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November 2010
A Fresh Start
By Heather Head

     No one—corporation or consumer—wants to file corporate and/or personal bankruptcy. For those who are in dire financial circumstances, an experienced bankruptcy attorney can make all the difference.

     Not many people can say that bankruptcy has been good to them, but that is exactly what David Badger (“Dave”) claims. Over the past 36 years, he has filed bankruptcy for so many clients he has lost track. His years of experience from both the debtor and creditor sides have gained him the respect of his clients and peers—an accomplishment he cherishes and tries to maintain with each new corporate or consumer client.

     Badger grew up near the wharfs of Boston, a gritty, blue-collar world. He experienced firsthand the challenges that the underprivileged faced and, as a sophomore when he transferred to Myers Park High School in Charlotte, he worked to assimilate the different culture, both regional and societal. The strong education he received there and at UNC Chapel Hill prepared him well to do what he had always wanted to do: Become a lawyer.

     Badger foresaw the life of an attorney as a way to indulge his passion for prosecuting victimizers and defending their victims. With an undergraduate degree in English, history, and political science, he attended UNC Law School with trial advocacy as his focus.

     From the beginning of his professional life, Badger’s prowess lay first and foremost in the courtroom. He loves to argue, and he does it exceedingly well. At Whitfield & McNeely, the firm where he began his career, he was thrown into the courtroom almost immediately despite his relative inexperience. He won his first case and realized his desire to be a trial lawyer. From that day on, Badger has worked relentlessly to hone his courtroom skills as the backbone of his career as a confident negotiator.

     By 1976, he had opened his own practice handling civil and criminal trials and being introduced to bankruptcy cases by then Chapter 13 Bankruptcy Trustee Robert Burroughs. He especially enjoyed the challenge and the frequent courtroom appearances required by criminal cases, but over time it was bankruptcy clients and challenges together with the guidance of the late Judge Marvin R. Wooten that fostered his desire to specialize his practice.

     By the early 1980s, Badger’s practice focused on two areas of expertise: criminal and bankruptcy. It wasn’t until nearly 10 years later that Badger let go of the criminal side of his practice and embraced bankruptcy wholeheartedly.

     “And bankruptcy has been good to me,” he remarks, without a trace of irony.


A Comforting Approach

     Although consistently ranked among the top attorneys in the country for several years running, Badger’s style remains comfortable and unassuming. His trendy office with a loft in SouthEnd boasts exposed ductwork, a wrought iron spiral staircase, and an airy feel that calmly counters any apprehension of clients as they enter the office.

     As if the atmosphere isn’t enough to soothe a troubled spirit, most visitors to the space are immediately greeted by a large, warm, purring feline presence who offers himself up for attention and gazes soothingly into their eyes while they relate their financial difficulties to Badger and his staff.

     Target (pronounced Tar-zhay) is the office cat (but don’t tell him that, because he thinks he’s top dog). Besides comforting worried clients, Target’s job (and he does it well) is to sit at the top of the spiral staircase and use his feline intuition to initially screen clients as they enter the office.

     On occasion, after a brief initial conference, potential clients are simply referred elsewhere on the basis of the cat’s intuition and the initial interview, Badger says with a wry smile, not entirely tongue in cheek.

     But for those who do receive the friendly feline’s leg rub of approval, the cat’s presence adds one more layer of desperately needed down-to-earth comfort that one doesn’t expect to find in a bankruptcy attorney’s office.

     “Walking through the door may be the hardest step people ever take in their lives,” acknowledges Badger, “but most people walk back out the door feeling like an enormous weight has been lifted from their shoulders. That isn’t just because of the cat. Having a clear picture of where they stand and the path ahead helps clients put their situation in perspective.” Knowing that their case is in the very capable hands of Badger’s staff helps relieve the pressure too.


Turning Complexities Into Advantages

     Today, filing bankruptcy is harder and more complicated than ever before, thanks to legislation enacted in 2005 still being analyzed in the courts and legislatures around the country.

     According to Badger, the law was promoted to reduce alleged bankruptcy fraud and prevent people able to pay their debts from filing for bankruptcy relief. The combination of poor draftsmanship and the complexity of the various types of bankruptcy proceedings render even a good general practitioner ripe for malpractice issues.

     “In almost every case there are a myriad of questions that arise,” says Badger. “Exemptions, residency requirements, where and when to file, whether you qualify—it’s endless.”

     Recent mortgage loan modification laws have complicated matters even further. In theory, banks are urged by the government to offer discounted interest rates, lower payments in proportion to a borrower’s financial circumstances and other mortgage modifications to minimize the impact of the economic downturn on the property owner, his neighborhood, and the mortgage holders.

     In practice, however, it’s not so simple. Several programs, all voluntary on the part of the financial institutions, have been ineffective causing banks to be overly cautious in negotiating these consumer and commercial situations—even “cat-atonic” to the frustration of all participants.

