Before you ever hire any professional, doctor, engineer, lawyer or contractor, always check with their licensing agency to determine whether or not they are in good standing and even licensed to conduct business in your area.
There are serious problems that arise from filing the wrong type of bankruptcy, filing at the wrong time, failing to properly plan for your bankruptcy or failing to disclose assets and liabilities. These problems include losing your home or car, losing tax refunds, involving family in your bankruptcy because you paid them money before filing, losing the ability to file any bankruptcy, being sued despite your bankruptcy and/or spending time in jail for bankruptcy fraud. Is this all worth the small, if any, additional cost if you hired a qualified, licensed attorney?
If you believe these problems could not happen to you – talk to anyone who has had problems with their bankruptcy. There are thousands of horror stories. The problem is that once you file a bankruptcy you cannot get out without a court order. Remember this is your life – your choice. Diane L. Drain
To add insult to injury the Arizona State Legislature decided that 19-year old kids had as much right to draft documents as any well educated lawyer.
Therefore, they allowed the expiration of the penalty for practicing law without a license. Of course the person that grooms your dog or cuts your hair must be licensed, but not the person who helps you set up your child’s trust account or decides which of the four types of bankruptcy is best for you.
BANKRUPTCY & DOCUMENT PREPARERS
In bankruptcy the law limits what an unlicensed person can charge for preparing bankruptcy documents (in Arizona is it usually limited to $200.00).
In the area of Bankruptcy law, Congress has attempted to protect the debtor from this type of abuse. They have passed a law (11 U.S.C. Section 110) which limits the amount an unlicensed person can charge for preparing bankruptcy documents (in Arizona is it usually limited to $200.00). The law also requires that the person preparing the documents disclose their name and other information. They cannot collect the filing fees from the Debtor. There are fines and penalties of $500 for each failure up to $2,000, plus more. In addition, as of July 1, 2004 the Bankruptcy Court General Order 89 requires all document preparers comply with the Arizona Supreme Court Rule and be licensed as a document preparers.
Just deciding the type of bankruptcy to file is “giving legal advice”.
11 U.S.C. Section 110 prohibits these document preparers from “giving legal advice”. Explaining the terms: secured creditors, unsecured creditors, executory contracts, lease assumptions, etc are all deemed to be “giving legal advice”.
Using these services would be akin to asking your next door neighbor to diagnosis your cancer and recommend the proper medical treatment.
There is a reason that your doctor and lawyer spent years in school and continue to take education classes in their areas of practice.
WARNING TO ARIZONA RESIDENTS
Con artists, including disbarred lawyers, are praying upon innocent citizens suggesting they are able to perform legal services, like preparing bankruptcy or divorce documents.
Many of these legal services are never performed, or done so poorly that the person is left in a worse situation than before. The Arizona Supreme Court, State Bar of Arizona and U.S. Bankruptcy Trustee are all attempting to prosecute these frauds, but they need your help. BEWARE: In Arizona, only an active member of the State Bar can give you legal advice, draft legal documents, or act on your behalf. Two exceptions to who can draft documents:
(1) a real estate salesperson or broker may fill out, without charge, documents related to sales of real property, and (2) Legal Document Preparer Program. Effective July 1, 2003, all individuals and businesses preparing legal documents, without the supervision of an attorney in good standing with the State Bar of Arizona, must be certified pursuant to Arizona Supreme Court Rule 31 and Arizona Code of Judicial Administration §7-208.
But neither of these groups can give any legal advice, explain your rights or interpret the meaning of any documents that you sign.
A Power of Attorney cannot be used to change these limitations. Please report illegal activity to the State Bar of Arizona or the Arizona Supreme Court. The Arizona Supreme Court license’s Arizona attorneys and the State Bar of Arizona oversees the attorneys. Realtors and brokers are licensed by the Arizona Department of Real Estate. Arizona Supreme Court licenses document preparers. If you find a problem please file a complaint against unlicensed document preparers or lawyer. This complaint form is available at the Arizona Supreme Court.
Since 1983 numerous individuals, armed with a copy machine and a pen, have been drafting documents and dispensing legal advice in Arizona.
There was little that could be done in that the Arizona Legislature had allowed the unauthorized practice of law statute to sunset. Billboards, bus stops and local newspapers are rife with ads from these “document preparers”. Many “document preparer” companies are run by disbarred lawyers who cannot practice under their own name – for very good reason.
Many have been in prison for stealing from their clients, others have been found to be completely incompetent.
For example: a disbarred attorney Richard S. Berry, associated with Why Pay a Lawyer, a Tempe company. Berry was imprisoned and fined for practicing law in Arizona – remember he is a disbarred attorney. Ironically, Berry told a client that he was “helping” to file bankruptcy that he “was a retired lawyer”, pointing to his law degree on his office wall. This was shared with me when the same clients came to me to fix their bankruptcy and try to save their home and car. Mr. Berry never refunded the money these clients paid for his “help”.
It is clear that it is necessary to protect consumers from harm caused by non-lawyers providing legal services. And it is necessary to provide greater consumer access to legal services—and to ensure that those services are high quality. A recent rule change assists in both goals. Historic Era Begins, New Rules Cripple UPL, Aid Consumers. Frances Johansen, Arizona Attorney, State Bar of Arizona, June 2004
Until the late 1990’s there was no licensing requirements for these “document preparers”.
They rarely share with their clients that they have no education, licensing or malpractice insurance. These document preparers charge amounts that end up being equal to or greater than what most licensed attorneys charge. Most of these document preparers advertise by “loss leader”. For example – $199 to file a divorce. What they do not tell you is that there are many other documents that must be filed and they charge for each and every document. If you fail to pay them then your case is dismissed and all the money you paid lost.
To give an example about how bad this situation had become: one day I was in court where 13 divorce cases waiting to be heard – all of those cases prepared documents preparers were bad.
Eleven of those 13 cases were drafted by document preparers. All eleven cases had to be continued for various reasons, most of which were failure to have the proper documents. Each person had missed work for this hearing, now they had to go back to their document preparer, pay more money, file more paperwork and miss more work for the next hearing which may be several months away. Not only was the burdensome on the people involved, but also on the courts and the taxpayers.
There are established rules of Professional Conduct for all Arizona attorneys.
All Arizona lawyers have specific rules and regulations governing their behavior. If your licensed attorney has failed to perform as agreed, you can file a complaint with the State Bar of Arizona. Be very careful to check out any lawyer with the State Bar before hiring them. There are many disbarred lawyers who are “forgetting” to tell their clients that they cannot and should not be practicing law.
Document preparers may not “provide any kind of specific advice, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options or strategies
In an attempt to protect members of the public the Arizona Supreme Court has implemented rules, effective July 1, 2003. Under the Arizona Supreme Court Rule 31 all document preparers must be certified unless they are working under the supervision of an attorney who is licensed and in good standing in Arizona. These certified document preparers can only provide only general information and forms. They may not “provide any kind of specific advice, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options or strategies” In other words, they may not give any legal advice or explain the law or any person’s rights or obligations under the law.