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Beware “do it yourself” bankruptcy kits in Florida

Long before the mortgage foreclosure crisis and the recent economic downturn, Florida courts have warned against trying to save money by engaging non-attorney bankruptcy petition preparers when dealing with financial troubles.

A recent case shows how some predatory individuals take advantage of people struggling under debt and afraid of losing their homes by charging them illegal and excessive fees. In re Falck concerned a person unsophisticated in legal and financial matters that received an advertisement from the defendants in the mail. The homeowner met with the defendants and started making monthly payments to them for mortgage foreclosure defense.

The defendants were not licensed as attorneys in Florida or any state, and were not even paralegals. They did not file the correct disclosures, charged excessive fees and falsely claimed they received no fees from the debtor. In imposing sanctions on the bankruptcy petition preparation company, the court noted that the firm had followed the same illegal and fraudulent course of conduct for hundreds of other clients seeking mortgage foreclosure protection.

Bankruptcy law changes to regulate non-attorney bankruptcy preparers

The federal Bankruptcy Code was amended in 1994 to regulate the powers and role of bankruptcy petition preparers. Written notice must be provided on an official form to the debtor client that the preparer is not an attorney and cannot practice law or give any legal advice before any documents are filed or fees are charged.

This leaves a limited amount of services that can legally be performed by the petition preparers, but over the years there have been many attempts by non-attorney document preparation companies to skirt the requirements. Hefty fines and other sanctions have been increased for violations of the Code or fraudulent, deceptive or unfair conduct. Statutory damages of $2,000 or twice the amount of fees paid to the preparer, plus attorney fees and costs could be assessed.

Home remedies for legal services can cause complications

Non-attorneys selling package forms or “kits” for performing legal processes has long been recognized as the unauthorized practice of law if any instructions or advice on their preparation is included. The court in the 1973 case of The Florida Bar v. American Legal & Business Forms, Inc. warned against looking at these documents and filings as mere forms, since the selection of a particular document involves research and choices made after evaluation of alternatives. Printed forms which do not reflect these choices are often relied upon by people trying to save money, and the results are sometimes costly and unfair.

Florida Constitution supports statewide uniformity

The Florida Supreme Court is charged with adopting rules for the practice of law in the state, and determined decades ago that it is not only the representation of others in court that constitutes the practice of law, but also the giving of advice and counsel and legal services performed for compensation.

Since the giving of legal advice and the performance of legal services affect important rights of the person, the reasonable protection of those rights under the law require persons giving such advice to possess legal skill and knowledge beyond that of the average person.

The policy of the Florida Supreme Court is that persons unsure of their legal rights and remedies should seek assistance from a person licensed to practice law in the state. If you are struggling with debt and are looking for a chance to start over, it is essential to contact an experienced bankruptcy attorney to guide you through the process.

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