If you want to make a good living, become a bankruptcy paralegal. With the current trends in bankruptcy filings, you won’t run out of clients.
Bankruptcy filings rose by 16.83% between December 2022 and December 2023. It’s a big jump – from 387,721 to 452,990 cases.
What is bankruptcy in the first place? Bankruptcy has the following main characteristics:
- It’s a legal process overseen by federal bankruptcy courts under the U.S. District Courts.
- Individuals or businesses with overwhelming financial difficulties can seek a legal remedy.
- The legal remedy can either be to discharge or restructure their debts.
- Creditors have legal protection to recover some or all of their losses.
Where will you come into the picture? Your main bankruptcy paralegal responsibilities include:
- Provide support services to lawyers throughout the bankruptcy process.
- Gather and organize the clients’ financial documents.
- Prepare, file, and manage the bankruptcy documents.
- Ensure compliance with court procedures and deadlines.
As a bankruptcy paralegal, you play a crucial role in protecting your client’s interests.
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Understanding Bankruptcy Law
The foremost of bankruptcy paralegal responsibilities is understanding the types of bankruptcy cases.
CHAPTER 7
Debtors who cannot repay their unsecured debts use Chapter 7 bankruptcy. An appointed trustee oversees the sale of a debtor’s non-exempt assets. The creditors will receive loan repayments from the sale proceeds.
CHAPTER 11
Businesses with significant debts but want to remain in operation use Chapter 11. The debtor creates a reorganization plan including selling assets and restructuring debts. With it in place, the debtor repays their debts over a specific period.
CHAPTER 13
Individuals who file for Chapter 13 must have a regular income and propose a repayment plan. Then, they can pay part or all of their debts over 3-5 years, depending on their income. Chapter 13 applies to secured debts, such as mortgage payments.
A few of the key terminology that bankruptcy paralegals use include the following.
- Debtor – The business or individual that owes money to creditors and files for bankruptcy.
- Creditor – The organization or individual to whom the debtor owes money.
- Trustee – The official appointed by the court to oversee the bankruptcy process.
- Automatic stay – The legal action where creditors must temporarily stop debt collection.
- Discharge – The legal release where a debtor isn’t obligated to pay the discharged debt.
- Secured debt – With collateral
- Unsecured debt – Without collateral
Bankruptcy cases in the United States are under these laws:
- Bankruptcy Code (Title 11 of the U.S. Code)
- Bankruptcy Abuse Prevention & Consumer Protection Act of 2005 (BAPCPA)
Bankruptcy paralegals must also be familiar with federal and local bankruptcy procedures.
Key Responsibilities of Bankruptcy Paralegals
Here’s a brief overview of the key bankruptcy paralegal responsibilities.
- Gathering and organizing the financial information, documents, and evidence. Draft the necessary legal forms.
- Performing initial client interaction in bankruptcy cases.
- Filing bankruptcy documents, including case files. File management, including storage and retrieval, is also part of their job.
- Assisting lawyers before, during, and after debtor-creditor meetings and court hearings.
When you do your bankruptcy paralegal responsibilities well, you can make a positive impact on your clients.
Skills and Qualifications for Bankruptcy Paralegals
To do so, you must develop these vital bankruptcy paralegal skills.
- In-depth knowledge of the bankruptcy laws, procedures, and processes. Your legal knowledge is crucial in keeping on top of things in complicated cases.
- Attention to detail and organizational skills are a must because accuracy and completeness can make or break a case. Even the smallest error can result in rejections, delays, and other unfavorable consequences.
- Effective communication skills are vital in every step, from client interactions to court hearings.
- Familiarity with the technology used in the legal system is critical for success, too. These include legal software, office software, and electronic case filing systems.
Challenges Faced by Bankruptcy Paralegals
Be ready for the challenges in bankruptcy paralegal work, too.
- Dealing with stressed clients is a common challenge. Be compassionate and patient. Explain the process in terms they can understand, too.
- Handling complex cases is stressful, especially with several creditors or complicated financial situations. You must also work with lawyers in creating strategies and researching precedents.
- Keeping up with updates relevant to bankruptcy laws is a challenge, too. You must engage in continuing education, learn about new regulations, and track changes in case laws.
Educational Pathways and Certifications
Bankruptcy paralegal coursework covers the complex processes of bankruptcy litigation. Classes also emphasize the rights and duties of both the debtors and creditors.
Choose from these universities that offer the best bankruptcy law education.
Boston University School of Law – Bankruptcy and Creditor Rights Program
Students tackle specialized courses in bankruptcy law including advanced topics on creditor rights and reorganization.
Georgetown University Law Center – Bankruptcy Law and Practice Program
Georgetown’s focused curriculum on bankruptcy law, including consumer and corporate bankruptcy.
New York University School of Law – Advanced Bankruptcy Studies
Students tackle in-depth courses on bankruptcy law with an emphasis on practical skills.
These are the current paralegal certifications in bankruptcy.
- Certified Bankruptcy Assistant (CBA), offered by ABJA, is suitable for paralegals and legal assistants working in bankruptcy law.
- Certified Paralegal (CP) with a Specialty in Bankruptcy Law, offered by NALA, requires additional coursework and exams.
- American Alliance Certified Paralegal, offered by AAPI, credential covers bankruptcy laws, too.
Bankruptcy paralegals must engage in continuing education because of the industry’s dynamic nature.
Career Opportunities and Advancement
There are plenty of career opportunities for bankruptcy paralegals. While these are tied to economic downturns, career opportunities are available in other areas, too. The legal industry welcomes professionals willing to learn.
Of course, you can choose not to specialize as a bankruptcy paralegal. However, you will enjoy several benefits from being a specialist. Think of it as your career advancement edge that leads to higher-income jobs.
You also have the opportunity to work in a wide range of settings. Law firms are popular, but consider government agencies and corporations, too.
Conclusion
Bankruptcy paralegals are crucial in the bankruptcy process, from initial client interaction to final case resolution. Their ability to perform their roles and responsibilities can make or break a case, too. Hiring highly skilled paralegals is a cost-saving measure for bankruptcy lawyers and their firms, which means these professionals may be in high demand. Those who have obtained paralegal certificates coupled with the right level of work experience have a competitive edge.
So, if you want to become part of the exciting legal industry, consider becoming a bankruptcy paralegal. With an estimated total pay of $72,648 per year, it’s a good living. The actual wages vary widely based on specialization, location, and level of experience.
