People in dire financial straits will often see New York bankruptcy as an unacceptable last resort. Instead, they may try to hire any number of outfits promising to help them get on top of their debts but instead charging high prices for little benefit, if any. One species of this kind of fraud—and it is frequently fraudulent—is the “petition mill.” What are these? As the term implies, a petition mill files unnecessary or fraudulent bankruptcy petitions on behalf of its clients. Here are some ways to sniff out a petition mill from a legitimate bankruptcy operation.
(1) It’s not run by a lawyer. If it says it’s a credit counselor, financial advisor, or even paralegal, you should proceed with caution. There are severe penalties for pretending to be a lawyer but not so much for saying you’re something else. This isn’t to say that every financial planner is planning to scam you. However, when it comes to resolving debts, a New York bankruptcy lawyer has certain professional and fiduciary responsibilities that other professionals don’t.
(2) It promises to draft your petition but only anonymously. By the time you’re paying someone to draft bankruptcy papers, you might as well have a lawyer do it. Filling out paperwork is easy. Knowing what chapter to file in, what exemptions to take, whether to reaffirm a car loan, etc. is the professional advice you pay for when hiring a bankruptcy lawyer.
(3) It promises to fight a foreclosure or eviction for a high price, but it files bankruptcy instead. The trick to pulling this off is having the client sign a few blank sheets of paper and then forging those onto bankruptcy petitions. Never sign blank sheets of paper.
(4) It tells you to deed them your property. This one is the bread and butter of petition mills. It will take your property, give it to someone else who then gives it to someone else, and on and on. The petition mill also files bankruptcy multiple times and includes the property in each petition. While this process may keep you in your home for a time, at some point the lender will move the bankruptcy court for in rem relief from the automatic stay, which denies anyone holding the title to the property the benefit of a bankruptcy filing. After that, it will foreclose and evict anyone in it. Untangling the legal mess of holding the petition mill responsible, if it’s still around, will only add to your troubles.
If you are running into financial difficulties, stay away from anyone who isn’t a lawyer but might file or encourage you to file bankruptcy. Only an experienced New York bankruptcy lawyer will help you deal with your debts legally without defrauding you.
For answers to more questions about petition mills, bankruptcy fraud, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy trustee Bruce Weiner for a free initial consultation.
