§ 26.2     Use of Paralegals and Representatives
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 26.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

It is virtually impossible for debtors or creditors to afford lawyers to do all that is required in Chapter 13 practice. Volume is essential to successful Chapter 13 practice, and efficiency is realized through use of nonlawyer professionals. Finding, training, supervising and keeping good paralegals is an important component of counsel’s role.

[2]

But there are lines, not always clear, between the duties of an attorney in a Chapter 13 case and the duties that can be delegated to a nonlawyer. For example, the court in In re Slaughter1 found that debtor’s counsel abdicated responsibility to properly supervise and that a paralegal engaged in the unauthorized practice of law by making the decision to file a Chapter 13 petition. In Slaughter, the debtor’s attorney was out of town when a paralegal made the decision to file a Chapter 13 petition on behalf of Ms. Slaughter. The bankruptcy court found that counsel and the paralegal were in trouble:

Practicing law without a license is a violation of Wisconsin law. . . . I question whether Mr. Rohmeyer, [paralegal in debtor’s counsel’s office] who appears to have made legal determinations on behalf of the debtor in this case, was practicing law without a license. . . . [Debtor’s counsel’s] actions, in placing the burden of acting in a legal capacity on Mr. Rohmeyer, are not so innocent. . . . [T]he type of decision made by Mr. Rohmeyer, to file an emergency petition, was not unique to this case. If Mr. Rohmeyer’s actions constitute the unauthorized practice of law, then Mr. Gibson [debtor’s counsel] violated Wisconsin Supreme Court Rule . . . which forbids an attorney from “assist[ing] a person who is not a member of the bar in the performance of activity that constitutes the unauthorized practice law.” Mr. Gibson, in essence, abdicated his “duties, responsibilities, and judgment as an attorney to non-attorney personnel.” . . . Mr. Rohmeyer, not Mr. Gibson, made the decision to file.2

The bankruptcy court in Slaughter referred debtor’s counsel to the Wisconsin Board of Attorneys Professional Responsibility for disciplinary action.

[3]

Slaughter is clear that at least the decisions whether and when to file a Chapter 13 petition are legal matters that cannot be delegated by debtor’s counsel to a nonlawyer.3 Other reported cases expand this list of forbidden delegations, sometimes on egregious facts, to include many tasks and decisions that are the everyday stuff of a busy debtor law practice.4 The key to avoiding the dark side of these cases is the level of supervision provided by the debtor’s lawyer: paralegals can appropriately perform many important tasks in a law office that represents debtors, without engaging in the unauthorized practice of law, only if training, supervision and involvement by a licensed attorney are constant and of good quality.5 These are not bright-line rules. Counsel must be constantly vigilant that every debtor gets meaningful personal attention from the attorney who signs the papers and makes the fundamental legal decisions in every Chapter 13 case in the office. This is intensive of lawyer time and not cheap. But in the long run, under-lawyering and over-paralegaling are a formula for big-time trouble.6

[4]

After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),7 every debtor’s attorney in a Chapter 13 case is a Debt Relief Agency.8 As amended in 2005, §§ 526, 527 and 528 contain innumerable duties and services that must be performed by a Debt Relief Agency in every Chapter 13 case in which the debtor is represented by an attorney.9 It has been said that the statutory duties of a Debt Relief Agency must be provided by the debtor’s attorney—“support” from nonlawyers is allowed but meeting personally with the debtor is a nondelegable duty of a debtor’s attorney in every Chapter 13 case.10

[5]

Debtors need explanation of the roles of paralegals and assistants. Debtors do not come into a law office understanding that they may be dealing with nonlawyers through much of their involvement in the Chapter 13 case. Debtor’s counsel must accompany the debtor at the meeting of creditors, at the confirmation hearing (if any), and at any contested hearing. The collection of information, the preparation of petitions and statements, the initial formulation of a Chapter 13 plan—these things are often the responsibility of nonlawyers in a debtor’s counsel’s office. Careful explanation on the front end of the division of responsibility will prevent broken expectations and avoid attorney-client meltdown later in the case. This explanation should be part of the written contract between every Chapter 13 debtor and attorney.11

