I was recently retained by a client who – like many people struggling nowadays – tried to tackle their mounting financial problems by going to a debt settlement company. I’ve said it once, and I’ll say it again: debt settlement companies are a rip-off. The proof is in how empty my client’s wallet is now, and where my client is now.
Posts Tagged ‘Petition Preparers and Fees’
Still Think You Can File Bankruptcy Without An Attorney?
Tuesday, July 27th, 2010
Even though I have written and spoken publicly about the perils of representing oneself in bankruptcy, people still do it. I recently came across a case where a lawyer – with a boatload of legal problems – was sanctioned for essentially abandoning his clients during a bankruptcy case. But I’m not writing about that lawyer or what he did that got him into so much hot water with the Bankruptcy Court. Rather, what I write about today is what District of Massachusetts Bankruptcy Judge Melvin Hoffman had to say about the bankruptcy process, and the role of a debtor’s attorney. So if you’re still thinking you can or should go through the bankruptcy process alone, take a few minutes and read this.
Cheap Becomes Expensive
Tuesday, May 18th, 2010
Like many attorneys, I get calls from prospective clients asking me what my fee is for a bankruptcy filing. It’s not a particularly difficult question to answer – in theory. But at the same time, it is. Generally, I know that if their concern is price, then who they retain as their attorney is not all that important to them. But I also get calls from prospective clients who have or had another (and less expensive) attorney who now is not performing at what they believe is an acceptable level. Perhaps they aren’t returning calls. Perhaps they are not giving straight answers to honest questions. Or perhaps better said, the cheap attorney doesn’t know what the hell they are doing. The desire to go cheap has now turned into something expensive. (more…)
E.D.Michigan Caps Petition Preparer Fees
Friday, April 23rd, 2010
I came across this interesting order issued on Tuesday, April 20th by the US Bankruptcy Court for the Eastern District of Michigan. The Administrative Order caps the maximum allowable fee charged by a bankruptcy petition preparer in any case to just $100.
The Peculiar Parallel of Debt Relief Agencies and Madonna
Thursday, March 11th, 2010
In yesterday’s blog, I suggested that some attorneys – namely on Craigslist – were not complying with the BAPCPA imposed requirement that they disclose that they are a “debt relief agency.” That might not have been completely fair.
Certainly, when an attorney fits into the definition of a “debt relief agency”, they must disclose that fact and are obligated to comply with additional disclosure requirements. But, if an attorney does not fit into the definition of a “debt relief agency”, may they still represent individuals in consumer bankruptcy matters? The answer is yes… and that raises some interesting questions.
CareOne: What’s Behind Those Commercials?
Thursday, February 18th, 2010
As I was watching the news the other night, I saw this commercial for CareOne Credit. The name rang in my head – and then it hit me: I had recently read about them in a case while doing some research Since the judge’s observations in that case and his comments were stuck in my head – and since I am seeing these commercials more and more - I thought I would share them here.
The Case
In late 2006, Debra Wood was struggling with debt – and after apparently seeing an ad, she contacted CareOne Credit Counseling. When she contacted CareOne, she was referred to Consumer Law Associates, LLC (CLA). CLA then gave her documents to start her into a debt management plan – which would be administered by Ruther and Associates, LLC (RA). They describe themselves as a “national law firm dedicated to consumer debt reduction.” As the facts of this case unfold, you’ll see what that description is inaccurate – at best.
Filing Bankruptcy Without an Attorney
Friday, April 10th, 2009
According to a New York Times article, more and more people are representing themselves in court. I have had much experience counseling debtors who have initially elected to seek bankruptcy protection without the benefit of counsel. There are many reasons for this: the lack of money to hire an attorney being one of them, if not the biggest. Another, and perhaps more troubling reason is that pro see filers have a belief that a judge will help them through the process.
From the article:
Judges complain that people miss deadlines, fail to bring the right documents or evidence and are simply unprepared for legal proceedings. Such mistakes make it more likely they will fare poorly – no matter the merit of their cases.
This applies in any courtroom, and in any legal proceeding. If you want to represent yourself, you have to be prepared. That means, you have to know what the legal issues are (not what you think the legal issues are or should be) and have your ducks and documents all lined up. It also helps if you know the law.
But relying on the judge to help your is tantamount to ignoring that the role of the judge actually is. As the Times discusses:
Overseeing a proceeding where one or both sides lack lawyers puts a judge in a difficult position: The judge is supposed to be neutral but also has an interest in moving things along.
“If you see a person making a terrible mistake, you can’t always jump in and save them,” said Judge Borbely, the circuit court judge in Vermilion County, Ill. “You cannot take the role of an advocate.”
