Is bankruptcy intake software a petition preparer under section 110
Short answer
Section 110 regulates a person, other than an attorney for the debtor or a supervised employee of that attorney, who prepares a document for filing for compensation. The one appellate decision reaching software, In re Reynoso, involved a product sold direct to pro se debtors that picked their exemptions for them. Software a law firm buys, whose output the firm’s staff review and whose petition an attorney signs, is a different fact pattern. This is general information, not legal advice.
A careful bankruptcy attorney evaluating any software that touches client data eventually asks the section 110 question. It is the right question to ask, and there is almost nothing written about it, so this page sets out the statute, the one appellate case that has ever applied it to software, and where the analysis appears to land for a tool sold to law firms. What follows is our own reading of public authority. It is not legal advice, it is not a legal opinion, and a firm with a real concern should put it to its own counsel rather than to a vendor.
What is a bankruptcy petition preparer under section 110?
A person who is not the debtor’s attorney or that attorney’s supervised employee, and who prepares a document for filing in exchange for compensation. The definition is at 11 U.S.C. § 110(a)(1), and in full it reads: a bankruptcy petition preparer “means a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney, who prepares for compensation a document for filing.”
The second definition matters as much as the first. Section 110(a)(2) defines a “document for filing” as “a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States district court in connection with a case under this title.” The whole regime is built around documents that end up on a bankruptcy docket, and around a debtor who is dealing with the preparer.
The section is titled “Penalty for persons who negligently or fraudulently prepare bankruptcy petitions,” and it was added by the Bankruptcy Reform Act of 1994. Its target was a specific market abuse: non-lawyer typing services selling themselves to unrepresented debtors as a cheap substitute for a lawyer, then giving advice they were not qualified or licensed to give. The committee report language quoted in the case law is blunt about it. “While it is permissible for a petition preparer to provide services solely limited to typing, far too many of them also attempt to provide legal advice and legal services to debtors.”
One drafting detail is worth knowing because it is easy to get backwards. The exclusion in (a)(1) was narrowed, not widened, by BAPCPA in 2005. The amendment notes on the statute record that Pub. L. 109-8, § 221(1) substituted “for the debtor or an employee of such attorney under the direct supervision of such attorney” for the earlier “or an employee of an attorney.” Before 2005 the carve-out covered any attorney; today it covers the debtor’s own attorney and that attorney’s directly supervised employees. Anyone reasoning from a pre-2005 opinion is reasoning from different words.
Is software a bankruptcy petition preparer?
It can be, and one has been held to be, but the holding turned on who the software was sold to and what it decided. A software company is capable of being a “person” for these purposes, because section 101(41) of the Code defines person to include a corporation, and the Ninth Circuit said so directly in In re Reynoso. Being a software vendor is not itself a defense. The question is always whether this vendor, on these facts, prepared documents for filing for compensation.
Two facts do most of the work in the reported cases, and neither is about technology.
- Who the customer is. Every reported section 110 case we have found involves a provider dealing with a debtor who has no lawyer. The statute is written that way throughout. The notice goes to the debtor, the signature goes on the debtor’s filed document, the fee disclosure is of fees taken from the debtor, and the damages are payable to the debtor.
- Whether legal judgment was exercised. Courts distinguish clerical form completion from choosing which schedule an item belongs on, selecting exemptions, or supplying legal citations. Reynoso summarised California authority as holding that “merely clerical preparation services do not constitute the practice of law.”
What no court has done is decide whether a vendor whose only customer is a law firm is a bankruptcy petition preparer. We have not found a published decision applying section 110 to an attorney-facing petition or intake product, and the Ninth Circuit expressly declined to generalise from the one software case it did decide. That absence is not the same thing as a ruling, and this page does not present it as one.
| Product posture | Who the customer is | Who exercises legal judgment | Who signs what is filed | How section 110 reads on those facts |
|---|---|---|---|---|
| Consumer bankruptcy software sold to pro se debtors, marketed as a substitute for a lawyer | The debtor, who has no attorney | The software, which chose schedules and exemptions and supplied citations | Nobody with a licence. The Ziinet software printed “Not Applicable” in the preparer signature block | Held to be a bankruptcy petition preparer engaged in the unauthorized practice of law in In re Reynoso |
| Attorney-facing petition software (Best Case by Stretto, NextChapter by Clio, Jubilee Pro by LegalPRO Systems) | The law firm | The firm. The software computes forms from data the firm entered and reviewed | The debtor verifies the schedules and the attorney signs the petition | Outside the fact pattern of the reported cases. These products have been standard in law firms for decades |
| Attorney-facing intake software (Casewell) | The law firm | The firm. Every field is confirmed by the firm’s own staff before the file is used | The debtor verifies the schedules and the attorney signs the petition | The same posture as row two. Our reading, offered as our reading, and worth confirming with your own counsel |
What did In re Reynoso actually decide?