[6]

Debtors must be told whether and how much they will be charged for the services of nonlawyers, paralegals and assistants. Many debtors’ attorneys include the cost of nonlawyer services in the fee charged by counsel—either as “overhead” or simply as part of the agreed-upon fee.12 The reasonable and necessary services performed by a paraprofessional that are not “overhead,” clerical or secretarial in nature are compensable in a Chapter 13 case.13

[7]

In this regard, the growing practice of using “contract” or “appearance” attorneys in Chapter 13 cases raises many professional responsibility concerns. A contract or appearance attorney stands in at meetings of creditors and sometimes at hearings on contested matters on behalf of other lawyers and the Chapter 13 debtors whom those absent lawyers represent. Too frequently, the contract attorney is not personally acquainted with each debtor and the debtors are surprised to learn that they are “represented” by an attorney they have never met.

[8]

There are few reported decisions dealing with the use of contract or appearance attorneys in Chapter 13 cases. In In re Wright,14 the bankruptcy court held that a contract attorney can assist in representing a Chapter 13 debtor but only if there is full disclosure to the debtor and prior consent from the debtor. To satisfy these requirements, debtor’s counsel would have to explain the use of a contract attorney before the debtor goes to court and at least tell the debtor whom the contract attorney will be.15 Perhaps “full disclosure” includes introducing the contract attorney to the debtor in advance. Though not addressed in Wright, the prior consent from the debtor probably should be in writing, perhaps included in the written contract between the debtor and debtor’s counsel.16

[9]

Few creditors can afford lawyers to investigate and participate in every Chapter 13 case. Outside counsel’s task may be to train a nonlawyer within the creditor’s organization to manage Chapter 13 cases and to identify those cases that should be referred to counsel. Collection of the information necessary to assert a claim, preparation of the proof of claim, attendance at the meeting of creditors and negotiation with debtor’s counsel all can be accomplished for a creditor by a knowledgeable nonlawyer representative. Sophisticated creditors are often represented at meetings of creditors by nonlawyers who negotiate the value of collateral, the amount of monthly payment and the appropriate interest rate.

[10]

Prior to BAPCPA,17 there was much local variation with respect to whether and to what extent nonlawyers could appear and participate at the § 341 meeting of creditors.18 BAPCPA resolved much of the uncertainty with the following amendment to § 341(c):

Notwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors.19
[11]

As a result of this amendment, creditors holding consumer debts in Chapter 13 cases may appear and act through nonlawyers at the meeting of creditors, or they may appear and participate in conjunction with an attorney.20 This amendment doesn’t answer every question. For example, notwithstanding the authorization to “appear” and “participate,” it is still possible for a creditor representative to stumble into the unauthorized practice of law. Under Bankruptcy Rule 9010(a), a creditor is authorized to appear in a Chapter 13 case and act on its own behalf or through a nonlawyer agent so long as the acts performed do not constitute the practice of law. Because “practice of law” is difficult to circumscribe under state or federal jurisprudence, creditors are cautioned to investigate exactly what functions within a Chapter 13 case can be performed by nonlawyer agents. This is especially true when creditor action moves beyond the meeting of creditors.

[12]

Prior to the amendment to § 341, corporations and partnerships generally could not appear in bankruptcy court except through counsel. To the extent this general rule continues to have application outside the § 341 meeting context, it does not prevent corporate creditors from acting through agents to file proofs of claim, and corporate creditors can always appear in bankruptcy court through an agent licensed to practice law.21 A sole proprietor can appear in person at all stages of a Chapter 13 case, though few individual creditors have sufficient contact with Chapter 13 cases to be effective self-advocates.

