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Pay Bankruptcy Petition Preparers No More Than $200, or They Pay You $2,000

Did you know that there is absolutely no reason to pay a non-lawyer bankruptcy petition preparer ("BPP") more than $200 total for a chapter 7 in Colorado? 

Recently, Colorado bankruptcy judges have penalized bankruptcy document preparers who charge more.

In the Cordova1 case, Judge Brown ruled that bankruptcy petition preparers may not charge more than $200 without court approval. In that case, Judge Brown decided that the BPP should not have charged more than $150 and ordered the BPP: 
  1. to turn over to the bankruptcy trustee the unreasonable $499 fee charged and 
  2. to pay $2,000 to Mr. Cordova, the debtor in that case. 

In the Herrera2 case, Judge Romero ruled that two people overcharged a debtor by collecting a $1,000 fee for bankruptcy help. Judge Romero also observed that the BPP had charged debtors $1,000 in other cases but on court forms the BPP reported that he had been paid much less. In the Herrera case, Judge Romero ordered the two people involved
  1. to turn over to the bankruptcy trustee the excessive $1,000 fee charged and 
  2. to pay $2,000 to Ms. Herrera, the debtor in that case.

Here's what the bankruptcy court has to say about petition preparers:

Beware of bankruptcy petition preparers who do not comply with all legal requirements. The role of non-attorney petition preparers is solely to type information on Bankruptcy Forms (available at this link without charge). Petition preparers are barred by law from providing legal advice - they cannot explain how to answer legal questions or assist in bankruptcy court. Petition preparers must sign all documents they prepare; print their name, address, and social security number on such documents; and furnish copies to the debtor. They cannot sign a document on the debtor's behalf or receive payment from the debtor for court fees.

A bankruptcy petition preparer violates the law if the BPP does not enter into a written contract or overcharges for typing the bankruptcy forms. A BPP must 

(1) . . . execute a written contract with [you] that explains clearly and conspicuously—
(A) the services such agency will provide to [you]; and
(B) the fees or charges for such services, and the terms of payment; [and]
(2) provide [you] with a copy of the fully executed and completed contract.3

Don't let a bankruptcy petition or document preparer charge you more than $200. If a BPP has charged too much, you may be entitled to the greater of $2,000 or twice the amount paid to the BPP in addition to your attorneys' fees and costs.4 

Contact the local U.S. Trustee's office if a bankruptcy petition preparer charges too much, violates bankruptcy law, or commits any fraudulent, unfair, or deceptive act. There are also a few bankruptcy attorneys helping people who have been unwitting victims of BPP violations.


1  Case No. 11-24204, decided May 15, 2012.
2  Case No. 12-12026, decided September 17, 2012.
3  Section 528(a) of the Bankruptcy Code.
4  Section 110(i) of the Bankruptcy Code.