Bankruptcy petition preparers: what they may and may not do

What is a bankruptcy petition preparer?

A petition preparer is a person or business not authorized to practice law that prepares bankruptcy petitions for pay.3 1 2

People meet them when filing pro se, which means without an attorney. Individuals can do that, though the federal courts strongly recommend getting advice from a qualified attorney.2

The official bankruptcy forms are available to the public free of charge. What a preparer is paid for is entering your information into them.2 1

Petition preparers also count as debt relief agencies under the Bankruptcy Code, so the rules for those agencies apply to them too.4

What must a petition preparer do?

1. Before preparing any document or accepting any fee, give you a written notice on an official form. It says in simple language that the preparer is not an attorney and may not practice law or give legal advice. You both sign it, and it is filed with your documents.1
2. Tell you the maximum allowed fee, where one has been set, before preparing any document or accepting any fee.1
3. Sign every document they prepare and print their name and address on it, followed by an identifying number, which is the preparer's Social Security number.1 2
4. Give you a copy of each document no later than the time it is presented for your signature.1 2
5. File a sworn declaration listing the fees received from you within the 12 months before the case was filed.1

What is a petition preparer barred from doing?

The central limit is legal advice. The law lists advice a preparer may not give, including advice on these subjects.1

• Whether to file bankruptcy, or which chapter is appropriate.1
• Whether your debts will be discharged.1
• Whether you will be able to keep your home, car or other property.1
• The tax consequences of a case, or whether tax debts can be discharged.1
• Whether to promise to repay a creditor or sign a reaffirmation agreement.1
• How to characterize your property or your debts.1
• Bankruptcy procedures and rights.1

Preparers also may not sign documents for you, may not use the word "legal" or similar terms in their ads, and may not collect money for court filing fees.1

As debt relief agencies, they may not advise you to take on more debt in contemplation of filing, and may not misrepresent their services or the benefits and risks of bankruptcy.4 5

How does a preparer compare with a lawyer or the court clerk?

What can a petition preparer charge?

The law allows a maximum preparer fee to be set by Supreme Court rules or Judicial Conference guidelines. This page does not list fee limits, so ask your local bankruptcy court whether a maximum applies in your district.1

The court must disallow, and order turned over to the trustee, any fee found to exceed the value of the preparer's services or to break the fee rules. A preparer who does not follow the law's requirements may forfeit all fees. You, the trustee, a creditor or the U.S. Trustee may ask the court for that order.1

The preparer's fee is separate from the court fees, which are $338 for Chapter 7 and $313 for Chapter 13 (effective December 1, 2023). A preparer may not collect those from you.6 7 8 1

What happens when a preparer breaks the rules?

A preparer who breaks the rules can be fined for each failure. If a preparer violates the law or does something the court finds fraudulent, unfair or deceptive, the court must order the preparer to pay your actual damages, an additional amount set by the statute, and reasonable attorney's fees. A court can also bar a person from acting as a petition preparer.1

The warning signs follow from the rules above.

• They answer legal questions, such as which chapter to file or whether you will keep your car.1
• They ask you to pay the court filing fee to them.1
• They leave their name off the documents, or do not give you copies.1 2
• They use the word "legal" or similar terms in their ads.1
• They give you no written notice to sign before they start.1

Mistakes in the paperwork still land on your case. Filing takes careful preparation, and misunderstandings of the law can affect your rights. Advice on those questions is what the federal courts say a lawyer can give.2