[13]

A difficult problem in Chapter 13 practice today is the use of agents and representatives by the mortgage-servicing industry.22 The proliferation of mortgage lenders and the securitization of home mortgages into large investment “pools” spawned an industry: servicing agents collect and monitor mortgage payments after pooling. Mortgage-servicing agents administer millions of mortgages, including tens of thousands involved in Chapter 13 cases across the country. These agents are rarely equipped to properly represent the underlying mortgage holder in Chapter 13 cases. The servicing agents often do not understand Chapter 13 practice in general and are not familiar with Chapter 13 practice in the various districts that will catch cases from a large pool of mortgages. The servicing agents are often not organized to act quickly to get a Chapter 13 notice into the hands of an attorney who can effectively represent the mortgage holder in a Chapter 13 case. The result has been a quagmire for the bankruptcy courts and poor representation of mortgage creditors by mortgage-servicing agents in Chapter 13 cases.23 Litigation has blossomed between Chapter 13 debtors and mortgage servicers.24

[14]

The Bankruptcy Reform Act of 1994 contained an unusual, specific authorization for representation of “child support creditors” in the bankruptcy courts. Section 304(g) of the 1994 Act states as follows:

Appearance before Court. Child support creditors or their representatives shall be permitted to appear and intervene without charge, and without meeting any special local court rule requirement for attorney appearances, in any bankruptcy case or proceeding in any bankruptcy or district court of the United States if such creditors or representatives file a form in such court that contains information detailing the child support debt, its status, and any other characteristics.25
[15]

This provision of the 1994 Act seems to authorize appearances in bankruptcy courts by nonlawyers as representatives of creditors with child support claims. “Debt for child support” was defined by the Code as “a debt of a kind specified in Section 523(a)(5) . . . for maintenance or support of a child of the debtor.”26 In 2005, BAPCPA replaced that definition with the new term of art “domestic support obligation,” which includes support for a child of the debtor.27 Child support creditors would include former spouses but would also include many state and federal agencies that have received assignments of child support claims. While § 304(g) of the 1994 Act empowered nonlawyer representation of child support creditors in Chapter 13 cases, many of those creditors are represented by state child support agencies.

[16]

The treatment of domestic support obligations in Chapter 13 cases is complicated and controversial.28 It can only be recommended that child support creditors and their representatives consult an experienced bankruptcy attorney before attempting participation in a Chapter 13 case.


 

1  191 B.R. 135 (Bankr. W.D. Wis. Dec. 21, 1995) (Martin).

 

2  In re Slaughter, 191 B.R. at 145. Accord In re Burnett, 450 B.R. 116 (Bankr. E.D. Ark. Apr. 15, 2011) (Evans) (Attorney abdicated decision to file bankruptcy to paralegals, who advised debtors to file bankruptcy two weeks after foreclosure sale, rather than using $6,000 tax refund to cure mortgage arrearage. Attorney never accepted responsibility for protecting clients, enabling paralegals to practice law without license.).

 

3  These decisions would also be forbidden to a “bankruptcy petition preparer” under § 110 of the Bankruptcy Code, as amended by the Bankruptcy Reform Act of 1994, and further amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 23 (2005). See below in this section, and see § 4.2  Bankruptcy Petition Preparers.

 

