The work of a bankruptcy petition preparer can be divided into four broad categories: reviewing the client's financial details, preparing the paperwork required to file for bankruptcy, presenting the case to the creditors and negotiating with creditors. A bankruptcy petition is the formal request from an individual or business to be absolved of outstanding, unsecured debts. This process is one of last resort, used in situations where there is not enough income available to cover the ongoing debt payments. The actual process for filing for bankruptcy is different in every country, and the primary role of the bankruptcy petition preparer is to ensure that the process is completed correctly.
During the initial meeting with the client, the bankruptcy petition preparer will ask for a list of all the debts, both secured and unsecured that are held by the client. He or she will then ask for the total monthly income from the client, both the gross and net values. The next step is to write down all of the living expenses, such as rent, food, clothing, transportation and other costs that the client incurs each month. Calculations are completed to determine if the client meets the requirements for bankruptcy protection, or if there are any other options.
Bankruptcy protection is a legal process, and as a result, there is a significant amount of paperwork required. The bankruptcy petition preparer must fill out the appropriate forms, submit the supporting documentation and provide proof where necessary. Incorrectly following this process can result in delays and possible legal action against the client for nonpayment of his or her debts.
The first stage in a bankruptcy is a meeting of the creditors. While this is a required part of the process in bankruptcy law, this normally is achieved through letters, emails and phone calls, rather than a physical meeting. This type of meeting usually is held in person only for very large debts from a publicly traded company. In this situation, the company itself might have continued revenue but needs to restructure the debt to become more profitable.
In most areas, bankruptcy law allows the creditors to oppose the bankruptcy or to offer terms for settling the debt without bankruptcy proceedings. Creditors might offer the client the option of paying a reduced portion of the total debt in order to avoid bankruptcy. Negotiating with the client and the creditors is part of the responsibility of the bankruptcy petition preparer.
