If you use a petition preparer, the following are some of the methods of betrayal used by the clerks of the bankruptcy court, panel trustees, and personnel with the Regional U.S. Trustee's office, so they can allege charges against your petition preparer.

Most debtors are informed that they need to pay the filing fee to the clerk of the court. Some are informed of the amount. However, some petition preparers cannot go further in explaining how payment is made, as U.S. Trustees take advantage of the giving of any information to allege that the petition preparer practices law without a license, (UPL).

It has been reported that in bankruptcy courts across America, the clerks ask debtors who used a petition preparer how they desire to pay the filing fee. If you use a petition preparer, you cannot pay filing fees in installments.

The clerks inform debtors that they can pay the filing fee in installments. (If it is not UPL for clerks to advise debtors that they can pay the filing fee in installments, it is not UPL if petition preparers advise debtors that they cannot pay the filling fee in installments. This is just one of many double-standards used to U.S. Trustees' advantage.)

The bankruptcy court clerk who asks if you want to pay the filing fee in installments is setting you up and the petition preparer. Your case can be dismissed for non-payment of the full filing fee. Chances are that the U.S. Trustee will advise you to obtain legal counsel. Due to the deceptive advice provided by the clerks, you may find that you have to pay the full filing fee again, in addition to paying an attorney to prepare your petition. This provides U.S. Trustees opportunity to allege that the petition preparer conducts deceptive business, and to request that the court enter an order expunging the fee that the petition preparer charged.

Most debtors do not know what to expect at the 341(a) Meeting of Creditors. Anything that has to do with the federal government makes people nervous. Filing bankruptcy is generally a humiliating, disgusting experience. It can happen at a time when debtors have endured months or years of other types of stress, such as unemployment, illness, and having condescending bill collectors call. Most people are not a wall of bricks emotionally and mentally when they file for bankruptcy, and having to attend the Meeting of Creditors causes them to be more anxious.

When you use a petition preparer, you will be at the Meeting of Creditors alone. There will be no one to speak for you, explain to the trustee what is in your schedules, or how the information was determined.

At the 341(a) Meeting of Creditors, the trustee, or a representative from the Regional U.S. Trustee's office, may ask if you know the difference between a chapter 7 and chapter 13 bankruptcy.

You may very well know that you wanted to file bankruptcy that would discharge all of your debts. You may know that it is called a chapter 7. However, you may know nothing about chapter 13. What the trustee or U.S. Trustee's representative wants to do is allege that the petition preparer told you what chapter to file --- not that the petition preparer stated that you were filing chapter 7 based on what you told him or her. Your initial conversation with the petition preparer may have gone something like this:

Petition preparer: I'm sorry. The courts have determined that explaining the difference in the chapters of bankruptcy is giving legal advice and I cannot give legal advice. There is printed material that you can read.

If your answer to the trustee or U.S. Trustee's representative is that you do not know the difference between chapter 7 and chapter 13, they may ask how did you determine what chapter to file. They may even ask if the petition preparer told you what chapter to file.

These types of questions are very misleading and generated by the motive to get you to say that the petition preparer choose the type of bankruptcy for you. That would be UPL.

The Catch-22 of the U.S. Trustee Program is that petition preparers can know the difference between chapter 7 and chapter 13, (and they must in order to know what forms to provide), but they cannot tell you, because in U.S. Trustee prosecution, (or maybe we should say, persecution), telling you the difference and having you decide, is choosing the chapter of bankruptcy for you.

We have a transcript where a paralegal with the Regional U.S. Trustee's office asked the debtor if she knew what "real property" is. The debtor answered "no." The paralegal then asked how did she choose an exemption on real property without knowing what it is.

The paralegal used a shortened version of a term that the public generally refers to as real estate. Her intent was to allege that the petition preparer chose the exemptions, which would be UPL.

Federal bankruptcy, and some states, provide a homestead exemption if you own your home and have resided in it for a specific period of time. Some states do not have a homestead exemption but provide catch-all exemptions where you can apply portions to various property.

Most petition preparers have printed material, written by the bankruptcy courts or attorneys that explain exemptions. On our links page, there is a web site that provides exemptions by all states. This is public knowledge.

The panel trustee or U.S. Trustee's representative may ask how you came to use the petition preparer. If it was through the telephone directory, they may ask what section it is in. Petition preparers cannot advertise under the headings of "bankruptcy" or "legal." If it was through a television advertisement, you might be asked what channel and time the advertisement aired. If it was through printed advertisement, you might be asked to provide a copy.