4  See Clark v. LaBarge (In re Clark), 223 F.3d 859, 861–64 (8th Cir. Aug. 21, 2000) (Wollman, Beam, Frank) (Debtor’s attorney denied fees, ordered to disgorge fees and sanctioned for claiming flat fee of $1,250 for the filing of Chapter 13 cases when a paralegal prepared and filed the documents and counsel met the clients for the first time at the meeting of creditors. “Generally, debtors represented by attorney Walton became his clients after meeting with his paralegal, MacArthur Jackson, who worked from the same office space both as an employee of Walton’s practice . . . and as an independent financial consultant. The debtors, considering Jackson to be Walton’s ‘right hand person,’ paid approximately $350 to Jackson for services and filing fees related to their Chapter 13 cases, which included advice and the preparation of necessary filings such as the bankruptcy petition and Chapter 13 plan. Jackson would then explain that although he was preparing the documents, in court they would need to be represented by a lawyer. He then would refer them to Walton or simply indicate that Walton would represent them. In most of these cases, the debtors first met Walton in court. . . . The bankruptcy court found that by seeking the flat fee for services Walton knew had been performed by his non-attorney employee, Walton was attempting to collect excessive payments, with the effect of overcharging the debtors . . . . Walton admits that he did not meet with debtors until their meetings with creditors and that, although he officially represented the debtors, a non-attorney prepared, signed, and filed documents and advised the debtors when they sought bankruptcy assistance. These actions, at a minimum, violate Rules 9011 and 2016.”); McCullough v. Chambers, Nos. 98-6344 JB, 96-16524, 97-918, 2000 WL 502827 (E.D. Pa. Apr. 25, 2000) (Dubois) (Debtor’s counsel denied fees in excess of the $750 retainer based on evidence that a paralegal engaged in the unlicensed practice of law by meeting with the debtor and performing various legal services without supervision from the attorney. The paralegal’s services were billed at the same hourly rate as debtor’s counsel would charge. Debtor’s counsel also failed to reveal in the Bankruptcy Rule 2016 statement that the debtor paid $750 retainer within a year of the Chapter 13 case.); In re Ruebling, No. 15-71627, 2016 WL 6877796, at *5 (Bankr. C.D. Ill. Nov. 21, 2016) (Gorman) (Debtors’ attorney sanctioned for failure to supervise paralegals and for inappropriately delegating authority to paralegal to file Chapter 13 petitions without first obtaining wet signatures. “Attorney Linder has made a wholesale turnover of his bankruptcy practice to an inadequately trained and wholly unsupervised clerical staff member. He allows his paralegal to complete documents and file them without review and he makes no real effort to ensure compliance with the Local Rules . . . . Attorney Linder cannot ethically or professionally practice law by handing off work to his paralegal . . . . He has a duty to know what is going on in his office and his self-imposed ignorance is no defense.” Sanctions included forfeiture of all fees and conditions on future practice that debtors’ attorney personally be present when all documents are signed and that counsel file an affidavit verifying the signing of every document filed with the bankruptcy court.); In re Layer, No. 06-306, 2007 WL 2229624, at *10 (Bankr. N.D. Tex. July 31, 2007) (Jernigan) (After orders to disgorge fees and to transition clients to other representation, attorney improperly used a paralegal to represent clients by paper filings before bankruptcy court. “Accordingly, the court finds that [the attorney] failed to comply with the requirement that he transition his clients to new bankruptcy counsel, instead abdicating his responsibility to [the paralegal].”); In re Alvarado, 363 B.R. 484 (Bankr. E.D. Va. Jan. 8, 2007) (Huennekens) (Attorney who permitted dismissal for nonpayment of filing fee that had been collected could not avoid personal responsibility by delegating fee collection to his paralegal.); In re Caise, 359 B.R. 152, 156 (Bankr. E.D. Ky. Feb. 6, 2006) (Howard) (Debtors’ attorney was ordered to refund all fees when attorney failed to adequately supervise paralegal who met with debtors. “[A] lawyer cannot adequately represent a client consistent with the Kentucky Supreme Court Rules governing professional conduct and appropriate bankruptcy practice standards without meeting with the client before the client’s bankruptcy petition is prepared and readied for filing.”); In re Pinkins, 213 B.R. 818 (Bankr. E.D. Mich. Oct. 14, 1997) (Rhodes) (Castle Law Office, high-volume Chapter 13 filer, violated Michigan unauthorized practice of law rules by allowing legal assistants to explain the differences between Chapter 7 and Chapter 13 to prospective clients, by using legal assistants to make the determination which chapter was best for a particular individual, by imposing legal assistants between the client and an attorney with respect to advice and information without a direct relationship between an attorney and the client and by allowing nonlawyer assistants to handle retention letters with clients. Court denies all fees collected for the work of legal assistants.); O’Connell v. Mann (In re Davila), 210 B.R. 727, 730–32 (Bankr. S.D. Tex. Dec. 6, 1996) (Brown) (On trustee’s complaint, debtor’s counsel fees are disallowed in 155 Chapter 13 cases and counsel is ordered to disgorge all fees. Debtor’s counsel’s services “amount to little more than a large scale petition preparer service for which Mann receives an unreasonably high fee. . . . Because Mann is a licensed attorney, however, he and his office personnel avoid the statutory sanctions provided by 11 U.S.C. § 110.” Debtor’s counsel’s employees were “inadequately trained and supervised.” Debtor’s counsel’s “delegation of almost all client contact and pleading preparation to non-attorneys guarantees that his clients receive very little, if any, accurate legal advice.” Legal assistants in debtor’s counsel’s office “signed the pleadings with the client’s name, attempting to imitate the client’s signature.” Legal assistant and “in putters” collect all information and prepare all statements and schedules often without review by an attorney. Debtor’s counsel “blames his legal assistants” for errors in petitions, schedules and other documents filed in the 155 cases.).

