Many People View Bankruptcy as a Last Resort and Are Embarrassed by Having to File
Interviewer: What is the emotional state of people who need to file? What do they say to you about bankruptcy? Are they hesitant? Do they feel embarrassed?
John Reade: A lot of people do look at bankruptcy as a last resort. They have tried working with their creditors. However, creditors usually are not willing to work with these people, especially if they are not delinquent yet. Most creditors take the attitude, “Well, you’re not delinquent, so why should we help?.”
Some people look at it as, “Oh, I’m embarrassed to do this.” And some people are worried about how it will look on their credit report. These are some of the more common reservations that I encounter.
Is There Still a Social Stigma Associated with Filing for Bankruptcy?
Interviewer: Why do you think people see it as a last resort? What is so bad about filing for bankruptcy protection?
John Reade: Some people believe there is a stigma attached having to file for bankruptcy. Bankruptcy laws exist to help people, and enable them to get back on their feet. From there someone who files for bankruptcy can start over at least financially.
It Is Advisable to Avoid the Low-Cost Document Preparers that Advertise For Bankruptcy?
Interviewer: Are there “paralegals” or “bankruptcy prepares” that advertise, “Low Cost Bankruptcies,” and try to entice people to do low-cost bankruptcies with them?
John Reade: Yes, and unfortunately–in Oregon at least—there is no educational experience, or licensing requirement for someone to say they are a paralegal or bankruptcy preparer. Legally these discount bankruptcy filers (i.e. a paralegal or bankruptcy preparer) cannot give any legal advice. However, some paralegals or bankruptcy prepares do give legal advice (whether correct or not).
Only Licensed Attorneys May Dispense Legal Advice
So if someone asks a paralegal or bankruptcy preparer a question about something that involves legal advice, the paralegal or bankruptcy preparer is prohibited from answering the question(s) involving legal advice. Correct.
In other words, a bankruptcy petition preparer is just supposed to put the information, given to them, into the documents. That is the extent of what they are allowed to legally do. These bankruptcy preparers and paralegals, as they are known, will not attend a bankruptcy court appearance with you. So you generally get what you pay for. That means if there is a problem with your bankruptcy —it is going to be your problem.
When Something Low Cost Isn’t a Bargain: It Will Cost More to Fix a Problem with Your Bankruptcy than It Would If You Paid to Have It Done Correctly the First Time.
If there are any problems or discrepancies, they are not the paralegal’s problem; or the document preparer’s problem; they will be your problem. It usually costs considerably more to get someone out of a problem that has already been created, than to just do it correctly from the start.
Another reason people file for bankruptcy is to reduce their mental and financial stress. The process is significantly less stressful if it is done correctly, from start to finish.
Interviewer: In your course of business, do you see people that either tried filing themselves, or have hired a document preparer and now have problems?
John Reade: I see people that tried filing a bankruptcy themselves or paid a document preparer, have problems with their bankruptcy. Sometimes a problem can be remedied without a lot of time and expense. However, other times, it is going to cost a lot more than what the person, “saved,” with the discount filer. This assumes the problem can be corrected — sometimes , frankly, the problem can not be corrected.
Retaining an Attorney Who Is Experienced Doing Bankruptcies Is the Best Protection to Ensure a Successful Bankruptcy Filing
It is advisable to retain an attorney for a bankruptcy, who has experience doing bankruptcies. This helps ensure that it is done properly, and there are no problems. An attorney also represents the person filing for bankruptcy protection at their court appearances, preparing all the documents, and makes sure all creditors and all the collection agencies are included. An attorney who does bankruptcies will also ensure, by using Oregon bankruptcy exemptions or federal bankruptcy exemptions, that they are maximizing the protection of their client’s assets.
Bankruptcy Is a Specialized Area of the Law
Interviewer: How complicated is bankruptcy law?
John Reade: Most attorneys, who have a general law practice, do not do bankruptcy law because it is a specialized area of law. If bankruptcy was so easy, then all attorneys who practice law would also do bankruptcy law.
Attorneys would not specialize in bankruptcy, if it was one of those things that could be done by the average attorney or lawyer.