Consumers advised to take advantage of free legal help from lawyers instead
"And then they have to start the process again and come to us looking for an attorney who can do it right," Chambers says.
Harris acknowledges that there are some bad preparers but says most are "trying to do it right." Some preparers even refer customers to lawyers if a case is complicated, he says.
U.S. trustees reported that 504 actions were filed against preparers across the country last year, slightly less than the year before. Trustees don't break out numbers by state, although cases have been brought against preparers in Maryland.
Last year, a Baltimore preparer was fined $130,000 and barred from preparing petitions because of her "unauthorized practice of law" and other violations. A Bowie man was sentenced in 2010 to two years in prison for continuing to prepare petitions despite a court order to stop. Some of the consumers who hired him were facing foreclosure and wound up losing their homes, prosecutors say.
"Consumers need to be very cautious," says Leigh Maddox, executive director of the Baltimore-based nonprofit Civil Justice. "When in doubt, there is DAP in the U.S. Bankruptcy Court."
DAP — or Debtor Assistance Project — was launched three years ago by the Bankruptcy Court in Maryland. The program allows pro se — do-it-yourself — filers to meet one-on-one with a lawyer for a half-hour of free advice.
It was created after the court experienced problems with pro se filers — including those who used preparers — such as paperwork that was late, incomplete or incorrect.
"That's been our solution to the problem, and it has worked extremely well," says U.S. Bankruptcy Judge Robert A. Gordon.
DAP is open to consumers of all income levels. And they can meet with a lawyer more than once for free.
"Some people come back several times. The average is about two visits," says Rhonda Butler Washington, the project's coordinator.
To make an appointment in Baltimore or one of the three other Maryland locations, call 410-962-3813 or email email@example.com.
The Maryland court also has a list of "low-bono" lawyers, who agree to consult with low-income debtors for a reduced fee.
Another resource is the Maryland Volunteer Lawyers Service, which serves low- to moderate-income consumers. Volunteer attorneys will handle Chapter 7 bankruptcies for free. Call 800-510-0050.
Also, the group holds bankruptcy clinics for a small fee every other month to teach consumers on how to file their own Chapter 7 petitions. The next class is Aug. 9.