To ensure fair outcomes, courts must do more to help people navigate the courts, said John T. Broderick, the chief justice of New Hampshire. “If you and I went to the hospital and they said, ‘Do you have insurance?’ and we don’t, and they said, ‘There are some textbooks over there with some really good illustrations,’ ” Judge Broderick said, “we would think that was immoral.”
At the same time however, while courts can and do offer navigation assistance (such as the Pro Se Clerk at the US Bankruptcy Court), they cannot offer legal advice and the judges cannot be your advocate.
Was I Too Harsh on David Coleman?
Tuesday, March 17th, 2009
A few people have spoken to me about it. And I have had some time to reflect. My comments about David Coleman and his outfit, Mortgage finders of New England, were not kind. I believe I referred to him as “the lowest of the low.” In that article, I discussed what he did, and why the Bankruptcy Court fined him and issued an injunction against him. But courts issue fines every day and I don’t refer to the parties as the “lowest of the low.” So after some reflection, I thought it best to discuss why I stand by those statements.
Coleman – and others like him – scour public records to look for people in foreclosure. There is nothing wrong with that – provided you’re doing it for a good reason. There are some bankruptcy lawyers that do it, along with real estate brokers and others who offer their services to people who they think need it. But Coleman offers nothing.
Coleman leads his “clients” to believe that he is a lawyer and that he is capable of properly preparing a chapter 13 petition to stop a foreclosure. He then agrees to meet his “clients” at the courthouse – where the “clients” sign the petition and give him cash. Then, the petition is filed. The foreclosure is stopped….if only for the time being.
But Coleman does not counsel the “client.” He does not develop a strategy. He does not guide them through the rocky and ever changing legal terrain that is chapter 13. He does nothing more. The cases are dismissed, and the foreclosures in many cases, will likely occur. He has provided no benefit at all. He has done nothing other than take money and buy a small amount of time.
So why does this irk me?
Because people who are facing foreclosure need help. Because if their name is in the legal ad section of the newspaper and they have not already consulted with an attorney, or developed some sort of game plan, we can and should assume that either there is no game plan to put together, or maybe more likely the case, they are so scared and embarrassed at the very idea of losing their home, that it seems more appropriate to do nothing, since doing something is an acknowledgment that something is terribly, terribly wrong. In other words and perhaps more simply stated: they are vulnerable.
And Coleman takes advantage of it. He files the case. It gets docketd. It will get assigned to a judge and a trustee. Clerks will review it. Orders to Update will issue, directly the debtor to file other required documents. Those documents will likely never be filed. The case will be dismissed perhaps within a few days, or a few weeks or a few months. The foreclosure was stopped. It was stalled.
What also bothers me is that Coleman ignored court orders directing him to comply with those Bankruptcy Code provisions that require him, as a “petition preparer” to disclose his status (as well as for him to do other things that petition preparers are required to do). From all of this, I infer that Mr. Coleman and his outfit have no problem offering “help” to people, but ultimately providing none – and doing so only after taking their money. I also infer that Mr. Coleman doesn’t care what the law says or has any respect for our courts.
I am in the business of helping people. Debtor or creditor, that’s what I do. Bankruptcy law is tough enough on debtors. Being in deep in debt and feeling utterly powerless and alone is hard enough. But being preyed upon by someone who knows nothing, who offers nothing, and who takes everything is simply unconscionable. And it is for those reasons that I believe that my comments about David Coleman, Mortgage Finders of New England, and every other low-life who thinks they can get away with it, are entirely jusitified.
Bankruptcy Court Shuts Down Predator
Sunday, March 15th, 2009
When people are in foreclosure, they can fall victim to a host of scammers and scams. Unfortunately, by the time many of these folks are scammed, they are worse-off than they were before they stumbled into foreclosure. So when I come across a scammer who preys on people who need real help, you’ll read about here. Here’s the story behind David Coleman and his bogus outfit: Mortgage Finders of New England.
In April 2008, a Virginia couple contacted Coleman’s firm about an upcoming foreclosure on investment property in Newbury, MA. Coleman told the couple he could help them by filing a bankruptcy petition on their behalf. He also told the couple that he was experienced in filing bankruptcy cases, although at no time did he mention that he wasn’t a lawyer and that by law, he could not give legal advice. Only after the case was filed did the couple learn for the first time that Coleman wasn’t a lawyer at all.
Coleman waited for the debtor (the wife only) in the lobby of the Tip O’Neill building where he collected a $1,000 cash “fee” and had her sign a skeletal bankruptcy petition he prepared. But he did not properly complete the portion of the petition acknowledging that he was a petition preparer. In fact, in an effort to presumably fly below the radar and to keep his scam going, he left it blank. The case was dismissed on May 5, 2008 because no other documents were filed.
