Looking to Save Money? Avoid Bankruptcy Preparers Who Are Not Attorneys

Interviewer: Well, that's very good to know. In your area, do you have companies that advertise, "We'll prepare your bankruptcy for $200.00 and you don't need an attorney."

NOT a 'DIY' Proposition: Do Not File for Bankruptcy without Being Represented By an Experienced Attorney

Vance: I would never recommend anyone going into a bankruptcy without being represented by an attorney that is experienced and fully versed in bankruptcy law. Bankruptcy preparers are just that, preparers, not attorneys. That's all they're supposed to be, but the United States Trustee is really cracking down on the petition preparers.

Bankruptcy Filing without Attorney Representation Is a Pro Se Filing

A number of them are trying to dispense legal advice, but I would not go into any court or any legal matter without consulting with an attorney first. If you decide to go with a petition preparer, or to do it yourself, that's called pro se filing.

90% of Pro Se Filers Have Made Costly and in Some Cases Irreversible Errors on Their Bankruptcy Petitions

That's your choice, but I would not recommend it. I had a client that came into my office this morning, that had filed a pro se Chapter 13 bankruptcy, and he had made so many errors on his petition that I don't know if I can fix it.

Interviewer: How often do you encounter people that made mistakes because they do it on their own or they use a preparer? And what happens to them?

Preparing a Bankruptcy Petition Requires a Thorough Knowledge of Complex Bankruptcy Laws

Vance: I would say 90% of the time. The bankruptcy laws are very specific, you can't just blindly work your way through it. It is very important that you know what you're doing. You have exemptions, you have time limits and you have just so many aspects you have to know in a Chapter 7 filing to get your case discharged.

Then the goal of a Chapter 13 filing is to get a complaint and confirm, and then discharged. There are a number of pertinent details you have to know, and the petition preparer is not going to help you with that.

The bankruptcy laws are very complex, and you're really hurting yourself if you do not have qualified legal representation before you file. Like I said, this gentleman that came in this morning, I looked over his case and I spent an hour with him reviewing everything. I said, "I don't know. I don't know if I can fix this."

In this case, he might lose his house. He's looking at many consequences happening to him because he elected to file it himself. And the reason he filed the Chapter 13 himself, he was trying to save his house from foreclosure. He didn't think he could afford an attorney to represent him.

In a Chapter 13 Filing, You Do Not Pay your Attorney Directly; Instead, the Attorneys Fees Are Included in the Monthly Repayment Program

Yes, attorneys are expensive. I'll grant you that. In a Chapter 13, most of the legal fees are paid off through the Chapter 13 repayment plan. Over 80% are paid off through the plan.

Your Attorney Represents You throughout the 3 to 5 Year Term of a Chapter 13 Bankruptcy Filing

It's a monthly payment plan that includes a number of creditors. But it ensures that I'm in the Chapter 13 with you. Chapter 13 filing lasts anywhere from two to five years. I'm with you through the whole three to five years. I'm there at your every beck and call if anything happens in three to five years. Truthfully, something always comes up.

How Long Will it Take to File Bankruptcy?

Interviewer: How long does a Chapter 7 take on average to resolve? How long does a Chapter 13 take on average?

Vance: A Chapter 7 is about a 5 month process from start to finish. A Chapter 13 is a minimum 36 months and a maximum of 60 months.