Keywords: BPPs . attorneys fees . bankruptcy petition preparers .
Lawyers > What BPPs can't do BPPs, Lawyers, and public protection rules18 Cases , IssueID 43 |
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Topic Description:This topic collects cases that have claimed to "protect the public" by restricting what services BPPs can offer Lines of Cases:
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Upon the foregoing, the Court concludes that the unpaid legal fees for services rendered and costs incurred before July 16, 2007, totaling $10,924.38, constituted an unmatured prepetition debt subject to Debtor's discharge. Thompson's continuing efforts to collect those fees through state court litigation, after she was made aware of the discharge injunction, violated the injunction and placed Thompson in contempt of this Court's Order of Discharge. Sanctions will be imposed against Thompson in the amount of $2,300.00 to compensate Debtor.
A new bankruptcy attorney was ordered to pay the trustee's fee when the attorney did not properly clarify debtor's interests in certain corporations (which the trustee later had to do). The case ended up being dismissed (at debtor's own request) after trustee's investigation because it turned out that the debtor had no unsecured creditors.
The court held that "civil contempt is the normal sanction for violation of the discharge injunction" when a creditor filed a counterclaim suing debtor for a discharged amount.
Court denies request for $4K above standard "no look" feee of $3,500 for chapter 13 cases in that district.
Court would not allow $2,400 attorney fee of in no asset Chapter 7 case. $1,600 is max it would allow without documentation of 'individualized attention' attorney gave to each client (at $240/hr) in low-volume practice.
The attorney met his client on the morning of the foreclosure sale on her home. Attorney helped file an emergency petition, and asked for a waiver of the pre-petition credit counseling requirement (pursuant to Section 109(h)(3).
Attorney did not violate Rule 9011 when he took his client's word that she had attempted but hadn't been able to actually obtain credit counseling. The court held that, although there are different interpretations, it was not unreasonable of the lawyer to conclude that "requesting counseling from [an agency,] can satisfy Section 109(h)(3)."
Lawyer was sanctioned for vexatious litigation when he filed a motion that the court found was taken in order to collaterally attack a court-approved settlement.
That is, "the transfer motion [to transfer the case to District Court] was legally meritless. This Court does not have the authority to transfer a case to the District Court...[the motion] was also vexatious, and submitted for an improper purpose: the continuation of what Judge Batts had described as an obvious attempt to gain a more favorable forum and essentially overturn the Bankruptcy Court's ruling."
The BPP in this case repeatedly and intentionally violated Section 110 and engaged in the unauthorized practice of law.
Specifically, the BPP did the following: "1) instructing debtors about the need for credit counseling, 2) deciding under which chapter to file, 3) deciding whether debtors should include certain properties or debts on the schedules, 4) choosing exemption schemes on behalf of the debtors and then applying them to the debtors' properties, 5) determining how to characterize secured, unsecured and priority debts, 6) determining whether the presumption of abuse arises, and 7) in general providing advice regarding bankruptcy procedures and rights."
The court ordered the BPP to refund all fees, pay a fine, and enjoined her from providing bankruptcy preparation services.
Attorneys not allowed to charge in excess of 3K "no-look fee" for chapter 13 case
Attorney must disgorge $2,000 fee paid by debtor where case had to be dismissed because debtor had not completed credit counseling, requiring the court to dismiss the case. Although the forms said counseling had been completed, there was no certificate of completion. Counsel was lax in failing to confirm that debtor had, indeed, attended credit counseling and got the certificate.
The debtors case was dismissed for lawyer's failing to file appropriate forms, and the courts ordered the lawyer to disgorge the $2,000 fee he had been paid.
Bankruptcy petition preparer (BPP) was ordered to disgorge $750 in fees because his actions led debtor to believe BPP was a lawyer, and the BPP actually did more harm than good (he caused debtor's case to be dismissed because BPP failed to send in credit counseling certificate to the court).
BPP cannot run credit report for debtor nor advise them which exemption statutes to cite on their exemptions.
Bankruptcy petition preparer (BPP) was ordered to disgorge fees and pay a fine, with the court finding that BPPs must make it clear to clients that they are not lawyers. Here the BPP gave the client advice (which only a lawyer can do) and was not clear that she was not a lawyer.