On May 21, 2008, a New Bedford woman was contacted by Coleman after he obtained information about a looming foreclosure from a local paper. Coleman told the woman that he could stop the foreclosure and it would cost $1,000 cash to retain his services. The next day, he met the woman in the lobby of the Tip O’Neill building where he collected his $1,000 cash fee, filed a chapter 13 petition, but did nothing more. When the clerk asked Coleman if he was representing the woman, he said he was only assisting her. It was at that time that the woman learned that Coleman wasn’t a lawyer. The woman’s friend demanded that he return the money, but Coleman refused.
On May 6, 2008, a Roxbury man filed a chapter 13 case after being contacted by Coleman, who learned of a foreclosure in the local paper. Again, he met the man for the first time in the lobby of the Tip O’Neill building in Boston and collected the $1,000 case. Again, the filing was deficient. And in this case was dismissed because required documents were not filed. Again, the forms were not completed correctly. Again, the people were not properly advised.
There are many more cases. There are many more violations. There are many more victims.
Who is he?
David Coleman is a predator. He operated Mortgage Finders of New England at 70 Worcester Street in Methuen. He’s not a lawyer. He has no formal education. He has no training with regard to the bankruptcy process or how to properly and fully prepare bankruptcy documents. Yet despite this, he contacts distressed homeowners, convinces them that he can help them, takes their money (and I’m willing to bet, money they cannot afford to lose), files a bare bones petition and does nothing more. Since April 2008, when he started this operation, he has collected money and prepared bankruptcy documents for over thirty people.
He advertises in the Verizon Yellow Pages and by distributing cards and flyers. He makes calls to people, using “411″ to get a homeowner’s name after getting personal information from a foreclosure notice or other public record. He tells his victims to meet him in at the Bankruptcy Court in Worcester or Boston. He downloads forms on line, completes them in his own handwriting, and files them. He doesn’t tell his victims that he is not an attorney and that he may not give legal advice. He does not disclose to the court that he is a petition preparer. He does not even give copies of the documents he files to his victims. And then he does nothing more – ultimately letting their cases fail because other necessary documents are never filed.
He holds himself out as a bankruptcy expert. Folks, David Coleman is no expert.
And it gets worse.
In July 2008, US Bankruptcy Judge Hillman issued an injunction requiring that Coleman comply with the Code and properly disclose on cases that he is a petition preparer as defined by Section 110 and his fees. Even with this order, Coleman continued this unlawful and illegal scam. He continued to file documents without disclosing who he was and what he was doing. He continued to rip people off. He continued to hurt people.
In an order dated February 18, 2009, the US Bankruptcy Court issued an order finding that Coleman had violated Section 110(b)(1) of the Code. He was fined a total of $34,500 for violation of the code, and among other things was ordered to disgorge (return) the fees he unlawfully received.
It was also found that he was engaging in the illegal practice of law, and therefore, he has been barred as “(1) acting as a bankruptcy petitioner; (2) soliciting, assisting, advising, providing legal guidance, advice, assistant or consultation of any king to any person in connection with the filing or prosecution of any bankruptcy case or any document in any bankruptcy case, whether for a fee or for free” in Massachusetts. The order includes not only Coleman but also includes “any person or entity acting in concert with him.”
When it comes to helping people keep their homes out of foreclosure, Coleman serves no legitimate purpose. He preys on people who are probably feeling as if they are at the lowest point in their lives. What people facing foreclosure need is sound counsel given by people who are trained in and who study the law and know what they are doing. That’s not Coleman, and it never was. He’s only taking money and selling false hope. He’s the lowest of the low.
If you’re facing foreclosure, talk to an attorney. Don’t be scammed by Coleman, or anyone else.
Read the Court decision here: US v. Coleman, 08-04132 (2/18/2009).
Blackberries & Form-Fillers: What Bankruptcy Practice is Really About
As I continue to work through (in my mind) the issues raised by the proposed auction at 115 Cottonwood in Fairhaven, I recall attending a seminar where one of the speakers remarked that consumers have become “Blackberried.” Specifically, the speaker mentioned that clients had a tendency to send via Blackberry or email a specific legal question, and then call within 10 minutes or so wondering why no response to the question had been provided. The speaker remarked at how clients wanted information “now” – but lawyers on the other hand, sometimes need time to think and analyze before responding.
The same can be said for certain practice areas. For many years, I thought that consumer bankruptcy practice was just completing forms and filing them. Many, many years ago, before I embarked out on my own an old friend and colleague from law school told me that the only way to practice bankruptcy law successfully was by “volume.” That might have been true (way) back then, before BAPCPA was enacted, but it’s not the case now. And it cannot be.
When I got out of law school, the thought of being a bankruptcy lawyer never entered my mind. In fact, it was the last thing I wanted to do. I viewed it as little more than completing forms. Over time, I learned that I was wrong.
(more…)
Tags: attorneys, Commentary - Legal, Petition Preparers and Fees
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