Bankruptcy Petition Preparers and Other Bad Ideas

The Bankruptcy Code defines a bankruptcy petition preparer as “a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney, who prepares for compensation a document for filing.”  The Justice Department uses the term “typing service” to describe bankruptcy petition preparers.  This is because the limits on what a bankruptcy petition preparer can and cannot do are extreme.
Bankruptcy Petition Preparers are not attorneys and they are not qualified to give legal advice.  They cannot advise you as to what chapter of bankruptcy will best serve your purposes.  They cannot tell you what property to exempt or how to exempt it.  They cannot help you avoid the perils of fraudulent transfers or preference payments.  They cannot attend hearings with you or represent you in court.  In affect, all that a bankruptcy petition preparer can do is read you the questions on the bankruptcy form and type your answers.
For this reason the Bankruptcy Court for the Eastern District of Michigan has set a firm $100.00 cap on the amount of money that a bankruptcy petition preparer can charge for their services.  The Court understands the limited benefit that bankruptcy petition prepares provide and it also understand that a large percentage of cases that are filed through the use of bankruptcy petition preparers fail to successfully obtain a discharge.
The bottom line is that individuals who are seeking bankruptcy protection are vulnerable.  Money is tight and they are looking for the most affordable help that they can find.  They look to cut corners through the use of bankruptcy petition preparers or on-line form preparation software and manuals.  However, the cost of a good bankruptcy attorney is generally far less than the cost of the damage that can be done through inadequate representation.
A bankruptcy attorney can help you avoid losing your home, car or other assets.  A bankruptcy attorney can help avoid having the Trustee sue your family and friends for preferential payments or fraudulent transfers. A bankruptcy attorney can help you analyze your situation and determine which type of bankruptcy will best accomplish your goals.  An experienced bankruptcy attorney is not only a reasonable expense, an experienced bankruptcy attorney is a necessary expense.