Bankruptcy Petition Preparers
Bankruptcy petition preparers (BPPs) are individuals who can help the debtor with filling out the official bankruptcy forms, printing them out, and placing them in the order that the local bankruptcy court prefers. BPPs are considered a debt relief agency, and are regulated as such, and are legally prohibited from giving legal advice, such as what chapter to file under, what debts will be discharged, or to provide legal references that are required in some of the forms, such as those for claiming exemptions, nor can they help the debtor with the Chapter 13 repayment plan, probably the most difficult form to fill out in a Chapter 13 bankruptcy. BPPs generally charge between $100 and $200, depending on the district; however, they are subject to legal caps because the BPPs are only supposed to be helping the debtor to type the forms and organize them, not provide legal advice.
BPPs do not require any specific training or experience, but are regulated by §110 of the Bankruptcy Code and supervised by the United States Trustee. The BPP must file Form B-280, Disclosure of Compensation of Bankruptcy Petition Preparer, providing the name, address, telephone number, and social security number of the BPP, the amount and date of the debtor's payment to the BPP, and an itemized list of the documents that were actually prepared.
At the creditors meeting, the trustee may ask the debtor about the BPP, including what they actually did and what they charged, and whether the BPP provided any legal advice. In some districts, they may not even be allowed to provide you written materials on bankruptcy law. If BPP is found to have violated the law, then the BPP may be forced to return the debtor's fee.
BPPs must submit a statement under oath with each petition stating how much they were paid in the previous 12 months and any fees that the debtor still must pay. Larger fines are imposed on the BPP if they help the debtor to engage in any fraudulent act or to commit fraud. Because of the limited fee, many BPPs will only work on Chapter 7 cases because they are much simpler to file and because the BPPs are not permitted to help the debtor to draft a repayment plan, which is the most complicated form in filing Chapter 13 that must be submitted, since that is considered legal advice.
Bankruptcy Filing Tips
The best way to search for a bankruptcy petition preparer is by searching for those terms combined with either the name of the bankruptcy court district where you have to file or your zip code.
Some debtors with simple no-asset cases may be able to file bankrutcy themselves, now that the United States Trustee's website provides the official bankruptcy forms that can be filled in, although they cannot be saved to disk.
However, these forms can be saved on disk by printing to a file such as a PDF file or Microsoft's XPS format as a record of the petition. However, make sure that they print out correctly and be aware that the file cannot be altered afterward.
Lowering the Costs of Bankruptcies
The IRS and most states now allow tax filers to file taxes directly online. So why not allow bankruptcy petitioners to file directly online? Most bankruptcy petitions are simple, so most people with uncomplicated bankruptcies, such as no-asset cases, could easily fill out the forms themselves, especially if the forms were designed to ask the pertinent questions and to do any required calculations, such as for the means test.
For those who do not want to file for bankruptcy themselves, they can hire BPP's who have enough training to successfully complete most cases. Although attorneys often argue that the unauthorized practice of law statutes exist to protect the consumer, more often than not, they protect the income of the attorneys, increasing prices for legal services. Indeed, legal secretaries complete most of the bankruptcy filings for the attorney's clients, because most bankruptcy cases, to administer successfully, do not require the 4 years of college and 3 years of law school required of bankruptcy lawyers.
Since the United States Constitution1 gives the federal government complete jurisdiction over bankruptcies, the federal government can establish minimum educational requirements for BPP's or simply allow anyone passing a competency test to qualify, much as the law now allows anyone who passes the pertinent tests to become an IRS enrolled agent. Moreover, by spending less time in school, BPP's can gain more experience in conducting cases. Using only a test as a qualification lowers the barrier to entry for BPP's, lowering prices for the very people that really need to save money. Bankruptcy attorneys can always handle the more complicated cases.
1Article I, Section 8, Clause 4, often referred to as the Bankruptcy Clause, of the United States Constitution states: "To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States."