. 537 (Bankr. M.D. Fla. 2011)

Decided July 12, 2011 by a bankruptcy court in Florida in the Eleventh Circuit

This case is largely a rehash of the Tennessee cases (Waldo and Lawson), except that it’s in Florida. It even features the same law firm.

This is the case that began to lay the foundation for the modern bifurcated Chapter 7 bankruptcy, which was realized in a related opinion the following year in Walton v. Clark & Washington, P.C., 469 B.R. 383 (Bankr. M.D. Fla. 2012).

In the first of two opinions related to this case, the court held that bankruptcy attorneys could not have clients sign a single agreement, and then collect post-dated checks prepetition to be cashed them after the petition was filed:

The postdated checks give rise to prepetition claims because they represent a right to payment that arose before the petition date. As a consequence, the act of depositing the postdated checks after a bankruptcy case has been filed violates the section 362 automatic stay … [and] the section 524 discharge injunction [depending on when the check was deposited].

This case is important mainly because the judge provided guidelines for Clark & Washington to follow. With that said, much of these guidelines were also given in the Tennessee cases (Waldo and Lawson).

Clark & Washington’s attempts to adhere to Walton’s guidelines were assessed in the next opinion in this same case.