Avoid Bankruptcy Scammers

It seems that whenever folks are desperate for help there is always a potential for unscrupulous entities swooping in. For example, in a recent case in Detroit, MI a petition preparer was sentenced to four (4) years in prison for violating various bankruptcy court orders.

In 2012, a Maryland individual who posed as an attorney and filed numerous cases was shutdown by the the Maryland bankruptcy court and ordered to pay hundreds of thousands in fines. This individual had apparently even decorated his office with law books to create an air of legitimacy.

How to Avoid Scammers

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• Avoid providers with suspiciously low prices!

The first thing to watch out for is extremely low prices that appear too good to be true. I firmly believe a knowledgeable lawyer running a business will value his or her services accordingly. Hence, when the fee charged is ridiculously low you should be concerned. The Maryland individual referred to above advertised prices that were significantly the norm and this was probably attracted unsuspecting debtors who thought they were getting a great deal.

Are you going to be dealing with an attorney or a paralegal? Are you going to have your questions answered by an attorney or will you get the run around? We all know what it is like to have burning a question about something you need and to feel ignored! It can be exasperating.

• Avoid providers without a local office you can go to!

This warning comes from experience from some of the people I have spoken to over the years. Several individuals have contacted mad as hell because they paid several hundred dollars if not thousands to a paper boy who was supposed to take their information and documents back to an office for processing. While I recognize we are in 2014 and technology allows us to do amazing things, I am wary of a situation where you cannot meet with your lawyer face to face if need be. I will be the first to admit that in certain circumstances, I have accommodated clients with special needs, but that is vastly different than using paper boys as a matter of course.

• Avoid a bankruptcy Petition Preparer who charges more than $200.00!

The truth is the amount a bankruptcy petition preparer is allowed to charge is below the amount listed above, but if the amount is higher it should raise red flags. Why? You are overpaying for a typist! I have sat on meeting of creditors where the debtor paid a preparer close to or more than $1,000.00 only to have the trustee say the petition has significant mistakes. At that fee, you can get a competent lawyer to represent you.

• If things are so tight turn to low bono or pro bono organizations!

Low bono refers to programs where bankruptcy lawyers like myself agree to take a case for a reduce fee. The Maryland Bankruptcy Court has a list of low bono attorneys you can access. Go to the court’s website in your state. You are more likely to get more bang for your buck hiring a low bono lawyer than paying a preparer.

The Maryland bankruptcy court and the local bankruptcy lawyers run what is known as the Debtor Assistance Program. This programs offers free legal advice to individuals who are representing themselves in their bankruptcy cases. If you have to file without a lawyer do not go it alone! Invest some time in the DAP program to educate yourself and avoid mistakes.

Pro bono organizations provide free legal services to those who qualify. For example, I volunteer with Maryland Volunteer Lawyer Service and file a couple of bankruptcy cases for really deserving people each year. Therefore, that is a good resource to turn to and if you qualify we just might work together.

If you are not a Maryland resident, you can contact the clerk’s office in your jurisdiction for more information about low bono and pro bono resources as a starting point. Most states have similar programs.

This is a brief overview of a complex legal topic and it is important that you consult knowledgeable bankruptcy counsel before taking action.

Joseph K. Githuku, Esq.