Only it often comes with a big price tag.
Nearly 45% of the Central District CA Chapter 7 cases were filed by individuals doing it themselves. The national rules committee drafted the new bankruptcy forms with the unrepresented in mind.
Why do people take such a momentous step as filing bankruptcy without an attorney?
They go it alone, without a lawyer, for three reasons:
- They assume they can’t afford a lawyer.
- They assume that there are no consequences for doing it badly.
- They assume it’s “just filing out forms”.
What bankruptcy filing entails
Southern California bankruptcy lawyer Jay Fleischman outlined the steps in a bankruptcy case. Each of those decisions is one a pro per ( a person representing themselves in court) has to make to file their own bankruptcy case.
It’s a pretty daunting list.
You have to
- decide if bankruptcy is the best choice;
- choose a chapter;
- list all your tangible and intangible assets and your property transfers
- get the right credit counseling
An industry has sprung up to “serve” those bankruptcy filers who don’t want to do it entirely alone, but think they don’t need, or can’t afford a bankruptcy lawyer. They’re called petition preparers.
Enter the petition preparer
It takes no training or competence to hang out a shingle as a petition preparer. Anyone can call themselves a bankruptcy petition preparer.
A petition preparer is supposed to do nothing but type up the information provided by the debtor. They are not supposed to explain the forms or the choices those forms require. To do more than type is the unauthorized practice of law.
The wide spread harm that untrained preparers caused to their customers triggered special provisions in the 2005 bankruptcy “reform” law. At least now they have to disclose their involvement in drafting the bankruptcy schedules.
Special local rules limit what a preparer can charge and require that they identify themselves on the cases they handle or, more often, mishandle.
Sometimes, to avoid exposure, they coach their clients to lie about their involvement in the case.
Just for the record: lying in a bankruptcy case is never a good thing.
Exposed in public
So I get a really mixed feeling when a debtor appears at a 341 meeting in Oakland without a lawyer.
The trustees there ask the debtor to turn to Schedule C, read the code sections from the California Code of Civil Procedure beside each asset they’ve claimed exempt and tell him how they chose that exemption.
The trustee usually gets a blank stare or some confused stammering. The debtor has no idea how to answer.
Most people who have filed bankruptcy are scared to death about the first meeting of creditors anyway. But this question from the trustee is designed to flush out the fact that either, the debtor had “help” with their petition that wasn’t disclosed, or that the preparer did more than they are legally allowed to.
The preparer obviously told the debtor what exemption choices there were, and selected exemptions for the client.
This scene is particularly painful, since badly done exemptions may cause unrecoverable damage to the debtor.
While it’s the petition preparer who has broken the law, it’s the debtor who may pay for the bad advice.
My advice: confine your do-it-yourself inclinations to craft projects. Get competent legal help before filing bankruptcy.
Without a lawyer you may find you can’t get out of bankruptcy, no matter the cost of remaining.
Image courtesy of Crisg and OpenClipArt