Filing Bankruptcy: File Yourself, Hire a Lawyer or Use a Petition Preparer?
By Patricia Depew
Apr. 17, 2012 8:30a
Filing Bankruptcy: File Yourself, Hire a Lawyer or Use a Petition Preparer?
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bankruptcy attorney. I will outline the benefits and limitations of all three in this guide.
After the decision to seek bankruptcy protection has been made, the next step is to determine the most appropriate means of help with the process. When it comes to the actual bankruptcy process, there are three options. Either file the paperwork and go to court yourself, hire a bankruptcy petition preparer or hire an attorney who specializes in consumer bankruptcy law.
Filing Bankruptcy Yourself
There is no requirement that you must hire someone to help you with your bankruptcy petition. You may file bankruptcy "pro se" meaning you can yourself. The cost benefit of filing bankruptcy yourself can make filing yourself look very appealing during an already difficult financial time. But, it should be noted that a bankruptcy proceeding involves much more than just "filling out forms", and the consequences of poorly prepared bankruptcy documents or poor legal decisions in court can end up costing you much more than the cost of hiring a professional to represent you.
Using a Petition Preparer or Filing Service
Petition preparation services are not a recommended option for bankruptcy filers, as many people often misunderstand the function of these services. Bankruptcy petition preparers are not attorneys, and cannot offer any, repeat any, legal advice or guidance. What a petition preparer can do is fill out the bankruptcy petition forms based on the information you provide. By law they are allowed to provide typing services only. Nothing more. Over the past year, a number of such “petition preparers” have been closed down and the owners arrested for practicing law without a license.
Practice of Bankruptcy Law Without License
What constitutes the practice of law without a license? Any advice given to an individual regarding a legal matter constitutes the practice of law. Any time a choice is made as to which form is to be used or how best to answer a question on the legal form on behalf of an individual constitutes the practice of law without a license. Any time advice is given to an individual as to what legal strategy to use in a legal matter constitutes the practice of law without a license. In short, a petition preparer or paralegal can provide nothing more than a typing service unless they are working under the direction and supervision of an attorney.
Serious Limitations of Bankruptcy Preparation Services
The service provided by such petition preparers is in general inadequate, often erroneous and most often illegal. And, when the debtor’s case is closed without a discharge of his/her debt, the debtor will be worse off legally and financially than when they began the bankruptcy process. California Business and Professions Code Section 6162 restricts the practice of law to active members of the State Bar of California. Paralegals and petition preparers are prohibited under California law section 6450 (b)(5) from engaging in conduct that constitutes the unlawful practice of law. Anyone other than an attorney is prohibited from performing the following activities:
- Providing legal advice
- Representing a client in court
- Selecting, explaining, drafting, or recommending the use of any legal document to or for any person
- Acting as a runner or capper
- Engaging in conduct that constitutes the unlawful practice of law
- Contracting with or being employed to provide legal services
- Establishing the fees to charge a client for the services the paralegal or petition preparer performs
- Inducing a person to purchase legal services or enter into a transaction from which income or profit or both, may be derived.
Petition Preparer Cannot Offer Advice
This is one of the most often misunderstood aspects of a bankruptcy petition preparation service. These services by law cannot offer legal advice of any kind. They cannot tell you how you can keep certain assets, how to stop a foreclosure proceeding, how bankruptcy law can protect your assets, what type of bankruptcy would be best for you, or a great number of other types of advice that an attorney can provide.
Hiring a Bankruptcy Attorney
By far, the easiest and most effective way to file for bankruptcy is to hire a skilled bankruptcy attorney. A bankruptcy lawyer will guide you through the entire process, create a strategy that will allow you keep much of your property, ensure no mistakes are made in the paperwork, and most importantly, represent you in bankruptcy court.
What Are Your Expectations in Filing for Bankruptcy?
For anyone who owns a home, has business interests or any assets, hiring an attorney to protect them is the wisest choice. There are just too many complexities in the bankruptcy law system for a non-attorney to be able to correctly navigate all the options with the expertise of an experienced bankruptcy attorney.