      “It is not unusual for clients to be driven to my door by loan modification complications and the untenable practices of banks offering the programs,” says Badger. “Often, hopeful borrowers compile the lengthy and burdensome list of information required and mail it in, only to have it lost, ignored or rejected seemingly with a rubber stamp on the other end. By the time they realize they have to start over again, their situation has usually deteriorated further.”

     Because banks were apparently unprepared for the economic downturn, operate to a large extent with their eyes on government regulators, and have devoted insufficient resources to solving the issues shared with their customers, Badger believes the reported “shortcuts” taken by the financial institutions like “robo-signing” and inability to track legal documents evidencing liens were bound to occur. Cutbacks on governmental enforcement of lending regulations simply exacerbated the problems.

     Even when a borrower is successful in getting the paperwork processed, the new terms of the loan are often ignored entirely by the bank. Badger tells the story, which he says is not uncommon, of a woman who had made all the proper arrangements with her bank for a required temporary loan modification and faithfully paid the adjusted amount for six months.

     At the end of six months, the bank notified her that they were initiating foreclosure proceedings. Their reason: She had been making the lower payment agreed upon in her loan modification program, instead of the full payment required by the loan documents.

     “Banks are not your friends,” Badger says, shaking his head. “They advertise that they are, but you have to realize that they are first and foremost profit-seeking institutions, and operate on that understanding.”

     He estimates the number of permanent loan modifications at less than 10 percent, which means greater than 90 percent of people and businesses trying in good faith to pay their bills while adjusting to new circumstances are being driven unnecessarily toward bankruptcy. An advocate’s ability and experience can often allow both consumers, businesses and their creditors to avoid stressful, expensive and time-consuming bankruptcy filings once the parties are shown both sides of a typical “Minimize Loss—Minimize Loss” situation.

     Badger’s involvement in the local, state and national legal communities, together with his extensive continuing legal education schedule (often as a speaker) a enable him to quickly recognize issues from both the debtor and creditor perspectives, which often promote a cost-saving solution for all parties without unnecessary posturing and expense.


‘Bring It On’

     It is no secret that the periodic economic recessions have provided full employment for bankruptcy professionals, assuming you don’t mind working long hours. The number of bankruptcies filed in 2009 skyrocketed 35 percent over 2008.

     With continued high unemployment levels, a stagnant economy and the history of downward economic cycles, even if the economy slowly recovers, Badger believes bankruptcies will remain a vital process to promote resolution of financial disputes well past the end of his life’s work.

     While most of those bankruptcies are personal, Badger says a large portion of his clientele are business owners who secured business debts with both property and personal guaranties of loved ones having no ownership or involvement with the business. Banks historically have tried, even “required” a spouse to sign personal guaranties for business loans.

     When the business fails, the owner’s assets, as well as those of the spouse are jeopardized. And when that happens, domestic bliss is more often than not falls victim. Fortunately, Badger has had success invoking federal statutory protection for the spouse and the spouse’s property in commercial debt negotiations with banks.

     He says the hardest part about being in this business, other than working 60-hour weeks, is watching entire companies and lifestyles disappear overnight for people who a few years ago felt themselves financially secure. He adds, “A large number of my clients used to be big-name developers. Their unsuccessful efforts to convince their lenders to continue business as usual has left many in the position of not being able to pay the mortgage on their personal residence before they seek professional assistance.

     Once they walk through his door, though, they are on their way to recovery. It may be years before a business owner recovers a former lifestyle, if ever, but after months or years of anxiety, stress and friction, most are relieved to be unburdened and look forward to their financial fresh start.

     Clients are comforted by a justifiable confidence that Badger’s experience and his aggressive, but realistic approach will promote the best possible outcome for themselves and their businesses.

     In addition to extensive expertise in the industry and an understanding of the complexities of the current laws, Badger offers his clients an advantage few bankruptcy attorneys can: Fearlessness and a love for the courtroom.

     “Intimidation is a standard tool of unhappy creditors,” Badger says. “Many bankruptcy attorneys choose the specialty precisely because it rarely involves trials. Creditors use that knowledge to their advantage, often threatening litigation to get the opposing attorneys to cave in. It doesn’t work when an experienced litigator, who is very comfortable in a courtroom, is on your side.”

     Badger says when he receives a “threat” that a creditor wants to go to litigate, his first thought is: “Bring it on. We could use a change around here.” It provides an opportunity for him to get out of the office and do something he loves to do.

     He’s also good at it. Sometimes, too good. In one instance, he won the case for a debtor, but had his court-ordered compensation payable from the creditor reduced 30 percent by the judge. The judge’s reason: Badger was “overzealous” in the defense of his client. Badger considered the judicial statement to be an expensive compliment.

     Badger’s courtroom skill and bankruptcy experience have served him and his office well. Comfortable though it is, the current Atherton Mill loft is beginning to feel a little tight thanks to recent growth. When they add another staff member or two in the near future, they are going to have to find new digs.

     Wherever they go, they will take their commitment to their clients, work ethic, and, of course, their feline gatekeeper Target.


Heather Head is a Charlotte-based freelance writer.
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