A “bankruptcy petition preparer” is defined in the Bankruptcy Code as a non-attorney “who prepares for compensation a document for filing.” Hudena James helped prepare a Chapter 7 bankruptcy petition for debtor Edward Guidry. After Guidry had some problems concerning a property where his estranged wife was living, he tried to convert the bankruptcy case to a Chapter 13 to stop the property from being sold, but the conversion fell through.
Guidry later told the court that he’d been “ill-advised” by James to attempt the conversion. The bankruptcy court ordered James to explain why he offered legal advice to the debtor in violation of the Bankruptcy Code via an order to show cause.
James denied that offered the debtor legal advice, claiming that the debtor was just upset and blamed James for the issues with the property. But in a written response to the court, James said he helped the debtor prepare the motion to convert the case. James later claimed this was just a typo by his wife, and that he had only helped prepare the Chapter 7 petition.
The bankruptcy court wasn’t convinced, and found that James did in fact help prepare the conversion motion. It further found that he violated the Bankruptcy Code by not listing his name, address, and Social Security number on the motion. The court ordered him to refund his $200 fee and fined him $500.
The district court determined that there were a number of violations to Mr. James’ due process rights by the lower court. The claim by the debtor of being provided legal advise by the document preparer wasn’t made while under oath. Additionally, James wasn’t given the opportunity to confront and cross-examine the bankruptcy debtor on his allegation. Further, bankruptcy court didn’t provide sufficient notice to Mr. James regarding why the court issued the order to show cause. The lower court also made the mistake of making findings of fact as to Mr. James’ involvement without the benefit of an evidentiary hearing.
