How to Hire a Bankruptcy Petition Preparer

The United States bankruptcy code allows non-lawyers to prepare bankruptcy petitions and charge a fee for this service. However, petition preparers are not attorneys and cannot give legal advice. If they do, then they are practicing law unauthorized and can be sanctioned. If you are interested in hiring a bankruptcy petition preparer, then you should give serious consideration to hiring a lawyer instead. Although costs may be a concern, you can look for low cost legal help.

Part 1

Part 1 of 3:

Identifying if You Want a Lawyer Instead

1
Identify what a bankruptcy preparer can do. A bankruptcy petition preparer works under your control to generate the forms needed to file for bankruptcy. Generally, the preparer has special software that they can use to create the forms.^{[1]XResearch source}
- A preparer is especially helpful for those who don’t have access to a typewriter or to a computer for any length of time.
- If you have access to a computer, then you can download PDF forms which are fillable (i.e., you can type information directly into the form).^{[2]XResearch source}
2
Understand what the preparer cannot do. A bankruptcy petition preparer cannot do many of the tasks of an attorney. For example, the preparer cannot do any of the following:^{[3]XResearch source}
- Advise you about which chapter of the bankruptcy code to file under.
- Advise you about what debts to list.
- Tell you whether to list certain assets.
- Explain what property may be exempted from the bankruptcy estate.
- File the forms for you.
- Represent you in court.
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3
Identify when you need a lawyer. Basically, lawyers can do everything a petition preparer can’t. For example, you will need to talk with a lawyer if you don’t know what chapter to file under (such as Chapter 7 or Chapter 13). The lawyer will look at your debts and assets and talk to you about your goals. You should hire a lawyer if you need help with the following:^{[4]XResearch source}
- Draft all paperwork for you and explain it to you.
- Advise you about what debts to include and what assets are exempt.
- File paperwork for you with the court and communicate with creditors and the trustee.
- Represent you in court.
4
Compare prices between preparers and lawyers. Because lawyers can do so much more than a preparer, you would be better off hiring a lawyer. However, lawyers cost quite a bit more than a bankruptcy preparer. Before deciding to go with a preparer, you should compare prices.
- Generally, petition preparers will charge $100-200.^{[5]XResearch source}
- Attorneys typically charge $500-$3,500 for a Chapter 7 bankruptcy and $2,500-$6,000 for a Chapter 13 bankruptcy. The amounts will vary based on your region and the complexity of your situation.
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Part 2

Part 2 of 3:

Hiring a Bankruptcy Petition Preparer

1
Find preparers. You should find local bankruptcy preparers. Avoid preparers who operate online. Instead, get referrals to different preparers from the following:^{[6]XResearch source}
- Ask friends, family, or colleagues if they know of anyone who serves as a bankruptcy petition preparer.
- If you have used a lawyer before, then call them up and ask if they can recommend anyone.
- Look in the Yellow Pages.^{[7]XResearch source}
2
Ask preparers questions. You shouldn’t hire the first preparer that you find. Instead, call them up or send them an email and ask them questions. You can use the answers to compare preparers. For example, you should ask about the following:^{[8]XResearch source}
- Their fee. Bankruptcy law requires that preparers charge a reasonable fee and that they file their fee rate with the local court.
- Their experience. Ask how many bankruptcy petitions they have filled out.
- Any problems they have had. Ask if any of their petitions have been rejected for being filled out improperly.
3
Get a contract. Bankruptcy law requires preparers to provide you with a written contract in which they explain their services and how they charge fees.^{[9]XResearch source} If a bankruptcy preparer will not provide you with one, then you should look elsewhere.
- You should also get a written summary describing the different bankruptcies available to you.
4
Look for red flags. If you choose to hire a bankruptcy petition preparer, then you need to be on alert for unscrupulous ones. These people will give you (wrong) advice even though they aren’t allowed to, and they will mess up your bankruptcy petition. You will then have to suffer the consequences. To avoid this unfortunate situation, look for the following red flags:
- The preparer tells you what chapter to file under. Actually, this is your decision to make.
- The preparer does anything other than type. Remember, bankruptcy petition preparers are not licensed to practice law. They cannot answer legal questions.
- The preparer claims they can file the bankruptcy petition for you. Federal law prevents them from handling the fee you need to pay to the court.
- The preparer advertises using the term “legal.” They are prohibited from doing so.^{[10]XResearch source}
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Part 3

Part 3 of 3:

Finding Low Cost Legal Help

1
Get a referral to a bankruptcy lawyer. You would be better off using a lawyer than a petition preparer. You can find names of bankruptcy lawyers in a variety of places. For example, you should check the following:
- Ask people you know who have filed for bankruptcy. You might not want to admit to friends and coworkers that you are bankrupt. However, if you know someone who has used a bankruptcy attorney, then you can ask for their name.
- Contact your state’s bar association. They often provide referrals to attorneys.
2
Ask about fees. Once you have all of your referrals, you should call up the lawyers and ask them how much they charge to do a bankruptcy. If the lawyer quotes you an hourly rate, ask them to estimate how much time it will take.
- Since you are really focused on price, you probably don’t need to schedule a consultation with the attorney unless it is offered for free. Instead, try to get your questions answered over the phone.
3
Negotiate the fee. Ask the lawyer if their fee is negotiable. In particular, ask if they are willing to offer a flat-fee and ask how much it is. You can then compare the fees of different lawyers you spoke with.
- Lawyers probably won’t offer to negotiate a fee. And many of them probably won’t budge. However, you can always ask.
- If the person works in a small firm or is a sole practitioner, then they might be more willing to negotiate a flat fee.^{[11]XResearch source}
4
Ask about “unbundled” legal services. In many states, lawyers are allowed to handle only part of the case. For example, a lawyer could offer you advice or look over the forms that you fill out yourself.^{[12]XResearch source} You then handle the rest of the case, such as filing papers and representing yourself in court. This arrangement is called “unbundled legal services” or “discrete task representation.”
- You can ask a lawyer if they offer this service. Unbundled legal services help people keep their legal fees low while getting them the legal help they need.
5
Find a legal services organization. These organizations offer free legal help to those in financial need. You can find legal aid organizations near you by visiting the Legal Services Corporation’s website at www.lsc.gov. Click on “Find Legal Aid” and enter your address.
- Generally, your income will need to be less than 125% of the federal poverty line.^{[13]XResearch source} In 2016, the federal poverty line for most states (other than Alaska and Hawaii) was $11,880 for one person or $16,020 for two people.^{[14]XResearch source}
Some bankruptcy courts might offer free workshops or clinics to help the public fill out their bankruptcy forms.^{[15]XResearch source} The court may also have other free services that are helpful. Call the bankruptcy court and ask.
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