Should You Use A Bankruptcy Preparer?
You’re considering a bankruptcy, and are looking for bankruptcy attorneys. But then you see an advertisement, or hear from a friend, about something called a bankruptcy preparer. It seems cheap—much cheaper than a lawyer. Why not save money and use a bankruptcy preparer?
What is a Bankruptcy Preparer?
Bankruptcy preparers often are not attorneys. They may be legal professionals, such as paralegals, or others with experience in bankruptcy, but not licensed practicing attorneys.
A bankruptcy preparer helps you prepare your bankruptcy forms. A bankruptcy preparer will have or get the forms you need, and tell you the information you need to provide. The preparer will often type up the form, and explain to you what the forms are asking for. The preparer will submit the forms to get your bankruptcy case filed.
No Legal Advice
But a bankruptcy preparer cannot give you legal advice about your bankruptcy, and this is why it is always better to use a bankruptcy attorney. For example, a preparer cannot advise you what kind of bankruptcy to file, or give you the pros and cons of each type as applied to your specific situation.
A preparer can’t help you determine what assets should be exempt, or how to manage your assets in ways to maximize your exemptions. If you have questions that have to do with law, the preparer cannot advise you.
For example, a preparer may be able to tell you what you can expect at a 341 meeting. But a preparer could not advise you as to what the legal ramifications may be when you tell the trustee something about your paperwork.
If you give your paperwork to a preparer, the preparer will submit it. But unlike a preparer, an attorney will review your paperwork, and if there is something there of concern, the attorney will tell you so that you can make an educated decision whether or not you want to file for bankruptcy.
Although many preparers are ethical, many are not. They may tell you to leave off certain information on your bankruptcy forms, which is illegal, and can constitute bankruptcy fraud. An attorney, who is a member of the state bar, is ethically bound to make sure that you are filing and disclosing everything properly and legally.
On Your Own
Once the preparation is done, the preparer is finished. You will have no help during or before your 341 meeting, or dealing with subsequent filings in bankruptcy court. You will have no help handling redemption of secured liens, or with managing secured creditors, such as mortgagees. If a problem arises, such as a creditor asserting a lien, or objecting to discharge, you are on your own if you use a preparer.