You do not have to work for a bankruptcy firm to meet bankruptcy. Clients in family law, estates, real estate, employment and personal injury matters often have debt problems running in the background. The paralegals and legal assistants who talk to them every day are frequently the first to hear about it. Knowing what to notice, and what not to say, helps both the client and your supervising attorney.
Signs that bankruptcy may be relevant
- A client mentions a foreclosure notice, a repossession or a lawsuit from a creditor.
- Wages are being garnished, or a bank account has been levied.
- The client cannot pay a settlement, a fee, a support obligation or a judgment.
- Collection calls or letters are mentioned, repeatedly.
- The client is considering selling or transferring property to avoid creditors. (Flag this for your attorney, quickly.)
- A divorce involves debts, joint accounts or a home with little equity.
Why timing matters
Many creditor actions have deadlines: a sale date, a response date in a lawsuit, a hearing. Bankruptcy has legal effects on those, and some decisions are time-sensitive. That is why a client who mentions debt should be put in front of an attorney sooner rather than later. Do not wait for the next scheduled appointment.
What you can do
- Listen, and write down the facts the client gives you in the file.
- Note dates: sale dates, court dates and deadlines on letters.
- Collect the documents the client mentions, such as notices, court papers and statements.
- Tell your supervising attorney as soon as you learn of it.
- Give the client a referral to a bankruptcy attorney if your attorney directs you to.
What you cannot do
You cannot tell a client whether bankruptcy is right for them, which chapter to file, what will happen to their house or car, or which debts will be discharged. Those are legal questions, and answering them is the unauthorized practice of law, even when you know the answer. The safest response is also the most honest: "That is a question for an attorney, and I want to make sure you talk to one soon." Our article on where the line is for non-attorney assistants explains the boundary in more detail.
Basic vocabulary worth knowing
- Automatic stay: the legal pause on most collection activity that begins when a bankruptcy is filed.
- Chapter 7 and Chapter 13: the two common consumer chapters. See our plain-English primer.
- Means test: the income test used in Chapter 7. See the means test in plain English.
- Exemptions: the laws that protect certain property from creditors.
- Discharge: the court order that releases the debtor from eligible debts.
When your firm wants to help with bankruptcy
If your firm handles bankruptcy, or wants to add it, the drafting can be outsourced. Attorneys can learn how to hire a Virtual Bankruptcy Assistant. And if you are a paralegal or legal assistant interested in bankruptcy as a specialty, or in working independently as a Virtual Bankruptcy Assistant, NAVBA offers a path through training, certification and membership.
This article is general information about bankruptcy practice, not legal advice. Local rules, trustee preferences and state law vary, so confirm current requirements for your jurisdiction.
