With budgets tight these days, people considering filing for bankruptcy are often looking to save a few dollars by either filing their bankruptcy case themselves or by hiring a “petition preparer,” who is not a lawyer, to fill out the forms for them and file the case at a lower cost. When people ask me if they can file their own bankruptcy case, I say sure, but you can also pull your own teeth. You will likely only file bankruptcy one in your life, and the errors you make may cause even more damage to your finances. Remember, you get what you pay for.
A bankruptcy attorney in California recently related the horror story that he witnessed one day while attending a meeting of creditors in a Chapter 7 case with his client. The person had paid a petition preparer $99.00 to fill out the paperwork and file her bankruptcy petition. However, upon questioning during the meeting of creditors, the bankruptcy trustee learned that she owned three properties, one with $60,000 in equity, another property that was a retirement investment and a rental property where the tenants had not paid their rent. During the meeting, the debtor seemed very proud of her investments. However, the bankruptcy trustee quickly discovered that the debtor had filled out her bankruptcy schedules incorrectly and had not claimed the correct exemptions, among other problems. By the end of the meeting is was clear that the trustee planned to collect the back rent from her tenants and sell her other two properties for the benefit of her creditors. Sure, she had saved money by having a petition preparer draft her petition for $99.00–but she was going to lose everything she worked so hard for.
As a Chapter 7 Trustee, I have seen many pro se debtors’ cases dismissed because they either did not file the bankruptcy forms completely, properly or correctly, or they have failed to provide my office with the required documents within a week prior to the meeting of creditors.
Also, a bankruptcy petition preparer is not permitted to give legal advice and he or she cannot represent you at the meeting of creditors or in court. Legal advice includes telling you which type of bankruptcy to file and telling you what property you can keep after you file. Petition preparers are only permitted to type bankruptcy documents and charge a reasonable fee, which is usually no more than $100. If your bankruptcy case is dismissed because your petition preparer acted negligently, or with intentional disregard for the bankruptcy laws, or committed fraud or deception upon you, you have a right to sue them and recover your damages and attorney’s fees. But remember, you can avoid all of these problems in the first place by hiring an experienced bankruptcy attorney.
The attorneys at the law firm of Margulies & Associates, LLC have assisted thousands of clients through the bankruptcy process. Please call us for a consultation today. Laura Margulies is a principal and Fred Nix is an associate in the law firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia. To learn more about our firm visit our web site at www.law-margulies.com.