By Ryan C. Wood
I am not just saying this because I practice bankruptcy law. This is my advice based upon what I have witnessed over the years. Yes, you should use an experienced attorney to provide you legal advice, prepare your bankruptcy petition and file your bankruptcy case. If you want to lose assets that could be protected or not get the full benefit of the bankruptcy laws, do not hire an attorney. Just wing it. You are only messing with your entire financial past and future for the rest of your life. So spend the extra $1,000 plus and hire an attorney to make sure your bankruptcy case is prepared and filed properly. Why cause yourself more stress and anxiety? Part of the bankruptcy process is changing choices and behavior. Please begin to make better choices regarding your finances. Part of that should be getting the proper advice to make sure you make the best decision based upon your circumstances.
Never Ever Retain A Bankruptcy Petition Preparer
The fact that bankruptcy petition preparers are even allowed is a sad fact in the bankruptcy industry. In my personal opinion bankruptcy petition preparers cause much more harm than they will ever benefit people in financial distress. In the Northern District of California bankruptcy petition preparers can only charge a total of $150 for preparing the petition. What can you get for a mere $150? That is not even four tires on vehicle. It is not even a nice meal and a movie for a family of four. But this is how much some people think it will take to make sure their bankruptcy is filed properly. Or $150 is 15 combo meals at Carl’s Junior. So for 15 Carl’s Junior combo meals you can make all of your financial problems and debts go away forever. Yeah right.
There are also a number for disclosures and forms that must be filed to disclose that a bankruptcy petition preparer was retained and paid. Bankruptcy petition preparers are forbidden from providing any legal advice or providing any advice about exemptions to protect assets. It is like anything. You get what you pay for. If you retain a bankruptcy petition preparer and something goes wrong you will end up calling me or some other bankruptcy attorney to try and fix the problem. The bankruptcy petition preparer can do nothing for you. First, you are now going to get charged higher attorneys’ fees because the situation requires it. Second, the problem may not be able to be fixed. You have painted a picture and you may not be able to go back and change that picture. Bankruptcy petition preparer may not: (1) Advise you whether to file bankruptcy or whether chapter 7, 11, 12 or 13 is more appropriate for you; (2) Advise you whether your debts will be eliminated, or “discharged,” in a bankruptcy case; (3) Advise you whether you will be able to keep your home after filing a bankruptcy case; (4) Advise you as to the tax consequences of filing a bankruptcy case; (5) Advise you whether you should promise to repay, or “reaffirm,” debts to creditors; or (6) Charge you more than $150 for preparing, photocopying and forwarding your bankruptcy papers to the bankruptcy court. Also, the clerk of the court and their office is not allowed to assist you with the preparation of the voluntary bankruptcy petition, other forms and schedules. You are still required to conform with the Federal Rules of Bankruptcy Procedure, the United States Bankruptcy Code, the Northern District of California’s Bankruptcy Local Rules, Administrative Procedures and General Orders.
How Many Cases Have You Filed or Been Involved?
It always amazes me when someone calls me and they are two days away from their scheduled 341 hearing and now they want to retain my services to make sure things are done correctly. They usually proceed to tell what I need to do to help them. Look, Ms. Lin and I have been the attorney or record on well over 1,100 bankruptcy cases now. I personally have administered hundreds, maybe even another 1,000, Chapter 13 cases as staff attorney for David Burchard, the standing Chapter 13 Trustee for the Santa Rosa and San Francisco Divisions of the United States Bankruptcy Court for the Northern District of California. There are no attorneys in the Bay Area with this experience that will file bankruptcy for you. I am a professional like an artist painting a picture. I want need to paint the picture from beginning to end. I also cannot be liable for the part of the painting that was painted poorly or wrong.
Most Reputable Bankruptcy Attorneys Have Insurance
Ask the bankruptcy petition preparer if they carry insurance to protect you, their client, from potential mistakes. One of the main reasons to hire a bankruptcy attorneys is they carry professional liability insurance to make you whole no matter what happens. Every now and then I have a client that is just so freaked out that I say, “Look, we have filed over a thousand bankruptcy cases, but if nothing else, we have insurance to protect you. You cannot lose retaining us to file your bankruptcy case.” If we make such an egregious mistake our clients are protected by our professional liability insurance. Many Chapter 7 bankruptcy cases vary in the fee range of $1,000 – $1,500 in attorneys’ fees. For $1,200 you get all of our experience plus you are protected by our insurance. Most Chapter 7 bankruptcy cases involve discharging $40,000 or more in general unsecured debts. What a deal. If you qualify, you get an attorney that has massive experience and has done everything possible to protect you, the client for any harm. What a deal. You cannot lose. If a bankruptcy attorney does not have professional liability insurance they are required to disclose it in writing to you.
Here Is What Happens In The Real World
There are actually few bankruptcy cases in which the official disclosures and rules are followed regarding bankruptcy petition preparers. The person preparing the bankruptcy petition does not want to be limited by the $150 max fee. So they mislead the bankruptcy filer who does not know they should only be charged $150. The person charges $1,000 to prepare the petition and never puts there name on the petition. Nor do they file any of the required disclosures with the bankruptcy petition. They tell the bankruptcy filer to just tell the trustee that they prepared the bankruptcy petition themselves. So many Pro Se bankruptcy filings are actually assisted bankruptcy filings that are violating the rules. Many attorneys help people without following the rules and charging bankruptcy filers too much money too. The attorney actually takes more than $150, say $2,000, provides legal advice to the bankruptcy filer, drafts a skeleton bankruptcy petition and gives it to the bankruptcy filer to file themselves. The bankruptcy filer is now twisting in the wind. This is not how the system is supposed to work. Unfortunately there is very little regulation in this area by the United States Trustee’s Office or individual chapter 7 trustees. The proper regulation of bankruptcy petition preparers and attorneys not listing their names in the petitions they prepare would lead to better judicial economy, protect bankruptcy filers rights better and lead to fewer cases bankruptcy judges have to deal with on their calendars. We shall see.