Who Is a Bankruptcy Petition Preparer?

There is information all over the world wide web about how to prepare your own bankruptcy documents. Its possible, the forms are free downloads from the various Federal Bankruptcy websites. But there are many forms, and many people just do not want to prepare them themselves. And, most people only file for bankruptcy once in their life and the time it takes to learn about all the forms and procedures for that one time filing may seem unreasonable and overwhelming.

Nonlawyer Bankruptcy Petition Preparers are a recognized part of the system. [11 USC § 10]

NOLO SAYS:

"Who is a Bankruptcy Petition Preparer?

A "bankruptcy petition preparer" is a person who, for compensation, prepares any document for filing by a debtor in connection with a case in the bankruptcy or district court. A bankruptcy petition preparer is any person or business, other than a lawyer or someone who works for a lawyer, that charges a fee to prepare bankruptcy documents. Under your direction and control, the bankruptcy petition preparer generates bankruptcy forms for you to file either by typing them or inputting information into a bankruptcy software program.

Because bankruptcy petition preparers are not attorneys, they cannot provide legal advice or represent you in bankruptcy court. This means that the bankruptcy petition preparer cannot:

• tell you which type of bankruptcy to file
• tell you not to list certain debts
• tell you not to list certain assets, or
• tell you what property to exempt.

In essence, you must understand what debts your bankruptcy will discharge, what will happen to your property in the bankruptcy, and what laws should be used to exempt your property from being taken for the benefit of your creditors.

In addition, you must file the bankruptcy papers yourself and represent yourself in court. In other words, you are responsible for your case. You act as your own attorney and use the bankruptcy petition preparer as a typing service that transposes the information you give them onto the official forms."

FAIR ENOUGH.

HOWEVER:

I recently heard from a document preparer, who actually isn't even preparing bankruptcy documents at all -- he sells a bankruptcy kit - an organizer. Consumers purchase his kit, and return the filled in information so that a Bankruptcy Petition Preparer can then input that information into a software program which generates the completed documents. The completed documents are then returned it to the customer for filing. All of the monies spent by the consumer are disclosed as required under the federal bankruptcy rules.

A Federal Bankruptcy Trustee is in the process of running this document preparer out of business. The Trustee went so far as to tell the document preparer that he is on a mission to derail all bankruptcy petition preparers in the country. Despite the simple fact that Bankruptcy Petition Preparers are a recognized part of the system. Despite the fact that written materials explaining how to prepare documents are protected as free speech under the First Amendment. And despite the fact that many consumers cannot afford attorney fees, and would go without altogether, but for the assistance of a document preparer.

THIS HURTS CONSUMERS.

Bankruptcy Petition Preparers charge around $200. to complete required forms for a Chapter 7 Personal Bankruptcy. Attorneys charge around $2000. Attorneys can advise bankruptcy filers as to which bankruptcy chapter to file under; whether to file bankruptcy; and advise filers as to which assets are exempt -- Bankruptcy Petition Preparers cannot.

The choice between using a bankruptcy attorney or a Bankruptcy Petition Preparer is not apples to apples. The choice is more like - between hamburger and filet mignon. The budget sometimes dictates our choices. And, obviously, consumers filing bankruptcy may simply not be able to afford attorney pricing. If you can't afford the filet, having a hamburger isn't so bad.

If that Trustee has his way, anyone that can't afford the filet goes hungry.