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National Association of Legal Document Preparers (NALDP) Releases Membership
Survey
October 18, 2006, Washington, DC-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 http://www.naldp.org. A complete
list of federally approved credit counseling agencies is also available.
To find a legal document preparer near you, visit NALDP online at
www.naldp.org.
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.