California Petition Preparer Guidelines

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A bankruptcy petition preparer is permitted by law to offer services limited to the filing of documents and typing of forms. The preparer may be an individual or a business who charges a fee to prepare voluntary bankruptcy petition documents.

Requirements of a Petition Preparer

The services of the petition preparer are subject to a number of statutory guidelines and limitations. For instance, he is required under the Bankruptcy Code to file along with the petition a declaration disclosing compensation received from the debtor and other fee that he may have charged to the debtor. He is also required to provide the debtor with an official notification form that must be signed by both the debtor and the preparer, listing the services that the preparer may or may not perform. Furthermore, the preparer must sign and print his name, contact address and social security number on every form and document prepared for filing.

Guidelines Relating to the Petition Preparer’s Fee

Bankruptcy petition preparer guidelines should be carefully read and understood by both the preparer as well as the debtor who intends to file a bankruptcy petition. The first guideline relates to the preparer’s fee. The maximum fee payable to a preparer for his services is $150. This excludes the filing fee that must be paid to court clerk, but includes any and all expenditures such as courier or messenger, telephone, postage, typing and photocopying costs. Furthermore, if the debtor pays any money or transfers any property to the petition preparer within a year of the date of petition filing, the court’s filing fee cannot be paid in installments. The preparer’s fee may be reduced below the limit permitted by these guidelines upon application from any of the parties or by own motion of the court. All of the fee may be forfeited if it is found that the prepared has performed illegally or incompetently, or has failed to adhere to the guidelines.

Guidelines Relating to the Role and Status of the Petition Preparer

The bankruptcy petition preparer may file documents and type forms. The petition preparer should neither be a lawyer nor authorized to practice law. In specific terms, the preparer cannot advise or instruct the debtor on the following:

  • Whether a bankruptcy petition should be filed
  • Which code to file the bankruptcy petition under
  • How to respond to bankruptcy forms
  • Which exemptions ought to be claimed
  • Which debts may be dischargeable or non-dischargeable
  • Effects of bankruptcy on a foreclosure
  • Whether the debtor should avoid any liens
  • Whether the debtor should redeem any property
  • Whether the debtor may be entitled to a discharge
  • Any tax consequences that may arise from bankruptcy

Guidelines Relating to Notifying the Debtor

The petition preparer must let the debtor read and sign a “Notice to Debtors about Bankruptcy Petition Preparers.” This form accompanies the guidelines, and the preparer must also provide a copy of the guidelines to the debtor. The Notice in original form must be filed along with the petition or along with the first paper prepared in connection with the bankruptcy. The court encourages trustees, debtors and anyone else who may believe that a petition preparer has violated the U.S. Bankruptcy Code Section 110 to inform the U.S. Trustee of the violation.

Seeking Legal Advice

If the debtor feels he has been a victim of a bankruptcy petition preparer scam, or is unable to trust the preparer with the petition filing, he should get in touch with a bankruptcy attorney for advice. Correct petition filing can be critical to protecting the rights of the debtor under the bankruptcy laws.