That a web-based product sold directly to consumer debtors, which selected their exemptions and decided which schedule their information belonged on, was a bankruptcy petition preparer and had engaged in the unauthorized practice of law. Frankfort Digital Services, Ltd. v. Kistler (In re Reynoso), 477 F.3d 1117 (9th Cir. 2007), decided February 2007, is the only federal appellate decision applying section 110 to software. The slip opinion is on the Ninth Circuit’s own server and the full text is also published by Public.Resource.Org.
The facts are worth stating plainly, because they are nothing like a firm buying a tool. Henry Ihejirika, who is not an attorney, ran websites including the “Ziinet Bankruptcy Engine.” The debtor, Jayson Reynoso, paid $219 for sixty days of access. The site told him: “Ziinet is an expert system and knows the law. Unlike most bankruptcy programs which are little more than customized word processors the Ziinet engine is an expert system. It knows bankruptcy laws right down to those applicable to the state in which you live. Now you no longer need to spend weeks studying bankruptcy laws.” It also sold access to a “Bankruptcy Vault” of “loopholes” and “stealth techniques,” including how to keep a bankruptcy off a credit report.
On the preparer question the court framed the issue and answered it narrowly. “Whether a software-provider may qualify as a bankruptcy petition preparer under 11 U.S.C. § 110(a)(1) is a question of first impression in the Ninth Circuit. We hold that the software at issue in this case qualifies as such.” Its reasoning quoted the Bankruptcy Appellate Panel below: “The software did not simply place the debtors’ answers, unedited and unmediated, into official forms where the debtors had typed them on a screen; rather, it took debtors’ responses to questions, restated them, and determined where to place the revised text into official forms.” The summary is one sentence: “In sum, for a fee, Frankfort provided customers with completed bankruptcy petitions.”
On the unauthorized practice question the court identified what took the product past clerical work. “The software did, indeed, go far beyond providing clerical services. It determined where (particularly, in which schedule) to place information provided by the debtor, selected exemptions for the debtor and supplied relevant legal citations.” That is three things, and the middle one, exemption selection with no lawyer anywhere in the process, is the conduct courts have consistently treated as legal judgment.
Two further limits on the case are worth knowing. First, it was decided under the pre-BAPCPA statute. Footnote 1 says the amendments “are not relevant to the issues before us” and that all references are to the Code in effect in October 2002, so the definition the court quoted was the older, broader “a person, other than an attorney or an employee of an attorney, who prepares for compensation a document for filing.” Second, at that time section 110 contained no legal-advice prohibition at all; footnote 7 notes that the ban now at section 110(e)(2) was added in 2005, and the court had to borrow California unauthorized-practice law to reach the question.
For balance, the case also contains the point that cuts against easy vendor arguments. Reynoso held that “§ 110 does not require that bankruptcy petition preparers have in-person interactions with their customers,” and that “the customer’s role in printing or otherwise reproducing the forms before filing does not alter the role of the preparer.” Its footnote 5 cites In re Fraga, 210 B.R. 812 (9th Cir. BAP 1997), as “holding that a corporation engaged in the preparation of bankruptcy petitions is not exempt from the definition of a bankruptcy petition preparer even though it is solely owned and operated by an attorney.” Distance from the debtor is not a defense, and neither is an attorney somewhere on the letterhead. What matters is whether a lawyer actually takes responsibility for the work.
Why does attorney supervision change the analysis?
Because the statute regulates unsupervised preparation for an unrepresented debtor, and because a represented debtor already has the protection section 110 was written to supply. Read the obligations in order. Section 110(b)(2) requires a written notice, on an official form, telling the debtor that the preparer “is not an attorney and may not practice law or give legal advice.” Section 110(e)(2)(A) provides that a preparer “may not offer a potential bankruptcy debtor any legal advice.” Section 110(f) forbids the preparer to “use the word ‘legal’ or any similar term in any advertisements.” Every one of those duties presupposes a non-lawyer standing where a lawyer should be.
