"The reality that a given statute or procedure is convenient, effective, and useful in faciliating government operations, alone, will not save the law if it is contrary to the Constitution. " I.N.S. v. Chadha, 462 U.S. 919, --- (1983).

Any reasonable person reading the title will understand that this statute does not apply to persons who DO NOT negligently or fraudulently prepare bankruptcy petitions. Because the statute is ambiguous and does not define "negligent" or "fraudulent," bankruptcy trustees turn the most simple actions of petition preparers into "negligence" preparation or "fraudlent" allegations. Seldom does a bankruptcy judge disagree with trustees.

It might be said that the statute itself defines what is negligent and fraudulent. If that is true, then the intent of Congress when legislating Section 110, and the decisions of bankruptcy judges nationwide demonstrate just the opposite.

Section 110 of the Bankruptcy Code went into effect on October 22, 1994. Most preparers who were in business in or prior to 1994 have been price fixed out of the business, or enjoined from preparing petitions. Seldom is a preparer in business for two years before allegations of violating Section 110 are filed against them.

Some of the most experienced petition preparers who sell material teaching "how to" and conducting ethical business, have been charged with Section 110 violations. One such petition preparer is a paralegal with lots of certifications with her name, and who works for attorneys -- even prepares bankruptcy petitions for attorneys as an independent business. When experts in the field are charged with violations, the public smells the proverbial rat.

Following is the complete statute. Our comments are in red and are based on decisions entered by the bankruptcy courts and federal district courts. We will have the referenced decisions posted as soon as possible.

(1) ''bankruptcy petition preparer'' means a person, other than an attorney or an employee of an attorney, who prepares for compensation a document for filing; (To the contrary, there is at least one decision where the judge ruled that although the person who prepared a form for the debtor did not charge a fee, that this subsection still applied) and

(2) ''document for filing'' means a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States district court in connection with a case under this title. (to the contrary, there are decisions that a petition preparer who prepares any other documents for filing by debtors, other than petitions, is practicing law without a license.)

(b)(1) A bankruptcy petition preparer who prepares a document for filing shall sign the document and print on the document the preparer's name and address.

(2) A bankruptcy petition preparer who fails to comply with paragraph (1) may be fined not more than $500 for each such failure unless the failure is due to reasonable cause.

(c)(1) A bankruptcy petition preparer who prepares a document for filing shall place on the document, after the preparer's signature, an identifying number that identifies individuals who prepared the document.

(2) For purposes of this section, the identifying number of a bankruptcy petition preparer shall be the Social Security account number of each individual who prepared the document or assisted in its preparation.

(Even when it is a corporation, the person preparing the petition cannot use the corporation's federal identification number. While bankruptcy rules have been amended to keep social security numbers of debtors confidential in the public record, social security numbers of petition preparers are not confidential in the public record.)

(3) A bankruptcy petition preparer who fails to comply with paragraph (1) may be fined not more than $500 for each such failure unless the failure is due to reasonable cause.

(d)(1) A bankruptcy petition preparer shall, not later than the time at which a document for filing is presented for the debtor's signature, furnish to the debtor a copy of the document.

(The cost for copying the document is not generally considered by judges when petition preparers are charged with excessive fees.)

(2) A bankruptcy petition preparer who fails to comply with paragraph (1) may be fined not more than $500 for each such failure unless the failure is due to reasonable cause.

(f)(1) A bankruptcy petition preparer shall not use the word ''legal'' or any similar term in any advertisements, or advertise under any category that includes the word ''legal'' or any similar term.

(In those states that allow independent paralegals, they cannot use their title in advertisements for petition preparation. "Paralegal" is a term similar to "legal." There is also a decision, posted on this site under "Petition Preparer Denied Due Process of Law," where the bankruptcy judge ruled that the term "amicus curiae" is similiar to "legal" in violation of Section 110.)

(g)(1) A bankruptcy petition preparer shall not collect or receive any payment from the debtor or on behalf of the debtor for the court fees in connection with filing the petition.

Because petition preparers have no control over when, if and how debtors pay the filing fee, officials in the U.S. Trustee Program use this to their advantage to bring allegations of violations of Section 110. Debtors using petition preparers who do not pay the filing fee in full, in general, have their cases dismissed. Actions are then brought against the petition preparer for charging excessive fees on the basis that the debtors did not have enough money to pay the filing fee after paying the petition preparer.

Allegations are also made that the petition preparer caused damage to the debtors since the debtors could not, functionally, afford to pay the court's filing fee. Petition preparers have no recourse for collecting their fee, even if debtors pay the filing fee in full but bounce the check for the petition preparer's service. Any collection effort is alleged as violation of the automatic stay to collect a pre-petition debt.

