Interviewer: What advantages, if any, do the 299 bankruptcy doc prep companies offer consumers?
Even Attorneys Regard Bankruptcy as a Complex Area That Requires Experience and Expertise for the Best Outcome
Jeanne: First off let me say that not every attorney plays in bankruptcy court. Bankruptcy is very technical and there are some traps for the unwary and attorneys are smart enough to know that they’re either going to do it or they’re not going to do it. But they’re not going to dabble in bankruptcy; nobody does that because there are still some highly difficult aspects of it.
Bankruptcy federal law and jurisdiction for federal law rests with a federal judge but even the federal district judge has an appointed judge under him called bankruptcy judge who hears nothing but bankruptcy cases. If there’s an appeal from a case the bankruptcy judge heard it goes to a federal district court judge. However, bankruptcies are far too prevalent and far too financially technical to be cases that a federal district court judge would have to hear every day, there are far too many of them.
Bankruptcy Judges Are Appointed to Hear Only Bankruptcy Cases to Relieve the Burden on the Federal Level
That’s why they have these specialists, which are the bankruptcy court judges. Again, he’s an adjunct to the federal judge. Additionally, people need to be aware that the bankruptcy code does allow for non-attorneys to prepare bankruptcy forms for you. But there is a very fine line between typing up a form for someone and giving them advice on it that the bankruptcy courts will follow like a hawk.
Interviewer: A bankruptcy specialist attorney knows the law, they know the forms; they know everything that you need to do. That’s how I would address the question about the document preparation companies.
Using a Bankruptcy Petition Preparer Will Result in an Additional Meeting for the Petitioner
Jeanne: If the court knows that you used a bankruptcy petition preparer, you will have an extra meeting with the judge or the judge will ask you what you paid and what advice you were given. This is because they will go after bankruptcy petition preparer that give legal advice and it’s as simple and easy to cross that line.
Only an Attorney Is Allowed to Offer Legal Advice on a Bankruptcy Filing
When you file bankruptcy, you have to list all of your property and all of your creditors and all of your debts and a budget. You’re listing all of your property but remember, we had a talk about that there’s laws called exemptions that protect your property like the homestead exemption. Most people don’t understand that.
In addition to the listing of property, you have to indicate what exemption law you are taking to protect your property. If the petition preparer gives you any advice as to what the law is then they are in violation and the court will call them into bankruptcy court and sanction them because they have given advice.
When the court sees that you used a petition preparer, you will have to go to court and explain. Not that you’re in trouble but they will want you to come give them evidence that they can monitor, remember they’re monitoring the attorneys on the attorney fees making sure that we won’t use and abuse debtors.
If you use a petition preparer then you’ll have an extra court proceeding where you have to go and explain to the judge because they want to gather information on these places and if they have crossed the line then they will sanction those firms.
Interviewer: How often do you come across that?
Jeanne: That has occurred. I’ve been in court on another matter for myself and somebody is without an attorney, trying to talk to a federal judge about why things were done the way they were and it’s clear that they need to hire an attorney because they are in over their head. Every single case filed by someone who indicates that their paperwork was done by a monitoring petition preparer will get a summons from the court to go talk about it. The court wants to make sure that there’s no fraud associated with the filing of bankruptcy.