If you are planning to use a bankruptcy petition preparer to assist you in filling out and filing your bankruptcy papers, it's always wise to consult with an attorney prior to filing. And if you are a bankruptcy petition preparer, it's an excellent idea to encourage your customers to seek attorney consultation. Here's why.
As I've explained in previous blogs, about 20% of those filing for bankruptcy may run into some difficult issues. And among the 80% who are unlikely to run into any trouble with their case, a small percentage shouldn't file bankruptcy at all -- either because they are judgment proof and there is no need, or because they have valuable property they will lose unless they do some careful pre-filing planning.
For bankruptcy filers, these numbers indicate that it's best to get some expert advice prior to filing, even if your case appears to be simple. Because Section 110(e) of the bankruptcy code prohibits a bankruptcy petition preparer from giving you even the most basic type of advice or information, only a lawyer can provide it. And if your case falls into the 20% "problematic" category, a talk with a lawyer is indispensable.
If you are a bankruptcy petition preparer, having your customers consult with an attorney is beneficial to you as well. Absent an attorney in the picture, the trustee may assume that the information necessary to make certain choices--particularly what exemptions to use and what chapter to file under--came from you the preparer--often a no-no for which you can be fined and barred from future bankruptcy work. If, however, your customer pays some money to an attorney for the consultation, even a nominal sum, the attorney's name will appear in Item 9 of the Statement of Financial Affairs and the trustee won't even inquire about the origin of the customer's information. In other words, having your customers engage an attorney for a fee is a kind of insurance against trustee harassment.