“Bankruptcy Petition Preparer” Slammed by New Mexico Court

11 Mar “Bankruptcy Petition Preparer” Slammed by New Mexico Court

A non-attorney “bankruptcy petition preparer” (BPP) was recently permantly enjoined by a New Mexico bankruptcy court from assisting any more debtorsin preparing bankruptcy petitions. This case, U.S. Trustee v. Brown, 2010 WL 519849 (Bky.D.N.M. Feb. 8, 2010),held thatPamela Brown, in the person of Southwest Bankruptcy Services, had violated section 110 of the bankruptcy code in nine separate cases.

The court noted that Brown was “no stranger to the United States Bankruptcy Court for the District of New Mexico,” having been fined by the court in 2009 for giving legal advice in connection with preparing bankruptcy papers, which BPP’s are prohibited by section 110 from doing.

After the 2009 case, Brown continued acting as a BPP, but she concealed her involvement in the cases at hand by failing to include her name, address and social security number, as required by section 110,on the cases she prepared. The fees Brown charged for preparing chapter 7 bankruptcy petitions ranged from $295 to $400.

The court also found that Brown had given legal advice in selecting the exemptions to be used in the petitions, selecting theforms on which certain creditors were to appear, and indicating on Form B22 whether the “presumption of abuse” arose in particular cases. The court also noted that it was likely impossible for a BPP to prepare bankruptcy papers in a manner that conformed to the requirements of section 110. It ordered Brown to refund all fees paid, to pay a fine of $400 for each violation of section 110, to be tripled because Brown had failed to disclose her identity, and to pay a fine of $2,000 for each case in which a violation of section 110 occurred.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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