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Bankruptcy judges take aim at bankruptcy petition preparer business

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Do I need an attorney to file bankruptcy?”

 

A Milwaukee bankruptcy judge has sanctioned a bankruptcy petition preparer after having the woman hauled into court in handcuffs and shackles by the United States Marshals Service.

Paperwork Charlotte Foreclosure Lawyer Mecklenburg Bankruptcy AttorneyThe woman, Katee Sims, faced contempt charges for continuing to prepare bankruptcy petitions for third parties, despite being ordered in July to stop doing so.

Sims said she first got into the business when she was at the courthouse working on her own bankruptcy petition. A man sitting next to her told her he was a bankruptcy petition preparer. Although Sims had filed bankruptcy herself five times, she had no professional experience or training helping third parties prepare petitions.

Nevertheless, she launched a bankruptcy petition preparation business, offering to assist people with filling out bankruptcy forms. Bankruptcy petition preparers are prohibited by federal law from providing any legal advice or answering even basic questions for clients. The Milwaukee Journal Sentinel described petition preparers as “typists.”

The Journal Sentinel reported that, until 2012, the Milwaukee area was a bankruptcy petition preparer hotbed, and had more preparers in business in its federal court district than nearly every other district in the country. Many of these petition preparers charged clients what were seen as excessive fees, and they were accused of submitting bankruptcy paperwork rife with errors.

After receiving a bevy of complaints from bankruptcy lawyers and litigants, judges began fining petition preparers for mistakes and even banned some from conducting further business. Fees for preparers were capped at $75 per petition.

In July, United States Bankruptcy Judge Margaret Dee McGarity banned Sims from working as a petition preparer after finding that Sims had overcharged clients. Judge McGarity also fined Sims and ordered her to refund fees to clients.

Judge Pamela Pepper said Monday that Sims was accused of continuing to take on clients after being banned from doing so by Judge McGarity. Sims had missed several contempt hearings, leading Judge Pepper to order the U.S. Marshals Service to arrest Sims and bring her to court.

Pepper all but apologized for having to use the Marshals Service to secure Sims’ appearance. “I didn’t know any other way to get you here,” Judge Pepper told Sims.

Sims denied taking on new clients and said she had planned on attending the Monday hearing. Judge Pepper ordered Sims to pay the sanctions Judge McGarity previously imposed by November 21 or face referral for criminal prosecution.

The referral may not be as frightening as it sounds. Judges have already referred some half-dozen preparers to the United States Attorney’s Office for possible criminal prosecution, however to date no one has been charged.

In general, unauthorized practice cases—very similar to unlawful petition preparation matters—are difficult cases to prosecute and may fall below the radar of law-enforcement officials and prosecutors who are more concerned with prosecuting violent criminals and others who may present a more immediate danger to individuals or the public.

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://www.jsonline.com/business/truant-bankruptcy-preparer-feels-wrath-of-judge-b99388238z1-282228211.html

 

 

Image Credit:

http://commons.wikimedia.org/wiki/File:Filling_out_a_form_(9787696074).jpg

 

 

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