Bankruptcy Petition Preparer Gets Hard Time!

26 Feb Bankruptcy Petition Preparer Gets Hard Time!

A bankruptcy petition preparer in Michigan was sentenced in federal court to several years in prison. The story can be accessed here.

As reported by the Detroit News, a man was convicted of violating several orders from the United States Bankruptcy Court prohibiting him from filing petitions for people. Bankruptcy petition preparers can do some tasks to prepare paperwork but such work is limited. Bankruptcy is a complex legal proceeding and petition preparers are not authorized nor trained to provide the services to fully guide a debtor through the bankruptcy process. The bankruptcy court in Michigan issued several orders and then, finally, after the preparer flouted the court’s order one time too many, referred the matter over for criminal prosecution.

Bankruptcy petition preparers may seem like an inexpensive way to obtain bankruptcy relief. Unfortunately, it will often turn out to be much more expensive. Often, a case prepared by a bankruptcy petition preparer will be incorrect and will create problems for the debtor. The debtor will then often be in the position of having to hire an attorney to fix the mess created. Fixing the mess is generally substantially more expensive than what the initial bankruptcy would have cost in the first place.

I also have had dealings with cases involving bankruptcy petition preparers. One case that I recently took over had been filed in the wrong district. The client did not file his schedules on time and his case was ultimately dismissed. Now, in order to save his house, he will have to incur another filing fee and fees for having counsel to file a motion to extend the automatic stay–none of which would have been necessary had the debtor retained experienced counsel.

Apart from the “hard time” the bankruptcy petition preparer will get, paying a petition preparer to get you through the complex maze of bankruptcy law is usually a false economy.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.
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