If you decide to seek bankruptcy relief, you can decide to represent yourself or hire an attorney to represent you, or even hire a bankruptcy petition preparer who is not an attorney.

Recently I had a consultation with a nice couple who had filed a Chapter 7 bankruptcy case several months prior to meeting me. At the Meeting of Creditors, this couple discovered that the Chapter 7 Trustee had many problems with their case and recommended that they hire a lawyer. They had paid the petition preparer as much as it would cost to hire an experienced bankruptcy attorney.

The Trustee advised them that he would file a “707(b)” action against them. A “707(b)” action is a Motion to Dismiss a Bankruptcy on the ground that granting the Debtors relief would constitute an abuse of the United States Bankruptcy Code.

My review of their filed bankruptcy found many problems, including improper valuation of real estate property, claiming much more in exemptions than they were entitled to, incorrect calculation of income, listing of living expenses that are not permitted as reasonable living expenses, non-dischargeability issues, over median income on the means test, failure to list assets properly, etc.

Based upon income and assets alone, the couple should never have filed for Chapter 7 relief. However, they were told by their petition preparer that they did qualify for Chapter 7, would be able to wipe out all their debts and keep all of their assets. I advised them that they did not qualify for Chapter 7, and would therefore have to convert their bankruptcy case to Chapter 13.

The moral of this story is be sure that you understand the relief you can obtain in bankruptcy and its limitations, and be careful in hiring people who are not bankruptcy professionals.

Joel R. Spivack, Esq. has been guiding NJ and PA residents in bankruptcy filings for over 30 years. If you are in need of a fresh financial start, contact the Law Office of Joel R. Spivack today.