Osenton Law Offices Attorney: Bankruptcy Preparers a Flawed Alternative to Experienced Lawyers

Brandon, FL (Law Firm Newswire) September 10, 2014 – Bankruptcy preparers who charge a fee to help with bankruptcy filings are getting into trouble with the law for providing legal advice.

Bankruptcy law is complex, and even filling out the forms correctly can be a challenge for many. In an effort to save on legal expenses, many individuals may be tempted to hire a preparer instead of a bankruptcy attorney. But it is illegal for preparers to give legal advice.

“Only an attorney can provide legal advice as part of a service for which a fee is charged,” said Tampa bankruptcy lawyer O. Reginald Osenton. “Preparers of bankruptcy forms generally have little or no legal training.”

The Milwakee Journal Sentinel reported that bankruptcy judges in the Eastern District of Wisconsin are cracking down on preparers who overstep their bounds. Several preparers have been ordered to pay fines or refund clients’ fees last year. And two others had to appear in court to answer to charges of violating court rules. One bankruptcy judge told reporters that people come to her courtroom with claims of paying preparers and getting nothing in return.

Milwaukee has had problems with bankruptcy preparers for years. Judges cracked down in 2011 and 2012, capping fees at $75 per case, referring several preparers for potential criminal prosecution, and barring some individuals from the profession within the Eastern District.

Most fines and refunds go unpaid, judges told the Sentinel, and one complained of a lack of investigation or charges against the individuals that had been referred to the U.S. Attorney’s office.

“The U.S. Attorney’s office should prosecute those who break the law,” added Osenton. “If they don’t, they risk serious damage not only to individual filers, but also the bankruptcy system.”

A faulty filing can result in the dismissal of a case, denying the debtor the protection from creditors that bankruptcy provides and endangering their assets and financial livelihood.

“If you feel bankruptcy may help you, consulting with a bankruptcy attorney should be your first step,” Osenton said. “The possibility of worsening your financial situation is not worth saving a little money on fees.”