This post is inspired by yet another person calling me asking for help after filing bankruptcy with a petition preparer instead of an attorney.  By not hiring me this person saved $500, but lost about $6,000 to the bankruptcy trustee due to a poor bankruptcy filing. Don’t be penny wise and pound foolish.

If you are considering filing bankruptcy in Utah you should hire an attorney and not merely rely on a bankruptcy petition preparer.  Sure, I’m an attorney so maybe I’m biased. Unfortunately, all too often I see the disasters that occur when people don’t use an experienced attorney.

What does the United States Bankruptcy Court say about filing bankruptcy without an attorney?

“While individuals can file a bankruptcy case without an attorney or ‘pro se,’ it is extremely difficult to do it successfully.”

“It is very important that a bankruptcy case be filed and handled correctly. The rules are very technical, and a misstep may affect a debtor’s rights. For example, a debtor whose case is dismissed for failure to file a required document, such as a credit counseling certificate, may lose the right to file another case or lose protections in a later case, including the benefit of the automatic stay. Bankruptcy has long-term financial and legal consequences – hiring a competent attorney is strongly recommended.”
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“Pro se litigants … are expected to follow the rules that govern procedures in the federal courts. Pro se litigants should be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court in which the case is filed. Local rules, along with other useful information, are usually posted on the court’s web site and are available at the local court’s intake counter.”

Petition preparers are not qualified (and are prohibited by law) to give any legal advice.

A petition preparer is also called a “typing service” by the court because that is all they are qualified to do.  They aren’t lawyers and they can’t help when problems arise and things get complicated.  When you have a problem they will quickly pull out that paper you signed that acknowledged they can’t help legally and will then promptly tell you to hire an attorney.  Unfortunately, there may not be much that I can do to unravel the mess that has been created.

There are very few times where their services are worth the $200 – $300 they charge.  Honestly, I could file cases for $300 if I didn’t have to make sure my client’s assets were protected, attend the creditors meeting, deal with the trustee for my clients, and supervise the case to ensure that my clients’ rights are always being protected.   The small additional fee that is paid for an attorney is well worth it.  If you have a typewriter or computer you can click on this bankruptcy forms link and complete the forms yourself.

The Federal Courts provide the following information:

“Beware of bankruptcy petition preparers who do not comply with all legal requirements. The role of non-attorney petition preparers is solely to type information on Bankruptcy Forms (available at this link without charge). Petition preparers are barred by law from providing legal advice – they cannot explain how to answer legal questions or assist in bankruptcy court. Petition preparers must sign all documents they prepare; print their name, address, and social security number on such documents; and furnish copies to the debtor. They cannot sign a document on the debtor’s behalf or receive payment from the debtor for court fees.”

But “The Bankruptcy Guy” says that he has filed hundreds of cases.  Won’t that help me?  I’m sure he is very fast at typing in your information, but he isn’t qualified to do anything other than type in what you tell him to.  Many people have called me after using his service and lost thousands of dollars.  His response is something along the lines of: I’m not allowed to give you any legal advice.  You knew that when we started.  The result = you lose.  Pay a little bit more and get the benefit of an actual attorney who can give you legal advice and guarantee you results.

What can’t a petition preparer help you with? 

Only an attorney is legally permitted to answer the following questions.

What specific consequences will bankruptcy have on me in my situation? = Legal advice.
What chapter is best for me?  = Legal advice.
What property is exempt? What statutes should I cite and how? = Legal advice.
What property is the trustee likely to take? = Legal advice.
When should I file my bankruptcy? = Legal advice.

Incorrect documents or poor timing can cost you a lot of money.  You need legal advice from the person completing your documents. You need a good bankruptcy attorney.

Many assets aren’t exempt and can be taken if proper planning isn’t done.

You could lose your tax refund, a commission, or any money or assets owed to you from any other source. (Excluding specific exemptions).

The statutes and case law that affect bankruptcy exemptions are constantly evolving. Just three months ago, in December of 2012, the Utah Supreme Court issued a ruling that allows bankruptcy trustees to take a person’s entire earned but unreceived wages, making the timing of a bankruptcy filing more important than ever.  We will time your filing to minimize / reduce the effect of this ruling.

Every year I receive calls from people who are surprised that they are required to surrender their tax refund money.  I would have saved them thousands if they had hired me.  When I hear from them it is usually too late.

Once a chapter 7 bankruptcy is filed, it can’t be voluntarily canceled.

Once your in, you’re in.  The case may be dismissed if you act quickly, but once the trustee has learned of a mistake that will get him paid (they work on a commission) they are going to fight to prevent you from dropping the case.

Family members can be sued to recover payments or assets transferred to them.

Apparently someone is out there telling people to transfer or hide assets prior to filing.  It is usually a family member’s uninformed suggestion, but I have been told that a local petition preparer who brags about filing many cases has advised clients to do so.  The result of taking that advice is a fraudulent transfer that will get you and your family member, or transferee, sued to undo the transfer and may result in a refusal of the court to grant debt forgiveness and potentially an extended stay in a federal prison.

Did you know that creditors and family members can be sued to recover payments owed to them on preexisting debts even if they money was actually owed to them?  They can.  Paying back mom and dad is a good thing, but if done within a year of filing bankruptcy the trustee might sue them to get the money back.

We are thorough and make sure to ask all the necessary questions to ensure that there will be no surprises.

For a free consultation call us at (435) 627-1260.