The Truth About Michigan Bankruptcy Petition Preparers

In the Eastern District of Michigan Bankruptcy Court, Detroit, ten percent of the Chapter 7 cases filed are by people without attorneys.

Many of the bankruptcy petition preparers abuse the process.

First, they charge more than allowed.

All of the Judges in the Eastern District of Michigan Bankruptcy Court have signed an order limiting bankruptcy petition preparer compensation to $100.

Bankruptcy courts have always had the power to regulate the fees of attorneys and other professionals who practice in front of them.

In addition, dozens have so ripped of customers and disrupted the court that they have been prohibited from filing ANY petitions.

The list of prohibited preparers is available here.

Petition preparers are supposed to do just that, prepare the paperwork.

They are NOT allowed to give legal advice.

Besides violating bankruptcy law, which is federal, the unauthorized practice of law is illegal in Michigan, by state law.

Why hire a bankruptcy petition preparer?

I think the only reason is people think they will save money.

Partly, this depends on what your time is worth.

After a petition is filed, there is a required 341 hearing appearance, and additional documents that must be sent to the trustee BEFORE that hearing, and a financial management class must be taken before  a discharge can be issued.

If you have not sent the correct documents to the right person on time, you may have to come back again, or, ultimately, have your case dismissed.

You risk losing property that is not properly exempted.

I always tell people, I do not want to take your money for something you can do yourself.

You can write a letter to the creditor offering a partial settlement; others are really not  impressed if a letter comes from an attorney instead of you.

You can get a free consultation, from me, or many other attorneys, so it cost you nothing to find out the truth about the process before you go to a hustler who just wants your money.

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