My inspiration for this blog occurred earlier this week when I was attending a 341 hearing with some clients who had filed Chapter 7 bankruptcy in the Southern District of Indiana in Indianapolis. As often occurs at 341 bankruptcy hearings, my clients and I had to wait for their names to be called and had a chance to observe a few hearings. One of the bankruptcy debtors who was called prior to my clients was pro se, meaning he filed his bankruptcy petition without the assistance of an attorney.
There is absolutely no requirement that anyone who files bankruptcy have an attorney. However, this hearing was interesting to me because the debtor testified that he looked up bankruptcy in the phone book and called who he though was an attorney to assist him with his bankruptcy. It was not until after his bankruptcy petition had been filed that he found out the person assisting him was not an attorney, but was a bankruptcy petition preparer. A bankruptcy petition preparer is a person who simply fills out the bankruptcy forms for a debtor. A bankruptcy petition preparer is not allowed to give any legal advice because they are not licensed to practice law. A bankruptcy petition preparer cannot go to the 341 hearing with the pro se debtor....the debtor appears at that hearing alone. Click here for the US Bankruptcy Court's warning about some bankruptcy preparers.
In the case earlier this week it was clear that the petition was not filed properly. The debtor's hearing took about 20 minutes, which is fairly long for the typical Chapter 7 case. It is more common for them to take about 5 minutes. On top some amendments (changes) to the petition that the trustee required, the debtor learned that he would need to turn over a portion of his income tax refund and testified that the bankruptcy petition preparer had advised him the refund would not be claimed by the trustee. In the end, the trustee also continued the debtor's 341 hearing, meaning that if the changes the trustee required were not done the debtor would be required to return for a second 341 hearing.
I can't recall exactly how much the pro se debtor at that hearing testified he paid the bankruptcy petition preparer, but I believe he said it was about $500.00 plus the filing fee of $306.00. I found this to be sad because by the time you factor in the amount the pro se debtor paid to the bankruptcy petition preparer, plus the amount the pro se debtor will have to turn over to the trustee, plus the amount the pro se debtor will likely need to pay a bankruptcy attorney to fix the petition he is almost certainly paying more than if he had hired a bankruptcy attorney from the start.
The bottom line is that unless you are confident in your ability to file a bankruptcy petition based on your own knowledge and research proceed with caution in deciding to complete bankruptcy through a bankruptcy petition preparer. A bankruptcy petition preparer is only a person who fills in forms based on information you provide and cannot give you legal advice. There is a reason attorneys go to college for 4 years, then law school for 3 years, then have to have a character and fitness to practice law evaluation, must pass a test about ethics in the law, and then pass a bar examination that allows them a license to practice law. The reason is that poor legal advice can have real negative impacts on peoples' lives. Bankruptcy petition preparers are no doubt going to be less expensive than an attorney....but they also know less, are not licensed and are not authorized to practice law. In addition, most bankruptcy attorneys I know (including myself) have payment plans than can make bankruptcy with an attorney possible for most people.
I also offer one free initial consultation at Halcomb Singler for those thinking about the need to file bankruptcy. At this meeting I can answer questions regarding bankruptcy and let you know whether or not I believe you are a good candidate for bankruptcy. At the end of your consultation if I believe you could benefit from bankruptcy I will quote you a flat fee and explain our payment plan. Whether you file bankruptcy and whether or not you select me as your attorney is up to you. If you would like to schedule a free initial consultation call (317) 575-8222 or click here.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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