It has been reported that in the state of Maryland, some panel trustees are highly upset at the amount of business petition preparers receive through word of mouth referrals. We have heard tapes of 341(a) Meeting of Creditors where the panel trustees unduly and cruely criticize petition preparers who receive business by word-of-mouth.

The intent for questioning how you came to find and use a petition preparer is to see if there is a basis for alleging fraudulent business practice. What the panel trustees and U.S. Trustee's representative are looking for is a statement from you that you thought the petition preparer provided legal service at a discount rate.

One debtor alleged that the petition preparer stated that he did the same thing that attorneys do. That was a half-truth. In terms of generating bankruptcy petitions by using a computer software program developed for that purpose, the petition preparer was doing the same thing that an attorney would do. The difference is that the attorney asks the questions; whereas when using a petition preparer, debtors fill in information on forms. The petition preparer did the same thing an attorney would do in terms of entering the information into a computer software program that most attorneys use to generate bankruptcy petitions.

Of course, based on the debtor's statement, the allegation was raised that the petition preparer conducted fraudulent business by misleading the customer to believe that the preparer was an attorney.

The panel trustee will ask how much you paid to the petition preparer, and might also ask how many visits you had, the length of the visits, and the purpose. If prepared correctly, the petition preparer will have the amount you paid already entered on the schedules. If debtors, through their nervousness for any other reason, do not quote the exact fee they paid, trustees suspect that the debtor is not telling the truth and actually paid more.

Some, if not all bankruptcy courts, have price-fixed what petition preparers can charge. Some petition preparers, to avoid being accused of overcharging, itemize their bill, including the price for preparing the petition; costs of copying; and if mailed, cost of postage or delivery. If you paid $5 for a copy of your petition, the trustee may allege that it was too much -- that you could have used the copier at the local library and paid less. Section 110 of the Bankruptcy Code requires that petition preparers provide their customers with a copy of the petition. If you go to the local library to make a copy, the petition preparer may be charged with violating Section 110 because he or she did not provide you with a copy. It's all part of the damned if you do, damned if you don't controversy of how U.S. Trustees conduct witch-hunts of petition preparers.

It has been reported that paralegals and attorneys for Regional U.S. Trustees confront debtors after the Meeting of Creditors has been concluded -- off-the-record. They offer information, whether true or not, that the petition preparer is under investigation. They state, whether true or not, that the petition preparer has been sued or charged with UPL, and/or conducting fraudulent business practices, and/or charging excessive fees.

Debtors are warned that they may lose property, exemptions, or have their case dismissed because the petition preparer was sloppy, or entered information that was not applicable to bankruptcy law. It may even be alleged that the watch you are wearing is worth more than the value of jewelry on your schedules. There will be no offering that your schedules can be amended. However, there will be offering that your discharge can be denied, and you can be sentenced to federal prison for bankruptcy fraud because you attempted to hide property to avoid paying your debts.

Once placed in a position of defense, some debtors accuse the petition preparer for not entering information as they provided. Falling into the trap has led some debtors to say that the petition preparer told them they didn't have to list this -- or list the value of that.

Ultimately, debtors are harmed by the practices of U.S. Trustees attacking petition preparers. Debtors often obtain legal counsel, paying much more than what was paid to the petition preparer. Once fear is placed in debtors using petition preparers, those debtors then go to attorneys. Some have reported that they paid $500 and up to attorneys for doing nothing more than filing an amendment to a schedule. At times, the amendment is nothing more than adding an address of a creditor. No price can be placed on the emotional trauma.

To inflict more mental harm, paralegals and attorneys for U.S. Trustees gain debtors' trust by leading them to believe that they are sincerely concerned for the debtors' benefit. While they say they cannot give legal advice, they lead into a series of suggestions with what they can do to help the debtor recover from alleged harm caused by the petition preparer. Much of the conversation is geared to appeal to debtors' gaining a financial advantage.

They will allege that they will hold the debtor's petition for several days to give them opportunity to consult with legal counsel. They are told that for an additional $50 to $100, they could have paid an attorney and avoided all the trouble. And, it has been reported that they comfort the debtor by advising that after getting an attorney, that attorney can sue for return of the fees paid to the petition preparer.

They do not tell debtors that sanctions and fines are paid to the trustee, who receives it as property of the bankruptcy estate, or to the general fund, which pays the paralegal's and attorney's salaries. Expunged fees are generally paid back to debtors. We know of no debtors who had a financial windfall after petition preparers are persecuted and prosecuted by U.S. Trustees.

If you are a petition preparer reading this and know of other bad faith questions or advice given to your customers by personnel of the U.S. Trustee Program, please email us. If you have transcripts providing evidence, whether of 341(a) Meetings or trials, we would love to have them.