The court said that this case shows "the sort of confusion that can arise when a BPP does not take early and affirmative steps to inform a debtor that the BPP is not a lawyer and cannot offer legal advice.:
Incompetent lawyer barred from further bankruptcy cases:
"Counsel has displayed, and continues to display, incompetence and disregard for the statutes and rules that govern bankruptcy practice. While some of the blame for these failures perhaps rests on Counsel's paralegal, unreasonable delegation is itself a violation of the rules and of the statute.
The Court has tried to change these behaviors by earlier, more limited, orders and admonitions. But those measures have had no success.
The Court agrees with the chapter 13 Trustee and with the US Trustee that protection of the public requires that Mr. Fahey be enjoined from further bankruptcy practice until he can convince the Court that he will practice in accordance with the statute, rules, and ethics requirements applicable to attorneys."
The debtor's attorney told her not to worry about scheduling any interest in debtor's heir property, and the court found that this was appropriate because the debtor's mother was still alive when debtor filed for bankruptcy. Because the mother was alive, the debtor did not yet have an interest in the property, even though she would eventually have such an interest. However, debtor did have a partial interest that she had inherited from her father (who had died a few years before this case).
The attorney had assured debtor that she did not need to schedule this interest, even though debtor protested. Because of this, the court allowed debtor's case (it denied the trustee's request to deny the debtor's discharge), saying:
"As most individuals do, the debtor believed her attorney provided correct legal advice. Although the debtor failed to disclose her ownership of the [property in question], teh court finds that such omission was not done fraudulently."
Petition preparer was sanctioned for committing a "'fraudulent, unfair, or deceptive' act by engaging in the unauthorized practice of law."
(NOTE: Pre-BABCPA case)
The court awarded debtor damages against a lender who tried to get payment of a dischanrged amount (pursuant to the discharge injunction).
Court denies request for $4K above standard "no look" feee of $3,500 for chapter 13 cases in that district.
Court would not allow $2,400 attorney fee of in no asset Chapter 7 case. $1,600 is max it would allow without documentation of 'individualized attention' attorney gave to each client (at $240/hr) in low-volume practice.
The attorney met his client on the morning of the foreclosure sale on her home. Attorney helped file an emergency petition, and asked for a waiver of the pre-petition credit counseling requirement (pursuant to Section 109(h)(3).
Attorney did not violate Rule 9011 when he took his client's word that she had attempted but hadn't been able to actually obtain credit counseling. The court held that, although there are different interpretations, it was not unreasonable of the lawyer to conclude that "requesting counseling from [an agency,] can satisfy Section 109(h)(3)."
Lawyer was sanctioned for vexatious litigation when he filed a motion that the court found was taken in order to collaterally attack a court-approved settlement.
That is, "the transfer motion [to transfer the case to District Court] was legally meritless. This Court does not have the authority to transfer a case to the District Court...[the motion] was also vexatious, and submitted for an improper purpose: the continuation of what Judge Batts had described as an obvious attempt to gain a more favorable forum and essentially overturn the Bankruptcy Court's ruling."
The BPP in this case repeatedly and intentionally violated Section 110 and engaged in the unauthorized practice of law.
Specifically, the BPP did the following: "1) instructing debtors about the need for credit counseling, 2) deciding under which chapter to file, 3) deciding whether debtors should include certain properties or debts on the schedules, 4) choosing exemption schemes on behalf of the debtors and then applying them to the debtors' properties, 5) determining how to characterize secured, unsecured and priority debts, 6) determining whether the presumption of abuse arises, and 7) in general providing advice regarding bankruptcy procedures and rights."
The court ordered the BPP to refund all fees, pay a fine, and enjoined her from providing bankruptcy preparation services.
Attorneys not allowed to charge in excess of 3K "no-look fee" for chapter 13 case
Upon the foregoing, the Court concludes that the unpaid legal fees for services rendered and costs incurred before July 16, 2007, totaling $10,924.38, constituted an unmatured prepetition debt subject to Debtor's discharge. Thompson's continuing efforts to collect those fees through state court litigation, after she was made aware of the discharge injunction, violated the injunction and placed Thompson in contempt of this Court's Order of Discharge. Sanctions will be imposed against Thompson in the amount of $2,300.00 to compensate Debtor.