That is also why the statute does not swallow the ordinary staffing of a law firm. A paralegal who types a petition all day is not a bankruptcy petition preparer, because section 110(a)(1) excludes “an employee of such attorney under the direct supervision of such attorney.” The distinguishing feature is not that the paralegal is a human being. It is that a licensed attorney directs and answers for the work.
We want to be precise about what that exclusion does and does not do, because this is the point a careful reader will press on. A software vendor is not the debtor’s attorney and is not that attorney’s employee, so the (a)(1) exclusion does not cover a vendor by its own terms. The vendor’s position rests on the operative clause instead. A tool that hands a firm structured data for the firm’s own staff to check, and that produces nothing that goes to a court, is not preparing a document for filing within the meaning of (a)(2). And unlike Frankfort, it is not standing in a lawyer’s place, because there is a lawyer in the place already.
Section 110(k) is the backstop and it points the same way. “Nothing in this section shall be construed to permit activities that are otherwise prohibited by law, including rules and laws that prohibit the unauthorized practice of law.” Unauthorized practice is a question of state law, and the answer to it in a law firm is straightforward: the practice is authorized, because an admitted lawyer is the one practising.
What does section 110 require of an actual petition preparer?
The duties are worth reading in full, partly because they are a good test of whether a given arrangement is really within the statute, and partly because they show how far the regime is from a software licence. If a product genuinely were a petition preparer, all of this would follow, and none of it is optional.
| Provision | What the statute says | In practice |
|---|---|---|
| § 110(b)(1) | The preparer “shall sign the document and print on the document the preparer’s name and address,” and if the preparer is not an individual, an officer, principal, responsible person or partner must sign | The preparer is identified by name on the face of the filed document |
| § 110(b)(2) | Before preparing anything or taking any fee, the preparer must give the debtor a written notice on an official form, which “shall inform the debtor in simple language that a bankruptcy petition preparer is not an attorney and may not practice law or give legal advice” | That form is Official Form 119, the Bankruptcy Petition Preparer’s Notice, Declaration, and Signature. It is signed by the debtor and by the preparer under penalty of perjury, and filed with the document |
| § 110(c) | The preparer must place an identifying number after the signature, which “shall be the Social Security account number of each individual who prepared the document or assisted in its preparation” | An individual human being’s Social Security number goes on a public court filing |
| § 110(e)(2) | The preparer “may not offer a potential bankruptcy debtor any legal advice,” including advice on whether to file, which chapter is appropriate, whether debts will be discharged, or “whether the debtor will be able to retain the debtor’s home, car, or other property” | The lawful role is transcription. Anything resembling counselling is prohibited outright |
| § 110(h) | A declaration under penalty of perjury disclosing fees received within the prior twelve months must be filed with the petition, and the court “shall disallow and order the immediate turnover” of fees exceeding the value of services rendered | The fee is disclosed to the court and can be taken back |
| § 110(i) and (j) | On a violation or any “fraudulent, unfair, or deceptive” act, the court shall order payment to the debtor of actual damages plus the greater of $2,000 or twice the fee, plus fees and costs. Courts may enjoin a person from acting as a preparer at all | The remedies run to the debtor, and the injunction can end the business. Frankfort was enjoined and ordered to disgorge |
| § 110(l) | Fines of “not more than $500 for each such failure,” tripled where the preparer advised excluding assets or income, advised a false Social Security number, failed to tell the debtor a bankruptcy was being filed, or prepared a document “in a manner that failed to disclose the identity of the bankruptcy petition preparer” | Per-document penalties that compound across a caseload |
Notice how personal these duties are. A named human signs, a human’s Social Security number goes on the docket, and a specific debtor gets a specific notice before a fee is taken. This is a regime for someone doing a lawyer’s job without a licence, in a transaction where the debtor is on their own. It is not a regime for a supplier of tools to a law firm, which is why petition software vendors have never operated under it.
Does using intake software change who signs the petition?
