I read a recent decision from the 9th Circuit Bankruptcy Appellate Panel that dealt with the issue of bankruptcy petition preparer errors and omissions in a chapter 7 bankruptcy case. The full case can be found here.
In this case the Debtor hired a non-attorney bankruptcy petition preparer to help her with her chapter 7 bankruptcy filing. The Court found that the non-attorney preparer violated several bankruptcy laws by failing to disclose required information. The debtor had paid the preparer a hefty fee of $1,000 and the US Trustee sought disgorgement of the fees. The Bankruptcy Court agreed, and required the preparer to refund all of the fees, and the Bankruptcy Appellate Panel affirmed.
An important lesson in this opinion is what a bankruptcy petition preparer can and can’t do vs. a bankruptcy attorney. A bankruptcy petition preparer can essentially only type information into forms. Petition preparers can not, under any circumstance give legal advice. They are not allowed to tell a debtor what chapter they should file, what exemptions should be used, and other critical information that a person facing bankruptcy should know. Essentially, all a preparer is allowed to do is type information given to them into a bankruptcy petition. Although it may be tempting for a debtor who is struggling financially to hire a bankruptcy petition preparer with the thought that they could save few hundred bucks, it could be a dangerous road to go down. Bankruptcy law is confusing, ever-changing and overwhelming at times. Attorneys and Lawyers have the ability to guide a debtor down the right path, see pitfalls and concerns a non-attorney may not, and actually give legal advice.
If you are facing bankruptcy you are probably already stressed out to the max. By hiring a good, capable and experienced attorney you are ensuring that your case is being handled correctly and that you are getting the advice that you need and deserve. Although hiring an attorney may cost more in the short-term, it could end up saving you thousands in the long-run if the attorney is able to guide you in the right legal direction. You deserve a fresh start and you deserve to get one as painlessly as possible. My advice is to hire a good bankruptcy attorney, get the process behind you and move on. Several of us even offer payment plans if you are unable to pay all of your fees up front.