A new bankruptcy attorney was ordered to pay the trustee's fee when the attorney did not properly clarify debtor's interests in certain corporations (which the trustee later had to do). The case ended up being dismissed (at debtor's own request) after trustee's investigation because it turned out that the debtor had no unsecured creditors.
The court held that "civil contempt is the normal sanction for violation of the discharge injunction" when a creditor filed a counterclaim suing debtor for a discharged amount.
Attorney must disgorge $2,000 fee paid by debtor where case had to be dismissed because debtor had not completed credit counseling, requiring the court to dismiss the case. Although the forms said counseling had been completed, there was no certificate of completion. Counsel was lax in failing to confirm that debtor had, indeed, attended credit counseling and got the certificate.
The debtors case was dismissed for lawyer's failing to file appropriate forms, and the courts ordered the lawyer to disgorge the $2,000 fee he had been paid.
Bankruptcy petition preparer (BPP) was ordered to disgorge $750 in fees because his actions led debtor to believe BPP was a lawyer, and the BPP actually did more harm than good (he caused debtor's case to be dismissed because BPP failed to send in credit counseling certificate to the court).
BPP cannot run credit report for debtor nor advise them which exemption statutes to cite on their exemptions.
Bankruptcy petition preparer (BPP) was ordered to disgorge fees and pay a fine, with the court finding that BPPs must make it clear to clients that they are not lawyers. Here the BPP gave the client advice (which only a lawyer can do) and was not clear that she was not a lawyer.
The court said that this case shows "the sort of confusion that can arise when a BPP does not take early and affirmative steps to inform a debtor that the BPP is not a lawyer and cannot offer legal advice.:
Incompetent lawyer barred from further bankruptcy cases:
"Counsel has displayed, and continues to display, incompetence and disregard for the statutes and rules that govern bankruptcy practice. While some of the blame for these failures perhaps rests on Counsel's paralegal, unreasonable delegation is itself a violation of the rules and of the statute.
The Court has tried to change these behaviors by earlier, more limited, orders and admonitions. But those measures have had no success.
The Court agrees with the chapter 13 Trustee and with the US Trustee that protection of the public requires that Mr. Fahey be enjoined from further bankruptcy practice until he can convince the Court that he will practice in accordance with the statute, rules, and ethics requirements applicable to attorneys."
The debtor's attorney told her not to worry about scheduling any interest in debtor's heir property, and the court found that this was appropriate because the debtor's mother was still alive when debtor filed for bankruptcy. Because the mother was alive, the debtor did not yet have an interest in the property, even though she would eventually have such an interest. However, debtor did have a partial interest that she had inherited from her father (who had died a few years before this case).
The attorney had assured debtor that she did not need to schedule this interest, even though debtor protested. Because of this, the court allowed debtor's case (it denied the trustee's request to deny the debtor's discharge), saying:
"As most individuals do, the debtor believed her attorney provided correct legal advice. Although the debtor failed to disclose her ownership of the [property in question], teh court finds that such omission was not done fraudulently."
Petition preparer was sanctioned for committing a "'fraudulent, unfair, or deceptive' act by engaging in the unauthorized practice of law."
(NOTE: Pre-BABCPA case)
The court awarded debtor damages against a lender who tried to get payment of a dischanrged amount (pursuant to the discharge injunction).
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If you're not familiar with what "case law" is, and how to use it, check out Chapter 7 of Nolo's LegalResearch: How to Find and Understand the Law for a guide to how to read through a case to get the parts that matter.
Also, you need to be familiar with the concept of "jurisdiction." Here are some helpful links:
When you read a case, check to make sure that the case's decision applies to your local district. Do this by looking at which court has decided the case -- either the U.S. Supreme Court, a court of appeal (listed here in large type), or a district court (listed in small type). Your local district court judge is not bound to follow the opinion of judges from other district courts, but often they look to these cases for advice. Your local district, however, is bound to follow decisions in cases from it governing circuit court. You'll see fairly few Supreme Court case here, but those cases are also binding on all districts."
NO! NO! NO! This is a start for your research. New cases are constantly being decided. I update this when I have time. This is only a fraction of the actual published opinions out there. Dozens of cases are handed down nationwide every week. I catalog interesting ones when I have time. They are meant to serve as a starting point for your research -- NOT as a comprehensive listing of the current state of the law.