This is an important enactment, as due to the increase in bankruptcy, many paralegals and other folks (who claims to be very knowledgeable) including some production mills of the law offices, are preparing petitions for bankruptcy without any regard to quality and paying attention only to quantity. Their only emphasis is production and measure and to make quick buck. All they do is file, file, and send a robotic (generic) attorney to 341 meeting. Let him bear the brunt of it, and truthfully, they do when trustee yell at them. I had seen trustees yelling at them because they come unprepared and don’t know anything in the file of their debtors. In this post, we are going to discuss an individual or firm call bankruptcy petition preparer or a paralegal who had learnt this by doing many times but essentially is ignorant of the Bankruptcy Code.
First of all, let us define who is a “bankruptcy petition preparer” under the Bankruptcy Code.
A bankruptcy petition preparer means a person, other than 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; and “document for filing” means a petition or any other document ready 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. Again a bankruptcy petition preparer who prepares a document for filing shall sign the document and print on the document the preparer’s name and address. If a bankruptcy petition preparer is not an individual, then an officer, principal, responsible person, or partner of the bankruptcy petition preparer shall be required to sign the document for filing and print on the document the name and address of that officer, principal, responsible person, or partner.
What shall a Document Preparer Need to Provide?
A document preparer shall before repairing any document for filing or accepting any fees from a debtor shall give to the debtor a written notice which shall be on an official form prescribed by the Judicial Conference of the United States in accordance with rule 9009 of the Federal Rules of Bankruptcy Procedure.
The notice 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; Also it may contain a description of examples of legal advice that a bankruptcy petition preparer is not authorized to give, in addition to any advise that the preparer may sign the petition. Also, the bankruptcy petition preparer shall leave an identifying number of his preparation on such documents. It may be the social security number of the person who prepared the documents. A bankruptcy petition preparer shall not use the word “legal” or any similar term in any advertisements, or advertise under any class that includes the word “legal” or any similar term.
A bankruptcy petition preparer shall not collect or receive any payment from the debtor or on behalf of the debtor for the court fees in connection with filing the petition.
The Supreme Court may promulgate rules under section 2075 of title 28, or the Judicial Conference of the United States may prescribe guidelines for setting a greatest allowable fee chargeable y a bankruptcy petition preparer. A bankruptcy petition preparer shall notify the debtor of any such maximum amount before preparing any document for filing for a debtor or accepting any fee from the debtor.
–A declaration under penalty of perjury by the bankruptcy petition preparer shall be filed together with the petition, disclosing any fee received from or on behalf of the debtor within 12 months immediately prior to the filing of the case, and any unpaid fee charged to the debtor.
–The court shall disallow and order the immediate turnover to the bankruptcy trustee any fee referred above found to be in excess of the value of any services.
–A bankruptcy petition preparer shall be fined not more than$500 for each failure to comply with a court order to turn over funds within 30 days of service of such order.
–If the court finds that a bankruptcy petition preparer has engaged in conduct in violation of these laws or any provision of this title, or misrepresented the preparer’s experience or education as a bankruptcy petition preparer: or engaged in any other fraudulent, unfair, or deceptive conduct; and injunctive refilled is appropriate to prevent the recurrence of such conduct, the court may enjoin the bankruptcy petition preparer from engaging in such conduct.
–If a court finds that a bankruptcy petition preparer has continually engaged in conduct which is fraudulent, the court may enjoin the person from acting as a bankruptcy petition preparer.
–The court as part of its contempt power may enjoin a bankruptcy petition preparer that has failed to comply with a previous order issued and the injunction can be issued on the motion of the court, the trustee, or the United States trustee.
A bankruptcy petition preparer who fails to comply with any provision of these laws may be fined not more than $500 for each such failure.
A bankruptcy petition preparer shall declare under penalty of perjury that (1) I am a bankruptcy petition preparer as defined in 11 U.S.C. section 110;(2). Also he verify that he has prepared the documents for compensation and have provided the debtor with a copy of the documents and the attached notice as required by 111 U.S. C Section 110(b), 110(h), and 342)b) and (3) if rules or guidelines have been promulgated pursuant to 11 U.S.C. Section 110(h) setting a maximum fee for services chargeable by bankruptcy petition preparers. A bankruptcy petition preparer’s failure to comply with the provisions of title 11 and the Federal Rules of Bankruptcy procedure may result in fines or imprisonment or both. 11 U.S.c. Section 110;18 U.S.C. Section 156.