Bankruptcy is one area of law in which paralegals may end up practicing with a high degree of independence. This article will explore the bankruptcy paralegal job description, the bankruptcy paralegal salary and bankruptcy paralegal duties. First however, a brief description of the bankruptcy process is in order.
What is bankruptcy?
Bankruptcy is a legal process whereby someone whose debts exceed his or her assets can, after giving up what assets remain (other than a few specified ones), walk away from and be legally discharged from his or her debts. Bankruptcy laws are written to protect both the creditor and the debtor. The creditor is protected because each creditor of the same class gets the same percent of the debt paid; the debtor is not allowed to favor friends, family or businesses in the community. The debtor is protected because once bankruptcy is filed, collections actions cease.
What are the types of bankruptcy?
Chapter 7 Bankruptcy:
Chapter 7 bankruptcies are liquidations. With the exception of a few exempt assets, the debtor’s assets are sold and the proceeds used to pay creditors. Property that is exempt includes a certain amount of home equity, an automobile worth up to a certain amount and personal effects such as clothing and home furnishings (this means ordinary things, not valuable antiques). Once that is done, the debtor is given a discharge that frees him or her from his or her obligation to pay debts with the exception student loans, taxes, child support or alimony, fines and debts incurred through fraud.
Chapter 13 Bankruptcy:
Chapter 13 bankruptcies are for people who are temporarily unable to pay their debts. Filing Chapter 13 puts a stop to collections actions, including repossessions and gives the debtor a bit of breathing room. Together with an attorney, the debtor creates a plan to pay the debts over three to five years using income the court deems “disposable”. With the power of the bankruptcy as a negotiating tool, debtors can often get better terms than they had initially and stop the imposition of late fees, penalties and other fees that plague those who get into too much debt. Once the repayment plan is complete, the debtor is discharged from other obligations associated with those debts.
Chapter 11 Bankruptcy:
Individuals with a lot of debt, and businesses which do not wish to liquidate may be eligible for Chapter 11 reorganization. Similar to Chapter 13, Chapter 11 means that the assets of the debtor are not liquidated and that a repayment plan is developed. The creditors get to vote on the reorganization plan, and can force the debtor into Chapter 7 if they (the creditors) believe it is in their best interest. Chapter 11 bankruptcy includes a lot of reports to the court and to creditors about the ongoing ability of the debtor to pay.
What is the job description of the bankruptcy paralegal?
Attorneys who handle bankruptcies of ordinary people tend to do so on a volume basis. Debtors are unable to pay large fees, so the emphasis is on handling routine matters in an efficient manner, which is often the bankruptcy paralegal’s job. As with any other case, it must be the determination of the attorney, not the paralegal, whether to accept a client and what fee to charge.
The attorney conducts the initial interview and determines which type of bankruptcy would best meet the client’s needs. At that point it is often the bankruptcy paralegal’s job to sit down with the client and review all of his or her debts and assets. The bankruptcy paralegal’s job description often involves knowledge of software used to complete bankruptcy schedules, which are the forms filed with the Bankruptcy Court.
Besides filling out the schedules, information on the creditors is needed because notification needs to be sent to all of them about the bankruptcy filing That is often one of the bankruptcy paralegal’s duties.
The Bankruptcy Trustee is an attorney appointed by the Bankruptcy Court to liquidate the assets of the Chapter 7 debtor and to distribute the assets to the creditors. Often attorneys who work as Bankruptcy Trustees will hire bankruptcy paralegals. Those bankruptcy paralegals duties may include finding a buyer for the surrendered assets. This may be as simple as calling a real estate agent or a used car lot or as complicated as trying to find the best price for exotic cattle. Since the trustee is also tasked with preserving the value of surrendered assets, the paralegal may not only have to find a buyer for those cattle but figure out who to hire to care for them, and where to keep them until they can be sold.
Companies in Chapter 11 bankruptcy have to file monthly reports with the court detailing income, expenses and debt repayment. It may be the bankruptcy paralegal’s job to do the first review of the report to make sure all necessary information is provided before turning it over to the attorney for further analysis.
Sometimes when a debtor files bankruptcy, one or more of the creditors object to something about the filing, at which time they file a lawsuit known as an “Adversary Proceeding”. Those proceedings are far more common in business bankruptcies than in personal bankruptcies and they give the plaintiff the ability to do “discovery”- to ask for records from the debtor. The bankruptcy paralegal’s job includes responding to these requests both in written form and by gathering the necessary records.
The independent bankruptcy paralegal
Personal bankruptcy for most individuals is a pretty simple process. By the time most people reach the point of considering bankruptcy they have few assets and overwhelming debt. What they do not have is a lot of money for attorney fees. Independent paralegals who do not work under the supervision of an attorney may help them do so. The independent bankruptcy paralegal’s duties involve completing forms that the client wants completed; since the paralegal is not an attorney she cannot give advice about which type of bankruptcy a client should file, or whether certain forms are needed. She can help complete the forms and tell the client where to file them, but she cannot represent the client.
What is the average bankruptcy paralegal salary?
While the average law firm paralegal salary in 2007 was $51,686, according to a survey taken by Legal Assistant Today , the average bankruptcy paralegal salary was only $45,380.
Like most other paralegal jobs, the bankruptcy paralegal job description can vary tremendously between firms and paralegals, and can include things not usually considered legal work (like figuring out what to do with exotic cattle).