New Bankruptcy Forms: Easier, Or More Problems?

©Robicsek 2015

The Official Bankruptcy Forms were overhauled on December 1, 2015.  This was done with a stated goal to produce a more consumer friendly form that will allow people to fill out the bankruptcy petition more easily.

The old forms were largely unchanged all the years I have been a bankruptcy lawyer, and I entered bankruptcy law in 1988.  I have spent untold hours over the years explaining the language in the bankruptcy petition, and if this makes it easier for my clients and me, well I am all for it!  Unfortunately I think that the forms will cause more harm than good.

Why?  Being able to fill out a form easier may make it easier to file a bankruptcy case, but that doesn’t mean it will be done correctly, or that the debtor will like what happens to them after the case is filed. In other words, it isn’t what is written on the form that you have to worry about, but what is not on the form.

Making it easier to do something doesn’t mean that it has been made safer to do it.

You might be able to answer the court’s questions easier, but knowing how the information provided will be used is not clarified.  The affect on the person filing for bankruptcy is not explained in the forms because they aren’t meant to give legal advise.  People filling out forms may not have all the knowledge needed to understand the consequences of filing for bankruptcy.

I know what you are thinking.  A lawyer is going to say people need to hire a lawyer because the lawyer wants the business.  Sure.  There is truth in that. However, I know that there is a need for an attorney’s legal knowledge and expertise, even in cases that I would have deemed to be an easy case.  I know this because I have seen many cases where people didn’t have a good lawyer, and I saw problems that I know could/should have been avoided.

Forms don’t explore options with people.  Forms ask for information but do not give legal advice.  Even if there are explanations printed, they don’t explain full consequences or that there may be better way to get the results desired in bankruptcy.

For instance:

• Is there a non-bankruptcy option, or Chapter 7 or 13 better?
  • Why?
• What can be done to protect assets?
  • What property is protected, and what is at risk of being taken away?
  • What potential harm may be caused by filing?
• Will waiting to file for a couple of days/weeks/months hurt or help?
  • Is there a better time to file a case?
  • Is it better to file before, or after, something happens, such as a pay raise, changing jobs, having a child, getting married, filing a tax return, getting a bonus, or moving to another home?  That just names a few.

Forms ask questions that may not be clear enough for every person to understand what is asked.

No matter how a question is asked, people can interpret it differently.  People read words differently, or may have a different interpretation of words because of their background.

Sometimes people think they understand a question, but don’t actually understand it in a legal context.  A word that means one thing to a lawyer may not mean the same thing to a non-lawyer reading the same thing.

I learned many years ago to ask questions in different ways so that if a client didn’t understand it one way, they may understand it asked a different way.  Even though I am asking the same question, rephrasing it gives me a different answer from clients.  The forms don’t rephrase.

Forms don’t explain why the questions being asked are being asked.

Just a couple of examples:

Why do all assets have to be listed on the bankruptcy petition?

Assets have to be listed so that the court can be sure that people keep only what they are allowed to keep under the exemption laws, and so that the Trustee is aware of all property that can be used to pay off the debts of the filer.

Why does the court need to know who has been paid in the last ninety (90) days/year, and what you have transferred in the last two (2) years?  

Bankruptcy laws can require some payments be refunded to be distributed in the case, and can require payment for, or return of, property taken, sold or given away under particular conditions.  Some times these actions can be good, but other times they produce results that the debtor never wanted – like making friends or relatives return legitimate payments made to them, or pay for property that was intended as a gift.

Forms give a false sense of security.  You might not feel the hurt until you are in too deep to get out.

A person may be able to fill out bankruptcy forms and file them, but if they learn that they have done something wrong or that there is an unexpected consequence to filing, they may find themselves facing a problem that can’t be solved and/or will be a lot of trouble to deal with.

Once you have filed bankruptcy and find yourself in trouble, you can’t just tell a judge “Oops! I changed my mind!” and expect to get out of the case.

And that is where the real trouble lies:  As a lawyer, I have had to tell too many people that I can’t fix something for them that could have been fixed if they had come to me earlier, or that I will have to charge a lot of money to try.  Even if a lawyer steps in and fixes what they can, once a case has been filed, the die is set and the law is set too.  Some things just can’t be fixed.

I am not convinced the new forms actually are easier to fill out. 

Personally, I find them much harder to read and more cumbersome to fill out because of the graphics and layout.  The sections are not easily distinguished from each other, and the graphics are not pleasing.  Virtually every bankruptcy attorney I know hates them.

Debtors who fill them out and file bankruptcy without any problem may like them, but the ones who stumble will not.