A Bankruptcy Paralegal speaks about Due Diligence in consumer bankruptcy cases

Reasons Not to Use a Paralegal for Your Bankruptcy Case

Seeking Bankruptcy ParalegalMy phone rings on average of once a week with callers seeking bankruptcy assistance from a paralegal so that they can avoid the higher fees for a lawyer. They have a do-it-yourself mindset and believe that paralegals are to bankruptcy what ‘H&R Block’ is to taxes — economical representation.

My callers googled for a bankruptcy paralegal and found my paralegal website which states that I specialize in the “preparation of bankruptcy petitions and schedules.” They are taken by surprise when I tell them that I don’t work directly for consumers (which my website also states right above my phone number). I am a virtual paralegal and I work for bankruptcy attorneys in several different states — but I only work for attorneys.

All callers so far have been courteous, but they all ask in their own way why I would turn down their business. I mention Unauthorized Practice of Law (UPL) and explain that no one but a licensed attorney can give them legal advice. Most callers will respond by telling me that their situation is “simple” and they don’t need legal advice, they just need help getting the forms ‘done.’

Therein lies the big misconception: filing your bankruptcy documents is not the completion of the process (like filing your tax return); rather, it is just the beginning. There are hearings that have to be attended; questions about your assets to be answered; claims will be filed; there could be objections or motions that have to be answered … none about which a non-attorney can give you advice or instructions. And if your bankruptcy documents are not completed to your best advantage, assets that you want to keep (like your home, car, furniture, jewelry, etc.) could be at risk.

Some of my callers will tell me that’s why they’re looking for a paralegal … a person who ‘knows’ as much as a lawyer, but doesn’t charge as much. I explain to them that UPL is not like a gag order. I am not a wealth of legal information that I am forbidden to share because I don’t have a law degree. To the contrary, I tell callers that when I ask my attorneys legal questions about a case, I am constantly amazed at aspects of the law that I just don’t know and would not know how to interpret or apply.

Sometimes I’ll mention some questions to my callers that they are likely to have, but that neither I nor any other paralegal, petition preparer, or non-attorney can legally answer for them. Such as:

  • “Should I do a chapter 7 or a chapter 13?”
  • “I moved recently. Which court do I file with?”
  • “What forms do I need to fill out?”
  • “What else do I need to turn in with my paperwork?”
  • “Can I keep my _______________?” (fill-in the blank with car, house, jewelry, inheritance, etc.)
  • “Can bankruptcy stop a _____________?” (fill-in with foreclosure, garnishment, repossession, etc.)
  • “My debts are almost all from my business. Should my LLC file bankruptcy or me?”
  • “I went through bankruptcy some years ago, can I file again?”
  • “I had a very high income, but now am laid off. Can I file a chapter 7?”

Yes, believe it or not, answering any of these could be construed as legal advice. If you can’t answer these yourself, you should not be handling your own bankruptcy case, which is what you’re doing if you try to hire a paralegal.

Listed here are some very common financial situations people get involved in. If you don’t know how these are affected by bankruptcy, then you need a lawyer.

  • Student loans
  • Judgments and liens
  • Child support
  • Joint custody of children
  • Own a business
  • Life insurance, 401(K), retirement accounts
  • Co-signing on a family member’s car loan or credit card
  • Past due taxes
  • Social Security
  • Medical bills
  • Tax refunds
  • Timeshare
  • Gifts of cash or property
  • Stuff I keep stored for my kids

I’d give a complete list if it was possible. But we all handle our finances so “uniquely” that it’s impossible to predict all the possibilities. That’s why it’s important to have a bankruptcy attorney look over your information and represent you.

The only opinion I share with my callers is this: even with my experience, if I had to file bankruptcy myself, I would not prepare my own case. I would hire an attorney and I would not bargain shop for one.

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