 

5  See, e.g., In re Van Dyke, 296 B.R. 591, 592–96 (Bankr. D. Mass. Aug. 11, 2003) (Rosenthal) (Attorney who supervised paralegal for pro se Chapter 13 debtor can recover $150 fee paid to the paralegal. “Applicant contracts with the paralegal . . . on an as-needed basis to prepare bankruptcy schedules and Chapter 13 plans, for a negotiated flat fee. . . . It may not always be clear when the completion of forms constitutes the practice of law under Massachusetts law, but even if the completion of schedules and statements do [sic] not constitute the unauthorized practice of law, it may, in certain instances, trigger the requirement that the paralegal sign the same as a petition preparer. And it is likely that in most cases the preparation of a Chapter 13 plan by a non-lawyer, if not under the direct supervision of an attorney, constitutes the unlawful practice of law. . . . [T]he debtor’s counsel closely supervised the paralegal in this case. . . . [C]ounsel was present during the entire initial meeting with the debtor and personally reviewed all of the papers which the debtor filed when she commenced the case pro se. . . . The independent paralegal functioned as a paraprofessional.”).

 

6  See, e.g., Lewis v. Weyerhaeuser Co., 141 F. App’x 420 (6th Cir. July 6, 2005) (not for publication) (Cole, Sutton, Zatkoff) (That debtor relied on paralegal’s “bad legal” advice to schedule potential discrimination action does not prevent application of judicial estoppel. Wrongful discharge lawsuit was dismissed.); In re Galloway, No. 15-12646, 2018 WL 1065124 (Bankr. E.D. La. Feb. 23, 2018) (Magner) (Among many violations of rules of professional responsibility, debtors’ attorney failed to adequately supervise paralegal when attorney abruptly retired and moved 2,000 miles away, leaving paralegal to make legal decisions on her own.); In re Ruebling, No. 15-71627, 2016 WL 6877796, at *5 (Bankr. C.D. Ill. Nov. 21, 2016) (Gorman) (Debtors’ attorney sanctioned for failure to supervise paralegals and for inappropriately delegating authority to paralegal to file Chapter 13 petitions without first obtaining wet signatures. “Attorney Linder has made a wholesale turnover of his bankruptcy practice to an inadequately trained and wholly unsupervised clerical staff member. He allows his paralegal to complete documents and file them without review and he makes no real effort to ensure compliance with the Local Rules . . . . Attorney Linder cannot ethically or professionally practice law by handing off work to his paralegal . . . . He has a duty to know what is going on in his office and his self-imposed ignorance is no defense.” Sanctions included forfeiture of all fees and conditions on future practice that debtors’ attorney personally be present when all documents are signed and that counsel file an affidavit verifying the signing of every document filed with the bankruptcy court.); United States Tr. v. Jones (In re Alvarado), 363 B.R. 484 (Bankr. E.D. Va. Jan. 8, 2007) (Huennekens) (Attorney who permitted dismissal for nonpayment of filing fee that had been collected could not avoid personal responsibility by delegating fee collection to his paralegal.); In re Layer, No. 06-306, 2007 WL 2229624 (Bankr. N.D. Tex. July 31, 2007) (Jernigan) (After orders to disgorge fees and to transition clients to other representation, attorney improperly used a paralegal to represent clients by paper filings.); In re Caise, 359 B.R. 152, 156 (Bankr. E.D. Ky. Feb. 6, 2006) (Howard) (Debtors’ attorney ordered to refund all fees when attorney failed to adequately supervise paralegal who met with debtors. “[A] lawyer cannot adequately represent a client consistent with the Kentucky Supreme Court Rules governing professional conduct and appropriate bankruptcy practice standards without meeting with the client before the client’s bankruptcy petition is prepared and readied for filing.”).

