About four years after the start of the 2008 financial crisis, the U.S. Federal Judiciary pointed out that people were using more non-attorney preparers to file bankruptcy, much as many use tax preparers who are not practicing lawyers.
Its website, maintained by the Administrative Office of the U.S. Courts, warned “U.S. bankruptcy courts increasingly are concerned with abuses committed by some non-lawyers in the business of helping prepare bankruptcy filing documents for a fee.”
Warnings issued while many BPPs provide useful service
Federal law regulates the conduct of BPPs (bankruptcy petition preparers), by definition "a person other than an attorney for the debtor or an employee of such attorney” who prepares bankruptcy documents for a fee.
An apparently serial violator of these rules of conduct has appeared and reappeared in the U.S. District Court for the Eastern District of Virginia for close to a decade. Although filing legal forms may seem like a strange crime spree, the attraction of collecting fees from people desperate to be free of seemingly insurmountable debt might explain repeat arrests.
What a BPP can and cannot do
There’s little question non-attorney bankruptcy petitioners can play a useful role in the big picture of bankruptcy protection. But what do they do and what are bankruptcy attorneys for?
A BPP can fill out forms and type documents using facts collected from you, the customer filing for bankruptcy. They’re allowed to advertise that they offer “document preparation services” and similar help.
They are prohibited by law from providing legal advice or services like guiding you through whether chapter 7 or chapter 13 is right for you. They cannot help you figure out which property is likely to be considered exempt and therefore is unlikely to be lost to creditors.
If a BPP leads you to believe that they’re an attorney or offers you legal advice, the U.S. Federal Judiciary asks that you contact the nearest U.S. Trustee field office.