No. The signature obligations do not move, and no software can absorb them. Under Federal Rule of Bankruptcy Procedure 9011(a), every petition, pleading, written motion and other document, with an exception for lists, schedules and statements, “must be signed by at least one attorney of record in the attorney’s individual name.” By signing, the attorney certifies under Rule 9011(b) that to the best of their knowledge, “formed after an inquiry reasonable under the circumstances,” the factual contentions have evidentiary support.
The schedules themselves are verified by the debtor. Rule 1008 provides that “a petition, list, schedule, statement, and any amendment must be verified or must contain an unsworn declaration under 28 U.S.C. § 1746.” That is the debtor swearing to the accuracy of the schedules under penalty of perjury, which is exactly what it was before any software was involved.
And the Code puts a further certification on the attorney specifically. 11 U.S.C. § 707(b)(4)(D) provides that “the signature of an attorney on the petition shall constitute a certification that the attorney has no knowledge after an inquiry that the information in the schedules filed with such petition is incorrect.” Section 707(b)(4)(C) adds that the signature certifies the attorney has “performed a reasonable investigation into the circumstances that gave rise to the petition” and determined it is “well grounded in fact.”
Read those together and the conclusion is uncomfortable for any vendor promising to take work off a lawyer’s desk, so we will say it directly. Nothing a software product does reduces the attorney’s duty of inquiry. Whatever route the numbers took to reach the schedules, the attorney is certifying them, and a tool that encourages a firm to sign without looking is creating exposure rather than removing it. Software can make review faster and can show a reviewer exactly where to look. It cannot review on the firm’s behalf, and no honest vendor should imply otherwise.
Where does Casewell sit in this analysis?
Setting out our own position, described narrowly and without any claim that it settles anything. Casewell is sold to law firms and is used by firm staff. It takes the firm’s own completed intake packet as a PDF, reads it five times independently, and puts every field the reads disagreed on in front of a member of the firm’s staff with the source page alongside it. The output is a Chapter 7 .BCB file for Best Case covering Schedules A/B, D, E/F, G, I and J in the New York districts, which the system reads back before delivery to confirm it will import. It is free during the current beta.
The facts that matter to the section 110 question are these, and each is checkable against the product rather than against a claim.
- The customer is the firm, and Casewell has no relationship with the debtor. No debtor pays us, signs anything with us, or receives anything from us. Every remedy in section 110 runs to a debtor who dealt with a preparer.
- Casewell produces no document that is filed. The output is a data file that Best Case imports. The forms are generated, reviewed and filed by the firm.
- Every field is confirmed by the firm’s own staff. The review step is not an optional setting. Fields the five reads disagreed on are surfaced for a person to resolve before the file is exported.
- Casewell does not make the legal choices Reynoso singled out. It does not produce Schedule C, so it selects no exemptions. It does not run the means test, and it does not generate the creditor matrix. Those were left out because a plausible wrong answer there is worse than a blank.
- The attorney signs, and the debtor verifies. Rule 9011, Rule 1008 and section 707(b)(4) operate exactly as they did before, and the attorney’s duty of inquiry is unchanged.
The comparison we would offer is not to Frankfort but to the products already on every bankruptcy desk. Best Case by Stretto, NextChapter by Clio and Jubilee Pro by LegalPRO Systems are all vendors to law firms whose software assembles official forms from data a firm supplies. Casewell occupies the same posture one step earlier in the workflow, turning a paper packet into the data those products expect. If the analysis makes an attorney-facing intake tool a petition preparer, it makes every attorney-facing petition product one too, and no court has ever suggested that.
Where we will not overstate the case is the placement question. Reynoso treated deciding “where (particularly, in which schedule) to place information provided by the debtor” as part of what went beyond clerical work, and Casewell does map packet fields onto schedules. Our reading is that the point in Reynoso was doing that for an unrepresented debtor with no lawyer to check it, in a product marketed as knowing the law, alongside choosing exemptions and supplying citations. A firm that finds that distinction thin should say so and should ask its own counsel. It is a fair thing to press a vendor on.
What should a firm ask any software vendor?
These are the questions we would want a firm to ask us, and they work on any vendor in this market. The useful ones are about who the product is sold to and what it decides, not about the technology.
- Who is your customer, and do you ever sell to debtors directly? A vendor with a consumer channel is in a different position from one that sells only to firms, and the answer should be unambiguous.
- Does anything you produce get filed with a court? If the output is an import file or a data export consumed by the firm’s own software, say so. If the product files anything, that is a materially different product.
