B is For Bankruptcy Petition Preparer

Posted on January 16, 2012 by Christine Wilton

We have a serious issue here in the Central District with the BPP ["Bankruptcy Petition Preparer"].  The Central District of California has more than 25% of the entire nation's Pro Se Debtors, which are Debtors that file their bankruptcy case without an attorney.  That's a whopping 38,667 cases filed without an attorney.  This volume of self-represented parties in bankruptcy has a significant impact on judicial resources and access to justice for all in bankruptcy.  Extra time is required of the court's clerks, judges and attorneys to provide assistance and correct errors when these self-represented parties make mistakes in their papers.  A significant portion of these Debtors seek the assistance of a Bankruptcy Petition Preparer, The BPP.  Problems can and do occur when Consumers use non-lawyers to assist them.  You may be saving money now, but might need to hire an attorney later to fix mistakes if you hire the wrong BPP.  Last week, I posted a warning in, Attention Debtors Without an Attorney, and provided important information on where to get help for FREE.

11 U.S.C. Section 110 provides for penalties for persons who negligently or fraudulently prepare bankruptcy petitions.  The bankruptcy courts are now tracking BPPs and prohibiting those that frequently make mistakes from filing cases within the district.  The most common mistakes made by the BPP is the wrong exemptions are used to protect assets of the debtors from being taken by the Trustee.  So, when you hear horror stories of someone who filed bankruptcy and the trustee took their property to pay creditors, it could be they hired someone who incorrectly applied exemptions and the Debtor suffered the consequences.  This usually can be corrected, and this a good reason to hire an attorney from the beginning of your case.

Remember that a BPP cannot give you legal advice or tell you which set of exemptions to use in preparing your bankruptcy case and, if they do, they are engaging in the practice of law without a license to do so.  Cal. Bus. & Prof Code Sections 6125-6128 define what constitutes the practice of law and persons authorized. There is no substitute for proper advice from an attorney.  I cannot emphasize enough that many of our local practitioners will provide a FREE consultation to help you choose whether to file bankruptcy, if so, which Chapter to file under and what you can expect from the bankruptcy process.  Only a licensed attorney can provide such advice. 

There is help if you've been defrauded by a BPP.  We have fee shifting remedies where the fees paid can be diverted to the attorney you retain to correct the BPP's mistakes under 11 U.S.C. Sections 523, 526 and 110.  It's important to cooperate with the attorney and sign a declaration that states the problems you've had and why you had to hire an attorney.  Then, be sure to attend the hearing on that matter and explain the situation to the judge.  This will help you obtain the assistance from this attorney, perhaps without any additional money being paid out of pocket for the much needed service. 

Other B Words in the Bankruptcy Alphabet: Beware of These Credit Card Offers, Bar Date, and Bank Account Levy.

Photo Credit: Leo Reynolds

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NJ Housewives Celebrity Bankruptcy is Worthy of its Own Reality Show

Posted on September 27, 2010 by Christine Wilton

Here's a tip; if you're going to live extravagantly, don't make that lifestyle the focus of a reality show. Teresa Guidice starred in the reality show, Real Housewives of New Jersey, with her husband Giuseppe.  Mrs. Guidice was often featured on the Bravo show going on outlandish spending sprees to furnish their newly constructed and underwater, $1.7 million dollar home. Now, the Chapter 7 bankruptcy trustee is alleging the debtors hid more than $250,000 in assets in their bankruptcy petition filed in November, 2009. 

You don't have to look very far to see the cash fly.  Teresa Guidice has a book, Skinny Italian; an online clothing boutique, T.G. Fabulicious LLC.; and the couple is also accused by the trustee of having an interest in a pizza parlor and laundromat.  They also mysteriously made more luxurious purchases after their bankruptcy filing.  Apparently, the online company made these purchases for their household goods totaling more than $60,000.  The trustee is seeking a preclusion of discharge and/or a dismissal of the bankruptcy case that would deny the debtors the benefits of bankruptcy.  The drama unfolding in federal Bankruptcy Court is worthy of a reality show all its own. 

There is a lesson in here somewhere I just know it.  I suspect that hiding assets from the bankruptcy trustee is never a wise idea.  Remember that you are signing your bankruptcy petition and schedules under penalty of perjury that you have disclosed all of your assets and all of your debts.  Bankruptcy Fraud is Prosecuted and is a Crime. 

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