Should I Hire a Non-Attorney Bankruptcy Preparer?

Prior to October 17, 2005, if your case was very simple meaning you did not own a home or cars, then, the answer was yes; however, the new bankruptcy law that went into effect on October 17, 2005 has changed that.

  1. The new bankruptcy law makes debt of creditors not properly noticed as non-discharged.  Under the previous law, in a typical chapter 7 case that had no payments or distribution to the creditors, even creditors and debt that were omitted from the bankruptcy were discharged.  The new bankrupcy law overruled that case law, and now in order to get a bankruptcy discharge of your debt, you must properly list the debt, give legally proper notice to the creditors at least 20 days before your creditors’ meeting.  Thus, relatively minor mistakes that previous had little penalty, other than requiring an amendment are now potentially mistakes that cannot be fixed.
  2. The new bankruptcy law gave the bankruptcy court the power to impose monetary fines for filing bankruptcy petitions without reasonable inquiry into their accuracy.  While on the surface this may seem like a minor detail, it gives the court the right to impose fines upon those submitting bankruptcy documents without a reasonable inquirying into the accuracy of the petition.  In addition, the same standard of reasonablenss is made for attorney-prepared bankruptcy petitions, non-attorney bankruptcy petitions, and bankruptcy petitions filed by the debtors’ themselves.  Therefore, in addition to losing your right to discharge certain debts by bankruptcy, the failing to accurately prepare your bankruptcy petition can result in fines.
  3. A well-prepared bankruptcy petition can make the process seem simple.  If you know someone that filed bankruptcy with a bankruptcy attorney, they may have told you that their case was simple without worries.  A well-drafted and accuarate bankruptcy petition have fewer problems and go through the bankrutpcy court system faster.  A few mistakes can cause problems, make your bankruptcy case linger in the court system longer, and allow the bankruptcy trustee to uncover problems that would have been missed had your bankruptcy petition been properly prepared.    The Bankruptcy Code is a complicated mesh of statutory law created by the federal legislature, and case law created by the federal district and bankruptcy courts.  If you want to know how complex it is, call any lawyer that does not regularly practice bankruptcy law and act them to prepare your bankruptcy petition.  They will either not do it, or charge far more than an experienced bankruptcy attorney.  They went to undergraduate school, law school, and passed a rigorous state bar exam.  Yet they do not feel competent to file a simple bankruptcy petition.  This emphasizes the importance and value of the experienced bankruptcy attorney’s knowledge.
  4. A non-attorney bankruptcy petition preparer cannot give legal advice.  Virtually everyone that files bankruptcy understands that having the knowledgable representation during their bankruptcy can make your case proceed smoothly and give you peace of mind.  The people who choose to havea non-attorney bankruptcy petition preparer complete their bankruptcy forms cannot give them legal advice.  There is, however, a common misconception of what constitutes legal advice.  The non-attorney bankruptcy petition preparer cannot tell you what information to include on your bankruptcy petition and schedules.  They cannot tell you which bankruptcy exemptions to use to protect your property, such as your home and cars.  Therefore, unless you know the difference between in two California bankruptcy exemption schemes and how to pick the best one for you, the non-attorney bankruptcy petition preparer will not be able to help you.  The non-attorney bankruptcy petition preparer may not help you choose the properbankruptcy court to file your bankruptcy petition.  They may not even mail your completed bankruptcy petition to the bankruptcy court.  All of these actions have been determined to be legal advice and beyond the legal scope of what a non-attorney bankruptcy petition preparer can do.  What can thenon-attorney bankruptcy petition preparer do you ask?  They can take information you give them on a bankruptcy questionaire that closely resemblesthe bankruptcy petition and put them on the forms.  Most likely if you can complete a typical bankruptcy questionaire, you can probably complete a bankruptcy petition as well as the non-attorney bankruptcy petition preparer.  Thus, the question you need to ask yourself is do you trust yourself to prepare your own bankruptcy petition?
  5. Only an attorney can appear at your creditors’ meeting with you, and appear in court for you.  A non-attorney bankruptcy petition preparercannot appear in court or appear with you to meet with the bankruptcy trustee at the meeting of creditors.  Many debtors feel that the bankruptcy attorney’s fees paid were worth their bankruptcy attorney appearing in at the meeting of creditors with tme or appearing in bankruptcy court for them.
  6. Answering questions about correspndence and taking telephone calls from the bankruptcy trustee, bankruptcy court, and your creditors can only be done by a licensed lawyer.  Only a bankruptcy attorney will receive correspondence and telephone calls during your case.  Once your bankruptcy case is filed you will receive many telephone calls and correspondence about your bankruptcy case.  If you hire a bankruptcy attorney, your creditors, thebankruptcy trustee (who represents the interest of your unsecured creditors), and the bankruptcy court will have to call or write your attorney.  Your attorney will understand and appreciate the complexities of the Bankruptcy Code and respond accordingly.  Any threats and actions will be taken in context and understood by your bankruptcy attorney.  If someone tries to take advantage of you, how will you know how to handle this without an attorney.  If you use a non-attorney bankruptcy petition preparer, your address and telephone number will be listed on your bankruptcy petition.  Thus, all calls and correspondence will come directly to you, rather than an experienced professional, such as your bankruptcy attorney.  Will you know how to evaluate the information and respond accordingly?  If not how will you get the information with a bankruptcy attorney?
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