 

7  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

8  See § 4.1  WARNING! You Are a Debt Relief Agency.

 

9  See § 4.1  WARNING! You Are a Debt Relief Agency. See also § 3.5  Four: Don’t Trust Lawyers.

 

10  See In re Pereira Santiago, 457 B.R. 172, 175–76 (Bankr. D.P.R. May 2, 2011) (Lamoutte) (Chapter 13 debtors’ attorneys are Debt Relief Agencies who must meet personally with every debtor before filing petition; nonlawyers are essential and may provide services directly to assisted persons but may not perform services required of an attorney in §§ 526(a) and 527(a). “Consumer bankruptcies generally involve debtors whose estates are small. Thus, the economics of handling the same is critical to providing access to the benefits afforded by the Bankruptcy Code. The use of paralegals is an essential element to providing cost efficient bankruptcy services to the community. . . . Considering the broad and strict requirements in sections 526(a) and 527(a), as well as the serious consequences of failing to comply with the same, it is necessary that the attorney provides the services directly to the client as an assisted person. The direct provision of legal assistance by the attorney does not preclude the support from nonlawyers. However, nonlawyers may not provide directly to the assisted person the services outlined above.”).

 

11  See 11 U.S.C. § 528(a), discussed in § 4.1  WARNING! You Are a Debt Relief Agency.

 

12  See § 136.7  Debtors’ Attorneys’ Fees after BAPCPA.

 

13  See In re Bergae, No. 13-71645, 2014 WL 1419586, at *7 (Bankr. C.D. Ill. Apr. 11, 2014) (Gorman) (Paraprofessional fees are compensable if the services “‘represent a shift of tasks ordinarily performed by a lawyer or other professional, and the service is reasonable and necessary . . . .’ . . . To determine whether a paraprofessional’s work is compensable legal work, a court should ‘look at the kind of services that are traditionally charged to overhead, the amount of discretion allowed to the paraprofessional, the experience or education required to accomplish the assignment, the responsibility delegated to the paraprofessional and the amount of supervision retained by the professional.’ . . . When an applicant for professional fees seeks compensation for a paraprofessional’s work, the paraprofessional’s experience and qualifications must be stated. . . . Even if the work is, in fact, clearly legal in nature, the work is not compensable under § 330 unless the person rendering the services has sufficient knowledge and expertise to perform substantive legal work. Therefore, time spent by general clerical staff advising clients, drafting documents, and the like is not compensable under § 330. . . . [T]here was no evidence presented that [paraprofessional] ha[d] sufficient knowledge or expertise to perform substantive legal work or that the work actually performed by her was substantive legal work. Thus, [paraprofessional fees requested are] not compensable and the entire $420 requested . . . will be denied.”); In re Brennan, No. 12-71327, 2013 WL 4046447, at *7 (Bankr. C.D. Ill. Aug. 8, 2013) (Gorman) (“Reasonable and necessary services rendered by paraprofessionals are specifically included as compensable services under the Bankruptcy Code. . . . When ‘the services provided by the paraprofessional represent a shift of tasks ordinarily performed by a lawyer or other professional, and the service is reasonable and necessary, the service is compensable.’ . . . However, if the services performed are clerical or secretarial in nature, then the work is charged to overhead and cannot be separately charged to the client.” Firm’s paraprofessionals were clerical employees not qualified to perform compensable tasks; their time must be treated as law office overhead for which fees cannot be awarded.).

 

14  290 B.R. 145 (Bankr. C.D. Cal. Mar. 11, 2003) (Mund).

