The Problems Of Hiring a Bankruptcy Petition Preparer
You may be tempted to save money on your bankruptcy by hiring a bankruptcy service or non-lawyer to prepare and file your bankruptcy petition. These, bankruptcy services, performed by paralegals, are also known as bankruptcy petition preparers. ("BPP") Granted, to the unwary, hiring a BPP is quite tempting. After all, you may save hundreds of dollars on attorney fees. In the long run, though you could potentially lose thousands of dollars by hiring a BPP instead of a licensed bankruptcy attorney. One of the main reasons for this is that BPPs are not legally allowed to give legal advice, which means that a BPP cannot do any of the following:
- Tell You What Bankruptcy Chapter You Should File-not choosing the right bankruptcy chapter to file could be devastating for many reasons. For example, with a Chapter 7, only specific property is exempt from your creditors; however, under a Chapter 13, a debtor is allowed to keep all of their property. So, if you make a mistake in filing a Chapter 7 instead of Chapter 13, you could potentially be forced to give your prized four-wheeler to the trustee.
- Advise you of any applicable bankruptcy exemptions-Their are many applicable bankruptcy exemptions and Nevada is quite generous with their exemptions. Legally, if you don’t use an applicable bankruptcy exception upon filing you will potentially lose that exemption. For example, if you forget to exempt your car, a trustee could take your car, sell it and after receiving his or hers 10% cut give the proceeds of the sale to the creditors. To be honest though a trustee, at least in Las Vegas, will likely give you a chance to amend your bankruptcy petition to allow you to exempt your property correctly. However, a significant problem will occur if you are mistaken about an exemption; which could result in a trustee objecting to a wrongly applied exemption, which could result in you losing a prized possession.
Please note, if a mistake is made in filing your bankruptcy petition, you do not have the right to dismiss your chapter 7. So, if you make a mistake that is advantageous to creditors and the trustee, once you file a chapter 7 you will not be able to dismiss your bankruptcy.
When Is It OK to Hire A BPP Over A Lawyer?
Under certain circumstances, it is not necessarily “bad” for you to hire a BPP instead of a bankruptcy lawyer. For example, if you have a straightforward case and you are poor hiring, a BPP could be appropriate. A straightforward case could mean that you are single, have little or no possessions and you only have credit cards as debt. However, you may never know when a so-called simple bankruptcy case may turn into a complicated matter. Hiring a BPP may be necessary if a wage garnishment or foreclosure is imminent and you can’t afford to hire a lawyer. In Nevada, wage garnishments result in 25% of your paycheck being taken by a creditor. So, if you are being garnished, it could take months before you can pay a bankruptcy lawyer to file your bankruptcy. In this case, you may be forced to hire a paralegal to do an “emergency bankruptcy petition” and afterward, when the garnishment stops, or the foreclosure is halted, you should then consider hiring an attorney to take over your case. You should never though attempt to complete a chapter 13 bankruptcy without hiring an attorney.
Hiring a Bankruptcy Lawyer Also May Not Be Expensive As You Think
First of all, based on the amount of debt you can discharge, the cost of hiring a bankruptcy attorney is minuscule. I.E., Paying even $1,000 in attorney fees (please note, that $1,000 is high in Vegas) to eliminate $30,000 in debt is an excellent investment. Additionally, if a BPP either gives you no advice (as stated earlier, legally, they are not allowed to provide any legal advice) or lousy advice, you can lose thousands of dollars if exemptions are either not used or are improperly used. Also, you can shop around and find great deals for bankruptcy legal service. Many bankruptcy cases are not complicated and could even relatively be considered as routine in nature. For example, a single person who merely has credit card debt will likely not need to retain a high-price bankruptcy attorney. So, hiring what some may consider being a cheap bankruptcy lawyer or a discount bankruptcy lawyer may be appropriate. Additionally, if you are genuinely destitute, you could be eligible for legal aid.
In summary, if you hired a BPP, you must know what debts can be discharged, what property you will be allowed to keep during your bankruptcy and all other applicable bankruptcy laws. Subsequently, not correctly applying for an exemption or missing an exemption could cost you thousands of dollars. Bankruptcy lawyers can and are required to give you legal advice, and if you hire an experienced bankruptcy attorney, you will be best assured that your bankruptcy case will be correctly filed and you will soon be on your way to a "fresh start."