Yes, so called paralegal typing services can type up your bankruptcy for much less money than you will pay for an attorney. However, as in most things in life, YOU GET WHAT YOU PAY FOR.

A person advertising as a Bankruptcy Preparer who is not an attorney can ONLY type your papers. By law they are not allowed to give you ANY legal advice, including which set of bankruptcy exemptions to use to best protect your belongings. You could lose your house, tax refund, vehicle, personal injury award, bank accounts, in some cases even your retirement and other assets, all because you did not know which set of exemptions to use. Often these petition preparers do not know how the courts interpret the exemptions or how to use "shadow exemptions" to maximize the protection of assets. They don't even know why some Individual Retirement Account money may be perfectly safe from creditors while other funds in the same IRA account can be taken from the debtor.

We have helped many people unravel the mess a Bankruptcy Preparer has created. This can be more expensive than the bankruptcy would have cost in the first place! Sometimes the damage done cannot even be repaired. Even where the damage can be repaired, it is certainly more of a headache for you.

Another area in which a Bankruptcy Preparer cannot advise you is that of lien avoidances. A lien avoidance motion is needed if you have personal property (i.e., TV, stereo, furniture) that secures a loan. Many times you may not even be aware that you have just pledged everything you own to the loan company. Sometimes they tell you to list everything "for insurance purposes." It is insurance - that you will pay them or lose your belongings! A motion with the Bankruptcy Court must be filed to have this lien removed so you can keep your household goods.

If someone has a legal judgment against you, there may be a judgment lien against your residence. This, too, can be removed if the proper motion is filed. A Bankruptcy Preparer cannot legally tell you if you need these services, let alone represent you in court for the motions.

If you decide to use a Bankruptcy Preparer anyway, be aware that they are only allowed to charge $150. Total. That's it. They are not allowed to collect the court filing fee. Some preparers have been known to collect this fee, file the papers using a "minimum down" fee that is available to "pro per" debtors, then pocketing the rest of the money! This leaves the debtor not even knowing that they are going to be dismissed for failure to pay the remaining fees! If an attorney did that, they would be disbarred. Unlike your barber or beautician, Bankruptcy Preparers are totally unregulated and unlicenced. You could, without any training or knowledge at all, go out and call yourself a bankruptcy petition preparer and not violate any laws. Frightening, isn't it?

The problems with people losing assets because of unethical or incompetent Bankruptcy Preparers reached epidemic proportions in the 1990's. As a result of these horrific results, Congress in 1994 passed laws that ban these typing services from even using the word "legal" in their names, advertising or even placing an ad in a category that uses the term "legal". If you see a person or business (other than a law firm) that prepares bankruptcy documents that uses the word "legal" in any way, they are violating federal criminal laws.

I am not saying that all Bankruptcy Preparers are unethical. However, some Preparers do take advantage of people. Far more often they are simply incompetent. If you have been charged too much or you have run into problems with a Preparer, give us a call! We often, but not always, have been able to help people in your position. Of course even the best "damage control" generally is never as good as having it done right to begin with.