- What legal choices does the product make on its own? Ask specifically about exemptions, chapter selection, means test results and debt characterisation. These are the categories section 110(e)(2)(B) lists as legal advice and the ones Reynoso treated as legal judgment.
- Can the review step be switched off? A product that will hand back a finished packet with no human confirming it is making a different claim about itself than one that requires review.
- What does your marketing say? Reynoso gave real weight to how Frankfort described itself, including the claim that its system was “an expert system” that “knows the law.” A vendor that markets legal expertise has invited the comparison.
- Will you put your section 110 position in writing? Then give it to your own counsel rather than accepting the vendor’s reading, including this one.
One practical note on scale. Section 110 penalties are assessed per document and per case, and section 110(l)(2) triples them in the listed circumstances, so a wrong answer to these questions is not a single-case problem for a firm with volume. That is a reason to ask early rather than a reason to be anxious, and it is the reason this page quotes the statute rather than summarising it.
Does using bankruptcy intake software make my firm a bankruptcy petition preparer?
Section 110(a)(1) defines a bankruptcy petition preparer as a person other than an attorney for the debtor, or an employee of that attorney under the attorney’s direct supervision, who prepares a document for filing for compensation. A firm preparing its own client’s petition is the debtor’s attorney, and its supervised staff are covered by the same exclusion. This is general information rather than legal advice, and a firm with a specific concern should ask its own counsel.
What did In re Reynoso decide about bankruptcy software?
In re Reynoso, 477 F.3d 1117 (9th Cir. 2007), held that a web-based product sold direct to consumer debtors was a bankruptcy petition preparer under section 110 and had engaged in the unauthorized practice of law. The software selected exemptions for the debtor, decided which schedule information belonged on and supplied legal citations, and it was marketed as an expert system that knew the law. Footnote 9 expressly states that the court expressed no view on whether software generally would constitute the practice of law.
Is Best Case or NextChapter a bankruptcy petition preparer?
We have found no published decision applying section 110 to a petition software vendor whose customer is a law firm. Best Case by Stretto, NextChapter by Clio and Jubilee Pro by LegalPRO Systems all sell to firms, and in that posture the firm enters and reviews the data and the attorney signs the petition. The reported section 110 cases involve providers dealing with debtors who have no lawyer.
Does a paralegal who prepares petitions count as a petition preparer under section 110?
Not when the paralegal is an employee of the debtor’s attorney working under that attorney’s direct supervision, because section 110(a)(1) excludes exactly that. The exclusion was narrowed by BAPCPA in 2005, which substituted the phrase attorney for the debtor and added the direct supervision requirement, so the supervision is part of the test rather than an assumption.
What does section 110 actually require of a bankruptcy petition preparer?
A signature and printed name and address on the document under section 110(b)(1), a written notice to the debtor on Official Form 119 before any work or fee under section 110(b)(2), an individual Social Security number on the filed document under section 110(c), a fee declaration filed with the petition under section 110(h), and a complete prohibition on giving legal advice under section 110(e)(2). Violations carry fines of up to $500 each, tripled in listed circumstances, plus damages payable to the debtor of the greater of $2,000 or twice the fee.
Does intake software change who signs the bankruptcy petition?
No. Rule 9011(a) still requires an attorney of record to sign the petition, Rule 1008 still requires the debtor to verify the schedules or declare them true under 28 U.S.C. section 1746, and 11 U.S.C. section 707(b)(4)(D) still makes the attorney’s signature a certification that the attorney has no knowledge after an inquiry that the schedule information is incorrect. No software reduces the attorney’s duty of inquiry.
Is Casewell a law firm or a bankruptcy petition preparer?
Casewell is a software vendor. It is not a law firm, it does not provide legal advice, and it has no relationship with any debtor. It sells to law firms, its output is a data file the firm imports rather than a document filed with a court, every field is confirmed by the firm’s own staff, and it does not produce Schedule C, run the means test or generate a creditor matrix. The analysis on this page is our own reading of public authority, offered as information rather than as a legal opinion.
Best Case and Stretto are trademarks of their respective owners. Casewell is an independent product and is not affiliated with, sponsored by, or endorsed by Best Case, Stretto, or any of their affiliates. References to Best Case and Stretto describe compatibility only and are nominative (descriptive) use.
This page is general information for law-firm staff, not legal advice for any particular case.