Many people put off filing bankruptcy as long as possible for understandable reasons. By the time they do file bankruptcy, however, money has become so tight they begin to think they can save a dollar or two by using a non-attorney bankruptcy filing service.
Filing bankruptcy, however, is no time to pinch pennies. A recent ruling from the U.S. Bankruptcy Court for the Western District of Virginia highlights the problem.
The court was confronted with a case involving a bankruptcy filing service that had sought to skirt the payment rules of the Bankruptcy Code. In an effort to collect its filing fees after its customers had filed bankruptcy, the bankruptcy service Law Solutions Chicago (doing business as the so-called “UpRight Law”) enlisted the services of a tow truck company.
The tow truck company would take cars in dangers of repossession and then sell them at auction. The tow truck company would then pay the bankruptcy filing fee to UpRight Law out of the funds earned at auction. Not surprisingly, the tow truck company did not pay the creditors with liens against the cars.
The court sanctioned UpRight Law more than $300,000. In addition, the court revoked its bankruptcy filing privileges.
Director Cliff White of the Executive Office for U.S. Trustees said, “This case is demonstrative of the vigorous enforcement actions that the U.S. Trustee Program can and will take to protect all stakeholders in the bankruptcy process.” For clients, that protection can with who they choose to work with when filing bankruptcy. Choosing to work with attorneys instead of a non-attorney filing service can be one place to start.
Reference: https://www.justice.gov/opa/pr/national-consumer-bankruptcy-law-firm-sanctioned-harming-financially-distressed-consumers-and (this reference is an abbreviated, but correct, website address)