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Department of Justice Warns Against Use of Bankruptcy Petition Preparers

According to the United States Courts Website , there is increasing concern about wrongdoing by bankruptcy petition preparers. A bankruptcy petition preparer is defined by law as “a person other than an attorney for the debtor or an employee of such attorney…who prepares for compensation a document for filing.” This includes paralegals and legal administrators under the supervision of attorneys which are often used at large law firms as a cheaper alternative to hiring an attorney.

United States Bankruptcy Judge Maureen Tighe blames the increased abuse over the past three years to “foreclosure rescue” and “loan modification” services. According to Judge Tighe, bankruptcy petition preparers take advantage of desperate homeowners who are seeking honest and legal solutions to their debt problems.

Unfortunately many of these cases get dismissed and the debtor is left in a bad situation. A recent report (which Judge Tighe recently released) shows how debtors who inadequate “representation” in the form of bankruptcy petition preparers have their cases dismissed at double the rate of the high rate of pro-se debtors (debtors who file for bankruptcy with no help).

In fact, this study states that about 23 percent of debtors received help from a bankruptcy petition preparer. Bankruptcy petition preparers may seem like an attractive alternative, as the bankruptcy court sets a ceiling on the fees that they are able to collect much lower than that of attorneys.

You get what you pay for, however, as evidenced by the high dismissal rate and the fact that bankruptcy petition preparers are not allowed to offer legal advice. All that they are allowed to do is take the information that you give them and blindly regurgitate it into the bankruptcy forms without any analysis whatsoever.

In fact, since 2008 formal legal actions against bankruptcy petition preparers has nearly tripled. Further, 99% percent of those actions brought against the bankruptcy petition preparers were successful. In Maryland, a bankruptcy petition preparer was sentenced to prison for wrongdoing. It has gotten so bad that the Department of Justice has a warning for debtors that are thinking about using bankruptcy petition preparers on its website.

Make sure that you use only experienced Maryland and Silver Spring bankruptcy lawyers to help get the fresh start that you deserve. Don’t risk the serious consequences that could occur by using a bankruptcy petition instead of a Maryland or Silver Spring bankruptcy attorneys.