Use caution if you decide to file bankruptcy using a BPP
Image Source: Flickr User Tak H.
When you decide to file bankruptcy in North Carolina, you have two options open to you – hire a bankruptcy attorney or represent yourself, which is called acting “pro-se.” Some North Carolina bankruptcy filers who want to file their own petitions may elect to use a bankruptcy petition preparer (BPP). Today, we'll tell you why you should be careful if you go this route.
What Is a Bankruptcy Petition Preparer?
A bankruptcy petition preparer may sound like someone who can help you get your paperwork in order before filing with the court but, by North Carolina law, these people are only allowed to offer “typing services.” That means they fulfill only a clerical role – and often charge hundreds of dollars or more for their work.
Under bankruptcy law, BPPs are strongly limited in their duties. The only thing they are allowed to do is type your petition. Specifically, they may NOT:
- Advise you on whether you should file bankruptcy.
- Advise you whether Chapter 7 or Chapter 13 is better for you.
- Advise you on what debts or assets to include.
- Advise you on what to include in your petition or how to complete forms.
- Advise you on exemptions.
- Advise you on which debts may be dischargeable or not.
- Advise you on bankruptcy as it relates to foreclosure of your home.
- Advise you on whether bankruptcy can remove liens.
- Advise you on redeeming property via bankruptcy.
- Advise you on tax consequences of filing bankruptcy.
- Advise you on how to defend against objection to discharge by a creditor.
- Represent you in court.
- Give you any legal advice whatsoever.
In some bankruptcy jurisdictions, there is a specific cap on the amount BPPs may charge for their services. A recent Eastern District of North Carolina matter determined $80 was fair, but this may differ by state and jurisdiction. In Northern California, the cap is $150.
Why You Don’t Need to Use a BPP
Even if you are determined to file bankruptcy without an attorney, a BPP is only a substitute for a typewriter or computer and printer – that’s what the law states. They are not a substitute for an attorney. If you plan to represent yourself, you are on your own and need to obtain the knowledge to succeed in court.
Even if you use a BPP who oversteps the line and does advise you, you cannot trust the advice because they are not an attorney and, in fact, are stepping outside the boundaries of the law by offering advice of any type related to your bankruptcy filing. You can do just as well by typing the forms yourself.
What Can Happen if You Use a BPP Who Oversteps Limitations
A recent North Carolina case filed against a BPP demonstrates the dangers of allowing a non-attorney to advise you in your bankruptcy petition. The Western District Bankruptcy Court in Charlotte, North Carolina recently sanctioned a BPP named Katrina Burton for misadvising bankruptcy filers.
According to case documents, Katrina Burton had worked as a paralegal at a law office and was acting as a BPP on the side. She charged hundreds of dollars to some clients, and a couple thousand to another mentioned in the case against her, and went well outside the boundaries of what BPPs are allowed to do.
She advised two bankruptcy filers to misstate matters to the court, falsely signed the filers' names to documents, gave legal advice that was neither accurate nor ethical, and did not properly disclose that she was a BPP and was not allowed to give legal advice.
The bankruptcy filers who used Burton’s services faced accusations of fraud by the bankruptcy court which, at the minimum, could see them not getting bankruptcy relief and, at the most, could see them in legal hot water. What’s truly surprising is how the court ruled to punish Burton
Katrina Burton was ordered to repay fees that she had charged to her clients but was NOT barred from continuing to offer BPP services in North Carolina even though the ruling said this:
“The court has not been able to locate a BPP in the relevant case law that violated the statutory requirements for BPPs more egregiously than Burton… Burton’s conduct… was completely contrary to the Bankruptcy Code, and it is difficult to find a part of §110 with which she did comply.”
The Benefits of Using a Reputable Bankruptcy Attorney
An experienced North Carolina bankruptcy attorney may be your best bet – and should get you much better results than trying to file without an attorney or relying on a BPP who is not allowed to give you advice and may charge steep fees for their service.
The fees Burton charged approximated the fees an attorney would have charged to offer those clients much better advice that complied with the law and better protected their interests. If you’re considering filing bankruptcy to deal with debts you cannot afford, consult a qualified and experienced bankruptcy attorney.
Most bankruptcy attorneys offer a free consultation to discuss your debts and whether bankruptcy is the best solution for you. Contact the Law Offices of John T. Orcutt for a free North Carolina bankruptcy consultation today. Call +1-919-646-2654 now for a no-obligation appointment at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.