 

15  See, e.g., Price v. Lehtinen (In re Lehtinen), 332 B.R. 404 (B.A.P. 9th Cir. Oct. 11, 2005) (Brandt, Marlar, Smith) (Debtor’s counsel was disciplined for sending substitute attorney to § 341 meeting without notifying debtor in advance. Attorney was suspended for three months and required to disgorge fees, but remand was ordered for court to consider mitigating and aggravating factors concerning suspension.).

 

16  See § 27.1  Explaining Chapter 13 to a Debtor and § 4.1  WARNING! You Are a Debt Relief Agency.

 

17  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

18  See, e.g., In re Clemmons, 151 B.R. 860 (Bankr. M.D. Tenn. Feb. 4, 1993) (Paine); In re Kincaid, 146 B.R. 387 (Bankr. W.D. Tenn. Feb. 28, 1992) (Kennedy); In re Messier, 144 B.R. 617 (Bankr. D.R.I. Sept. 14, 1992) (Votolato). In at least one jurisdiction, the U.S. trustee had acted to limit the participation of nonlawyers in creditor representation at the § 341 meeting. The U.S. trustee for the Central District of California issued a “Notice” in late 1992 that “agents of creditors” would not be permitted to negotiate reaffirmation agreements in § 341 meetings of creditors. See 12 Norton Bankr. L. Adviser 15 (1992). Compare State Unauthorized Practice of Law Comm. v. Paul Mason & Assocs., Inc., 46 F.3d 469 (5th Cir. Feb. 21, 1995) (Smith, Garza, Berrigan) (Corporation doing business as Creditors Bankruptcy Service, which files proofs of claim, monitors bankruptcy cases, and negotiates reaffirmation agreements for nationwide clientele, is protected from the unauthorized practice of law under Texas law by the authority of agents to act for creditors under Bankruptcy Rules 9010 and 3001.).

 

19  11 U.S.C. § 341(c), discussed in § 43.8  Representing Creditors at the Meeting of Creditors.

 

20  See § 43.8  Representing Creditors at the Meeting of Creditors.

 

21  See In re Viencek, 273 B.R. 354 (Bankr. N.D.N.Y. Feb. 15, 2002) (Gerling) (Citing In re Nunez, Nos. 98-CV-7077 (CBA), 98-CV-7078 (CBA), 2000 WL 655983 (E.D.N.Y. Mar. 17, 2000) (Amon), and Greer v. O’Dell (In re O’Dell), 268 B.R. 607 (N.D. Ala. Oct. 4, 2001) (Guin), mortgage-servicing agent is a party in interest with standing to defend objection to mortgage holder’s claim.); In re O’Dell, 251 B.R. 602, 606 (Bankr. N.D. Ala. Aug. 2, 2000) (Sledge) (Citing In re Morgan, 225 B.R. 290 (Bankr. E.D.N.Y. Sept. 30, 1998) (Holland), vacated by In re Nunez, No. 98-CV-7078, 2000 WL 655983 (E.D.N.Y. Mar. 17, 2000) (Amon), Max Flow’s filing of a proof of claim that stated “Max Flow Corp. on Behalf of MBNA America Bank, N.A. and Its Assigns” was misleading, constituted the unauthorized practice of law and subjected Max Flow and its attorneys to sanctions. Max Flow had not purchased the debt and had authority from MBNA only to file a proof of claim. Max Flow’s appearance in opposition to the debtor’s objection to the proof of claim was the unauthorized practice of law. Max Flow’s alteration of Official Form 10 obscured that Max Flow was not the real creditor and misrepresented that Max Flow was the holder of the claim. Max Flow was a corporation that could not appear in the bankruptcy court on behalf of MBNA and Max Flow’s attorneys did not have authority to represent MBNA.), rev’d, 268 B.R. 607, 610–15 (N.D. Ala. Oct. 4, 2001) (Guin) (“Max Flow is in the business of purchasing from credit card issuers accounts of consumer credit card holders who file Chapter 13 bankruptcy. . . . MBNA had authorized Max Flow to file a claim on its behalf. . . . Max Flow did not engage in the unauthorized practice of law. . . . An agent may conduct the legal affairs of its principal. Max Flow bought the Chapter 13 claims. . . . Even were Max Flow an agent for owner MBNA, Max Flow was authorized by MBNA to represent its interest in the bankruptcy proceedings. . . . In responding to the Debtors’ objection to the claim, Max Flow did so through licensed counsel. It did not perform activities generally considered the practice of law. . . . A ruling providing for sanctions is an outrageous abuse of discretion amounting to nothing more than an attempt to terrorize the entire bar.”), aff’d, 305 F.3d 1297 (11th Cir. Sept. 23, 2002) (Tjoflat, Wilson, Cowen) (Max Flow Corporation had authority to assert claim and to represent credit card issuer.); In re Morgan, 225 B.R. 290 (Bankr. E.D.N.Y. Sept. 30, 1998) (Holland) (Corporate servicing agents that filed objections to confirmation in Chapter 13 cases on behalf of holders of loan had no standing to file the objections and engaged in the unauthorized practice of law.), rev’d sub nom. In re Nunez, Nos. 98-CV-7077 (CBA), 98-CV-7078 (CBA), 2000 WL 655983 (E.D.N.Y. Mar. 17, 2000) (Amon) (District court vacates bankruptcy court holding that a mortgage-servicing agent lacked standing to represent mortgage holder and that mortgage-servicing agent had engaged in the unauthorized practice of law.).

