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Be aware of non-lawyer bankruptcy filing services

When considering bankruptcy, remember that you should work directly with an experienced advocate who can review your income and assets and help you decide if filing is the right option for you. According to recent reports, there has been a rise in complaints against non-lawyers preparing fee-based bankruptcy documents in Tennessee and nationwide.

Federal law allows individuals and businesses to use an attorney to file bankruptcy or to file pro se. Those who decide to file on their own can use the help of a non-lawyer. This is where third-party preparers will often step in to charge a fee and help pro se filers through the petition process. Unfortunately, many filers do not know the risks that they face, including loss of property, and the impact on credit. Using a third-party preparer may give a false sense of protection.

According to the report, there has been an increase in abuse, in part, due to the mortgage crisis. For people who are facing foreclosure, bankruptcy is a last resort. Third-party preparers may offer quick services as "foreclosure rescue." Other "loan modification services" could put homeowners at risk, if they do not have a comprehensive understanding of their rights and obligations.

Between 2005 and 2011, complainants filed 2,529 formal actions against non-lawyer petition preparers. In over 98% of these cases, the court granted some kind of relief.

When you are facing overwhelming debt or cannot keep up with mortgage payments, it is important to consult with a trusted bankruptcy attorney. Many debtors will take advice from questionable sources and risk waiving rights or facing unforeseen consequences, such as property loss or other financial damage.

Source: Legal Times, "Courts See Increase in Bankruptcy Filing Abuse by Non-Lawyers," June 18, 2012.

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