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Legal Document Preparers See Rise in Bankruptcy Filings One Year After New Bankruptcy Law.

National Association of Legal Document Preparers (NALDP) Releases Membership Survey

WASHINGTON, Oct. 19 /PRNewswire/ -- One year after legislation designed to reduce personal bankruptcy filings went into effect, nearly 80% of legal document preparers are seeing a spike in bankruptcy filings. According to a recent survey conducted by the National Association for Legal Document Preparers (NALDP), legal document preparers have seen as much as a 90% increase in Chapter 7 filings in the third quarter of this year, when compared to the first 6 months of this year.

Legal document preparers unanimously said they had seen a substantial decline in filings after the bankruptcy law was passed last year. Nationally, personal bankruptcies filed during the first six months of this year fell to 272,604 from 868,482 recorded in the first six months of 2005.

"There is a lot of misinformation out there about the new bankruptcy legislation, but people are starting to wade through that misinformation and realize they can still file for bankruptcy and qualify for Chapter 7," explained NALDP Director Lizanne Sadlier. "However, more complicated paperwork and increased lawyer fees are leading many people to seek affordable and reliable assistance from legal document preparers."

The legal document preparers surveyed said that between 95 and 100% of their clients pass the Chapter 7 means test, which allows them to seek cancellation of most of their debts rather than repay debts under a repayment plan as required under Chapter 13. In fact, it appears that the majority of bankruptcy filers do not have the means to qualify for Chapter 13. Money Management International (MMI), a consumer credit counseling service, reported that in the 13 weeks after the new law took effect Oct. 17, a mere 4.5 percent of the 14,907 debtors counseled by MMI had enough income to enter into a repayment plan.

According to the recent survey by the National Association of Consumer Bankruptcy Attorneys (NACBA), more than three quarters of bankruptcy attorneys say they are spending at least 50 percent more time in preparing a bankruptcy filing, which means clients are being charged for the increased billable time. While attorneys are raising their fees to account for increased paperwork and time, the majority of legal document preparers surveyed have not raised their prices, which are typically 50-80% less than attorney fees.

The recent rise in personal bankruptcy filings reported by legal document preparers is in-line with national figures that show bankruptcy filings are starting to creep up. Bankruptcies edged up 34 percent in the second quarter of 2006, compared with the first quarter of the year. The initial drop in filings may be explained by the rash of filings in the two weeks before the new law went into effect. Experts say that if the 8,000 cases filed the first two weeks of October 2005 were spread over the first six months of 2006, the monthly average would amount to nearly 1,500 filings -- consistent with the monthly averages over the last five years.

The Administrative Office of the United States Courts in Washington, D.C. projects in a "white paper" that bankruptcy filings will rise a minimum of 50 percent nationwide. They mention several factors that indicate an upturn in bankruptcy filings including a drop in the personal savings rate and that over the next 18 months, more than $1 trillion of adjustable-rate mortgages will be hitting their reset dates.

"Legal document preparers are here to meet the needs of consumers who are falling behind and need to get back on solid financial footing," said Sadlier. "It is clear that Chapter 7 Bankruptcy is the only option for most consumers to get a new financial start."

Interested consumers are invited to download NALDP's publication, How to Prepare and File Chapter 7 Bankruptcy, as a first step to filing. The booklet is available for a small fee at A complete list of federally approved credit counseling agencies is also available.

To find a legal document preparer near you, visit NALDP online at

About Legal Document Preparers

Legal document preparers are professionals, qualified through education, training or work experience, who provide the public with a simple and affordable option in handling their legal affairs. Legal document preparers help consumers represent themselves (pro se litigation) in undisputed legal matters by preparing the necessary legal documents to court standards. They are not lawyers and do not offer legal advice.


National Association of Legal Document Preparers, Inc., based in Washington, D.C., is a non-profit organization formed to give a voice and a national forum to the growing number of legal document preparers, legal technicians, online legal document providers and independent paralegals across the country. We are a grassroots network dedicated to the principle that all citizens have a constitutional right to represent themselves; and, in exercising that right, they have affordable access to efficient, effective and ethical legal document preparation services. In addition to those professionals working directly with legal documents, our membership includes public policy, education and consumer advocacy professionals who share a commitment to the principles of NALDP. More information is available at
 Beth Parker, NALDP
 (202) 955-5578

CONTACT: Beth Parker, +1-202-955-5578,, for National Association of Legal Document Preparers

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Publication:PR Newswire
Date:Oct 19, 2006
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