In 2017, bankruptcies fell to their lowest point in the past decade thanks to a robust economy and the sad fact that a lot of the most vulnerable individuals and businesses had already filed during the rough years of the Great Recession.
As the stock market booms and the job market expands, going into bankruptcy law might not be the first thing on your mind.
But the economy is cyclical and the one sure thing is that good times will go bad again eventually. The heroes for many desperate people in that hour will include paralegals specializing in bankruptcy protection.
Even in the immediate wake of the 2008 economic collapse, consumers were beginning to pile on debt again… debt that will, for some, become overwhelming the next time the market takes a dive.
No one enjoys wading through the sad shambles of a financial catastrophe but someone has to manage it, and that’s where bankruptcy law firms come in.
When there simply isn’t enough money to pay off all debts, both businesses and consumers have only two choices: to liquidate their assets and pay off as much as possible, or to restructure the debt to bring payments into line with what they can afford.
Both types of bankruptcy filings are painful and complicated. Paralegals bring their expertise to bear helping lawyers determine the right course of action for each individual client.
Bankruptcy paralegals can work both sides of these cases, representing either the creditors eager to get what money they can from the person or entity filing for bankruptcy or the debtors that are filing for liquidation or protection.
Navigating a complex web of financial arrangements and constantly evolving bankruptcy laws, paralegals help uncover assets and debts involved with the case. They also work with lawyers and the businesses or individuals involved to strategize restructuring and an eventual recovery from what is often the lowest point in someone’s life.
Bankruptcy Can Be a Lifeline … Paralegals are the Lifeguards on Duty
A bankruptcy can allow an overwhelmed individual or family to get out from under crushing debt and get a fresh start on life, or it can save a business from going under permanently… potentially taking hundreds or thousands of jobs along with it.
There are success stories to be found among the ashes of bankruptcy cases… Chrysler found itself in an inescapable fiscal trap in 2009 as the consumer automobile market collapsed. The company went through Chapter 11 restructuring in 2009 and was turned over to the United Autoworkers and Fiat. By 2011, the company was turning a profit again and thousands of autoworkers were saved from their own anguishing individual bankruptcies.
From Big to Small, Bankruptcies Hit Them All
No one is immune to going broke. Bad luck and bad judgment are found both among the rich and the poor. Medical expenses remain the primary cause of bankruptcy in the United States today, and fate’s black hand touches on the wealthy and the meek alike. There are cases available for bankruptcy paralegals at every level.
Although personal bankruptcies are the heartbreaking cases, they tend to be small and quick to resolve.
It’s a different story when you get to the meat and potatoes of bankruptcy work: business bankruptcies.
Big corporate cases are most likely to involve large teams of paralegals and attorneys working together to both untangle the complex webs of financial arrangements, and to then structure a plan to fulfill the requirements of the U.S. Bankruptcy Code.
Some of these cases can take years to resolve, and paralegals are likely to be involved throughout the entire process. The ongoing work can involve ensuring compliance with the settlement as well as dealing with any new claims that may arise.
What Paralegals Do During Bankruptcy Proceedings
Paralegals provide bankruptcy attorneys with specialized assistance in the areas of document preparation, legal research, and legal support:
Because bankruptcies in the United States are all governed by federal code, cases all over the country have the potential to establish legal precedents. Paralegals have to stay on their toes to keep up with recent developments.
Bankruptcy paralegals research specific issues, like exemptions (property individual debtors are allowed to keep after filing bankruptcy) and relief from stay motions (efforts of secured creditors to repossess or foreclose on a debtor’s property).
The research that bankruptcy law paralegals perform regarding these matters is critical to the rights of debtors and creditors during bankruptcy proceedings. For example, a 2016 Supreme Court decision in the landmark Czyzewski v. Jevic Holding Corp. case over the priority with which creditors must be considered for payment hinged on precedents from as far back as 1913 and on a close reading of settlement proposals and claims in the case.
Paralegals in bankruptcy law assist counsel in preparing statements, schedules, and statements of monthly income. Preparing a proof of claim and a motion for relief of automatic stay are the most common forms of document preparation. They also prepare preliminary drafts of motions, complaints objecting to the discharge of a debtor, and motions to sell property. They may also be called upon to prepare preliminary drafts of briefs or memoranda in support of—or in opposition to—motions.
Like paralegals working in other areas of law, bankruptcy paralegals are also key in preparing for trials by:
- Preparing deposition digests
- Assembling and marking exhibits
- Compiling factual data in understandable formats
- Making charts and other visual aids for use by counsel
In fact, paralegals can prepare and file bankruptcy petitions independent of lawyers. Although they are not allowed to provide legal advice, completing the paperwork involved in consumer cases is well within the capabilities of a well-trained paralegal.
The legal support paralegals in bankruptcy law provide includes:
- Client Interaction: Paralegals can expect a lot of client face time in bankruptcy proceedings; debtors are anxious about their lives and creditors are anxious about their money and everyone wants to see a calm, collected professional who can explain the situation and ask hard questions without creating a scene.
- Collection of Financial Documents: Bankruptcies are about numbers, and paralegals need to find the source documentation to support all of them, as well as analyze how they fit together and impact the case.
- Scheduling: Bankruptcy is procedurally complex, with many deadlines and required meetings and discussions. Paralegals can expect to have to shepherd these cases through the system to make sure all the boxes are ticked in the right order and to keep everyone on the same page as the process advances.
Earning Specialty Certification in Foreclosure and Creditor/Debtor Law
Bankruptcy is a notoriously complex area of the law and few paralegals are able to master it through on-the-job experience alone. Advanced education and training are practically required to become familiar with the procedural intricacies and code governing bankruptcy filings.
The National Federation of Paralegal Associations offers an advanced specialty certification in foreclosure and creditor/debtor law, which is well suited to those specializing in bankruptcy.
To receive this specialty certification, candidates must complete a four-course sequence (all delivered online), with each course lasting 4 weeks:
- Real estate
- Bankruptcy law
- Foreclosure law
- Debtor/creditor law
The course in bankruptcy law provides an overview of the entire spectrum of bankruptcy law, from Chapter 7 and Chapter 13 petitions to the complexities involved with Chapter 11 business bankruptcies. This course provides students with a complete analysis of bankruptcy theory and practice based on the U.S. Bankruptcy Code.
Some of the topics discussed in this class include:
- Analysis and preparation of statements and schedules
- Filing of bankruptcy petitions
- Motion practice in bankruptcy
- Reorganization cases
- Role and powers of the bankruptcy trustee
- Whether or not debts can be discharged
Although bankruptcy law is covered in any ABA-approved paralegal program, a number of institutions also offer paralegal certificate programs in bankruptcy law that allow paralegals to gain advanced knowledge and competencies in this area.