 

22  See § 138.2  Claims for Creditors’ Attorneys’ Fees; § 138.5  Truth-in-Lending and Other Consumer Protection Statutes; and § 138.8  Mortgage Claim Issues.

 

23  See § 138.5  Truth-in-Lending and Other Consumer Protection Statutes and § 138.8  Mortgage Claim Issues. See, e.g., Maxwell v. Fairbanks Capital Corp. (In re Maxwell), 281 B.R. 101, 116–17 (Bankr. D. Mass. July 16, 2002) (Feeney) (In a compelling account of misconduct by a mortgage lender/servicer, Fairbanks Capital Corporation violated RESPA, the FDCPA and Massachusetts Consumer Protection statutes: “Fairbanks, at no time, produced, or showed that it had, a payment history for the Debtor’s loan. Fairbanks, at no time, produced, or showed that it had, copies of the TILA disclosures that are required by law, including the MCCDA, to be given to a mortgagor. Fairbanks, at no time, produced, or showed that it had, the original or a copy of the Debtor’s Note. Thus, Fairbanks does not have, and never had, any way of ascertaining the extent of the Debtor’s obligation . . . . Nevertheless, Fairbanks, in a shocking display of corporate irresponsibility, repeatedly fabricated the amount of the Debtor’s obligation to it out of thin air. There is no other explanation for the wildly divergent figures it concocted in correspondence with the Debtor and her agents and in pleadings and documents filed with the bankruptcy court.”).

 

24  See § 138.8  Mortgage Claim Issues.

 

25  Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 304(g), 108 Stat. 4106 (1994). See 11 U.S.C. § 501 (Historical and Revision Notes).

 

26  11 U.S.C. § 101(12A), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 304, 108 Stat. 4106 (1994) (repealed).

 

27  11 U.S.C. § 101(14A), as amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

28  See § 58.5  Alimony and Support Exception; § 58.6  Domestic Support Obligation Exception after BAPCPA; § 73.2  What Claims Are Priority Claims?; § 73.7  Secured Priority Claims?; § 88.4  Alimony, Maintenance and Support; § 88.5  Domestic Support Obligations Assigned or Payable to Government: § 1322(a)(4) after BAPCPA; § 99.3  Child Support, Foster Care and Disability Payments; § 113.3  Domestic Support Obligations Must Be Current; § 124.6  Alimony and Support Collection after Confirmation; § 136.1  Treatment of Priority Claims; § 136.20  Alimony, Maintenance and Support in Cases Filed after October 22, 1994; § 136.21  Domestic Support Obligations after BAPCPA; § 158.1  Alimony, Maintenance or Support; and § 159.5  Domestic Support Obligations: § 523(a)(5).