Bankruptcy Laws are Complicated. The statutes (laws) are quite difficult to understand and often refer to other Bankruptcy law sections. The statues are implemented by the Bankruptcy Rules and are interpreted and applied to specific facts by court decisions. Some errors in filing can be corrected by amendment or by court ruling others can result in the court dismissing the Bankruptcy petition or in having the debts of some creditors remain and not be discharged.
Can I prepare the Bankruptcy papers and submit them myself? An individual is permitted to prepare and file a Bankruptcy petition and schedules without using an attorney or other preparer. The forms are available from legal stationary stores, from some courts, and from other sources. Bankruptcy form kits are sold in various places.
Is it a good idea for me to file Bankruptcy on my own? The answer may be different for each person. The Bankruptcy forms ask about secured creditors, unsecured creditors, priority and non-priority creditors. They ask about co-debtors, assets and labilities, about court cases pending against the filer. The forms have a place to list exempt property (property that cannot be taken by the Bankruptcy Trustee) but the types of property that may be exempt are not explained on the forms. What about keeping the car or the house? Can the filer continue to pay the rent for the apartment?
If a person has a simple case and is comfortable with forms and courts, then he/she may decide to do it alone. The problem, as we see it, is that the debtor will not know if they really have a "simple" case until after they file. They may learn, when it is too late, that it was not so simple and that mistakes were made.
Who can help prepare and file the bankruptcy? A debtor wishing to file for Bankruptcy can get help from a Bankruptcy Preparer or from a Bankruptcy Lawyer.
A Bankruptcy Preparer is not an attorney and does not work for or under the supervision of an attorney. A Bankruptcy Preparer is limited by law to typing or filling out the forms. A Bankruptcy Prepare is not permitted to give legal advice. The Bankruptcy Preparer can help in the mechanics of preparing the forms but cannot advise about what should go into the forms.If the debtor only needs typing assistance, then a Bankruptcy Preparer can be used.
A Bankruptcy Lawyer can advise an individual or a business about Bankruptcy laws, can advise if Bankruptcy is a good idea, can discuss the various Chapters (types) of Bankruptcy. A lawyer can have the forms filled out, organize the debtor's records, advise if a joint (husband and wife) petition or an individual petition is best. The lawyer can answer questions, warn about creditors that may file objections to discharge. The lawyer can deal with the creditors who may call or write to the debtor after the Bankruptcy is filed.The lawyer can represent the debtor at the required meeting with the Bankruptcy Trustee and be there to advise the debtor at the meeting.The lawyer can keep the debtor advised about the case and what needs to be done at each phase.
How much does it cost to do a bankruptcy? The costs may include fees for a Bankruptcy Preparer or a Bankruptcy Lawyer if one is used, and the court filing fee. The court filing fee for a Chapter 7 individual liquidation bankruptcy is $200. A Bankruptcy Preparer usually gets a smaller fee than a lawyer because the Preparer can only act as a typist while the lawyer is a legal advisor and representative. A Preparer might charge up to a few hundred dollars for the limited services. A Preparer is not permitted to submit papers so the debtor must file the papers with the court. A lawyer can file the papers on behalf of the debtor.
A lawyer is permitted to charge a reasonable fee for legal services. The fee may be a flat fixed fee or it may vary depending on the amount of time the attorney spends on the case. The time may be more in a complicated case, where the client or the lawyer need more meetings to discuss the bankruptcy, where the paper work is not organized, where there are a large number of creditors, where the debtor has a business which may affect the case. Bankruptcies of companies often cost more than individual bankruptcies because of the more complex issues in a business case.
Legal fees can vary even in the same city or town. Some law firms choose to have a large volume of cases with smaller fees. These firms give the advantage of a lower fee but the client might not have the same lawyer handle the case through each of its phases, may have to deal mostly with non-lawyer paralegal employees, may meet the lawyer for the first time at the meeting of the creditors, might not be able to speak to the lawyer by phone, might not be able to get individual attention even when requested.
Other lawyer firms may work with fewer clients in a more individual relationship. These firms are sometimes called "boutique" law firms because there service is more like a small shop than a large department store. Often the same attorney will take care of the case from beginning to end and will meet personally with the client. These firms and lawyers may charge a higher fee for the sometimes more individual service. Their fees must be reasonable since the lawyer must inform the court about the fee charged and the bankruptcy judge can order a refund if the fee is excessive.
How can the legal fee and the court filing fee be paid if the debtor does not enough money to pay his creditors? If the debtor does not have the money to pay the fees and cannot find a friend or a relative to pay the them, then arrangements may be made to pay the fees in installments. In some cases, the court filing fee can be reduced or waived.
Choosing a lawyer by the size of the fee may not be a good idea. Fees, whether high or low, do not indicate the competence of the attorney. Of course, if the fee is too high for your pocketbook, you will have to look elsewhere. But sometimes a law office that charges a low fee may not have the staff and equipment to do a first class job. It is also good to remember that a high fee is no guarantee of competence. Be sure to ask if the fee covers everything in your case or if there may be additional charges.
A lawyer should meet with you to explain how your case will be done. The lawyer may not explain all the details but the lawyer should tell you enough for you to have confidence in the lawyer and the plan for your case. The lawyer should answer your questions clearly and with patience. A lawyer who is in a hurry or who is not clear does not create confidence. A lawyer cannot always give an exact answer and may only be able to estimate how long a case will take.
Ask if the lawyer will personally take care of your case. In some offices, junior attorneys, paralegals, or non-lawyer assistants take over after a case is started and you may never see or hear from the lawyer personally again except in court. It is not wrong for another person to take care of your case, but you may want to know about before you start. A lawyer's office should be able to give you the status or what the next step is in your case when you ask. Since it takes valuable time to answer your status questions, do not ask too often. Some offices accept only written status requests.
If a lawyer has sent a letter or filed a paper for you, the lawyer should be able to show you a copy of the letter or a receipt for the paper. If the lawyer cannot show this to you and cannot explain why there is no receipt, it may be a sign of a disorganized office or that the paper was not filed.
Make sure the person in charge of the office is a lawyer. Preparers, notaries, consultants, debt counselors, or others who are not licensed as a lawyer may sometimes pretend to be a lawyer. If you are in the office, look for the lawyer's certificate on the wall. Since some licensed lawyers do not display their certificates, you can ask if the person is a lawyer. Look at the business card from the office. See if it says that the person is a lawyer or attorney.
If you are unhappy with the lawyer, you can change and go to another lawyer asking to have your case transferred. This may not be a good idea unless you are very unhappy since changing lawyers will usually cost additional fees and may increase the time needed finish a case.
If you find a good lawyer, tell other people. The lawyer will appreciate it.
Law Office of Richard Madison
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© Richard Madison, 2000
Last edit 20:04 6 Apr 2000