This is very controversial, and some attorneys have also experienced performing work in preparing petitions or payment plans without compensation. All it takes is a check that bounces after the petition is filed. There would be no petition unless debtors incurred the cost of having it prepared. The very existence of the bankruptcy petition prepared and filed should logically be construed as a post-petition debt.

All federal circuits do not agree on what constitutes receipt of court fees in connection with filing a petition. Some circuits decided that a money order made out to the clerk of the court, delivered by the petition preparer, is not in violation of Section 110. Other circuits do not allow petition preparers to accept money orders for the court's fee.)

(h)(1) Within 10 days after the date of the filing of a petition, a bankruptcy petition preparer shall file a declaration under penalty of perjury disclosing any fee received from or on behalf of the debtor within 12 months immediately prior to the filing of the case, and any unpaid fee charged to the debtor.

(2) The court shall disallow and order the immediate turnover to the bankruptcy trustee of any fee referred to in paragraph (1) found to be in excess of the value of services rendered for the documents prepared. An individual debtor may exempt any funds so recovered under section 522(b).

(The problem is that "excessive" if defined by bankruptcy trustees, the U.S. Trustee, or the bankruptcy judge, rather than the consumer or based on Business 101. In determining reasonable fees, personnel working for U.S. Trustees testify how longs it takes them to type petitions. They testify of their hourly salary -- without benefits, of course.

Imagine an independent trucker deliverying a 50 pound box 40 miles. To prove that his fees are excessive, the prosecutor brings in the fork lift driver from the city's warehouse to testify of his hourly wage and how long it took him to deliver a 50 pound box 40 miles on a fork lift.

Bankruptcy judges are accepting the testimony of government employees -- not business owners -- who type petitions in CONTROLLED environments -- not business environments open to the public.

(4) A bankruptcy petition preparer shall be fined not more than $500 for each failure to comply with a court order to turn over funds within 30 days of service of such order.

(i)(1) If a bankruptcy case or related proceeding is dismissed because of the failure to file bankruptcy papers, including papers specified in section 521(1) of this title, the negligence or intentional disregard of this title or the Federal Rules of Bankruptcy Procedure by a bankruptcy petition preparer, or if a bankruptcy petition preparer violates this section or commits any fraudulent, unfair, or deceptive act, the bankruptcy court shall certify that fact to the district court, and the district court, on motion of the debtor, the trustee, or a creditor and after a hearing, shall order the bankruptcy petition preparer to pay to the debtor -

(There are numerous cases where the bankruptcy court DOES NOT certify to the district court when ordering fines against petition preparers and when those fines are to be paid. Note that the petition preparer cannot motion the district court for a hearing.)

(2) If the trustee or creditor moves for damages on behalf of the debtor under this subsection, the bankruptcy petition preparer shall be ordered to pay the movant the additional amount of $1,000 plus reasonable attorneys' fees and costs incurred.

(j)(1) A debtor for whom a bankruptcy petition preparer has prepared a document for filing, the trustee, a creditor, or the United States trustee in the district in which the bankruptcy petition preparer resides, has conducted business, or the United States trustee in any other district in which the debtor resides may bring a civil action to enjoin a bankruptcy petition preparer from engaging in any conduct in violation of this section or from further acting as a bankruptcy petition preparer.

(I) engaged in conduct in violation of this section or of any provision of this title a violation of which subjects a person to criminal penalty;

(II) misrepresented the preparer's experience or education as a bankruptcy petition preparer; (the courts have decided that the only service a petition preparer

can performed is typing the petition by transferring information written by debtors onto the bankruptcy forms. In other words, the preparer only needs typing skills and therefore, the preparer's experience or education has no relevance.), or

(ii) injunctive relief is appropriate to prevent the recurrence of such conduct, the court may enjoin the bankruptcy petition preparer from engaging in such conduct.

(B) If the court finds that a bankruptcy petition preparer has continually engaged in conduct described in subclause (I), (II), or (III) of clause (i) and that an injunction prohibiting such conduct would not be sufficient to prevent such person's interference with the proper administration of this title, or has not paid a penalty imposed under this section, the court may enjoin the person from acting as a bankruptcy petition preparer.

(There are cases where attorneys for U.S. Trustees request injunctions against petitions preparers without there being any previous allegations or findings to support that the preparer "continually" violates Section 110.)

(3) The court shall award to a debtor, trustee, or creditor that brings a successful action under this subsection reasonable attorney's fees and costs of the action, to be paid by the bankruptcy petition preparer.

(k) Nothing in this section shall be construed to permit activities that are otherwise prohibited by law, including rules and laws that prohibit the unauthorized practice of law.