Should I Use a Bankruptcy Petition Preparer?
Bankruptcy petition preparers may be helpful, but be aware of theirlimitations.
As bankruptcy filings increase nationwide, more and more people are seeking help from bankruptcy petition preparers, also called "typing services" or "paralegals." These are non-lawyer typing services that charge a fee to generate your bankruptcy forms, under your strict direction and control.
It is important to remember that bankruptcy petition preparers are not lawyers and cannot provide any legal advice regarding your bankruptcy. But, if you don't have access to a typewriter or computer, a good bankruptcy petition preparer can produce the forms you need for a reasonable fee.
Before you hire a bankruptcy petition preparer, learn what they can and cannot do, what legal requirements apply to their businesses, and where to get more bankruptcy information and legal help. (To learn more about bankruptcy, see Nolo's area on Bankruptcy: Deciding Whether to File.)
What Is a Bankruptcy Petition Preparer?
A bankruptcy petition preparer is any person or business, other than a lawyer or someone who works for a lawyer, that charges a fee to prepare bankruptcy documents. Under your direction and control, the bankruptcy petition preparer generates bankruptcy forms for you to file either by typing them or inputting information into a bankruptcy software program.
Because bankruptcy petition preparers are not attorneys, they cannot provide legal advice or represent you in bankruptcy court. This means that the bankruptcy petition preparer cannot:
- tell you which type of bankruptcy to file
- tell you not to list certain debts
- tell you not to list certain assets, or
- tell you what property to exempt.
In essence, you must understand what debts your bankruptcy will discharge, what will happen to your property in the bankruptcy, and what laws should be used to exempt your property from being taken for the benefit of your creditors.
In addition, you must file the bankruptcy papers yourself and represent yourself in court. In other words, you are responsible for your case. You act as your own attorney and use the bankruptcy petition preparer as a typing service that transposes the information you give them onto the official forms.
Why Use a Bankruptcy Petition Preparer?
The bankruptcy petition preparer can't tell you anything about the law or the bankruptcy process, so why use one?
If you don't have ready access to a typewriter or computer, then you may want to pay someone to prepare the forms for you. A good bankruptcy petition preparer will have up-to-date bankruptcy computer software that will generate the documents quickly and relatively easily. And most bankruptcy petition preparers charge low fees, especially compared to lawyers.
Before you hire a bankruptcy petition preparer, learn about bankruptcy law and the options for completing your bankruptcy paperwork (see "Ways to Get Bankruptcy Help," on the next page).
Requirements for Bankruptcy Petition Preparers
Anyone can be a bankruptcy petition preparer. There are no educational, age, or experience requirements. Nor are bankruptcy petition preparers required to take a test or pass a background check.
Nevertheless, bankruptcy law does require bankruptcy petition preparers to follow certain business practices. Among other things, bankruptcy petition preparers must:
- provide a written contract defining their services and fees
- provide written disclosures summarizing the different kinds of bankruptcy and the associated procedures
- identify themselves (in their marketing materials) as debt relief agencies providing services under the federal bankruptcy code
- not charge an unreasonable fee (fees generally range from $100 to $200)
- not collect or handle the bankruptcy filing fees or other court fees (you must do that yourself)
- file a fee disclosure statement with the court (stating how much they have charged you for services)
- include their name and social security or tax identification number on the documents they prepare, and
- not use, or advertise with, the word "legal" or any similar term.
These restrictions apply only to bankruptcy petition preparers, who, by definition, charge a fee. People who help others for free are not subject to these rules.
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