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BANKRUPTCY PETITION PREPARER:
An industry that has been growing is the Bankruptcy Petition Preparer. This is a typing service that offers to type up your bankruptcy petition at a low fee and then give it to you for you to file it yourself in court and for you to appear in court at the creditors meeting alone.
Question – I met with a Bankruptcy Petition Preparer. They told me that they are not lawyers but that I don’t need a lawyer to file for bankruptcy. Is this true?
Answer – Bankruptcy Petition Preparers are happy to say that you don’t need a lawyer, because they are not the ones who will need a lawyer if something goes wrong with your bankruptcy. Most importantly, they simply fill in the bankruptcy petition with whatever you tell them to type in. They cannot offer you legal advice on how to prepare a petition, how to properly list your creditors, or how to answer the questions listed in the petition. The bankruptcy petition asks numerous questions that are very broad, and which require years of experience by an attorney, in order to properly understand the questions and honestly answer them in a way that benefits you as a client. Remember, in a bankruptcy you will have to answer to answer questions under oath, and your answers will be recorded. It is one thing if you are prepared for these questions by your attorney who knows most of the questions that you will be asked, by going to these meetings on a regular basis. If you do not have an attorney, you are responsible for understanding all of the questions, but you may end up misunderstanding the question and therefore not answering it in a full and truthful manner. The Trustee may then assume that you intentionally lied. This could prevent you from having your debts discharged, or worse it could result in a referral of the matter for criminal prosecution. At this point if you call up your Bankruptcy Petition Preparer, they will say that they told you from the beginning that they are not lawyers, and therefore they cannot help you. The problem is that at this point, hiring a lawyer to undo this mess, could cost you three times the money and aggravation that it would have cost you, had you hired a lawyer from the beginning. Even worse, your attorney may be unable to undo the damage that you may have done to your case by making statements to the Trustee under oath.
Question – I don’t own any assets, why shouldn’t I use a Bankruptcy Petition Preparer?
Answer – Many people do not realize that a bankruptcy is a process that deals with many issues other than what assets you own at the time you file for bankruptcy. Individuals who have used Bankruptcy Petition Preparer have come to me afterwards very upset after having found that the Trustee had their case dismissed because they did not properly fill out the petition, or could not comply with the demands of the trustee. Many people who do not use attorneys to protect themselves from these situations, are rudely shocked to learn that the Trustee is able to take their tax refunds, certain life insurance policies, or that the Trustee has sued their relative to get back money or other assets that were given as gifts years ago. If you file for bankruptcy without an attorney and you discover that you made a mistake, you will be surprised to learn that you are not automatically allowed to withdraw your case.
The first responsibility that your attorney has is to make very effort to protect you from something bad happening to you during the bankruptcy process. This is why having an attorney is so important. Your attorney will explain the questions that you will be asked so that you will avoid the problems that can develop as a result of misunderstanding the questions being asked of you. Your attorney should plan with you before you file for bankruptcy, perhaps even by selling assets that you are not allowed to keep in a bankruptcy and using the money to buy assets that you are allowed to keep in a bankruptcy. This is referred to as “exemption planning” and is permissible under the bankruptcy law so that you will be able to keep more assets than you otherwise would have been able to keep. Your attorney must also advise you on how to properly answer questions that will be asked of you under oath, to help ensure that your debts will be discharged.
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