Debtor ID Program

The Debtor ID Program was developed in 2011 to address the growing problem of non-attorneys filing cases for debtors. Many debtors have complained that bankruptcy cases were being filed in their names without their knowledge. When intake clerks identified deficient filings, “messengers” were regularly changing information—right in front of the Court clerks—on documents that had allegedly been signed by debtors when the debtors themselves were clearly not present to authorize such changes. The number of cases filed that appeared to have been prepared by a BPP, but did not disclose a BPP’s involvement, had skyrocketed.

The Court also has been facing a large number of bankruptcy cases that appear to have been “hijacked” by someone trying to slow a foreclosure action that has no connection to the named debtor. Full or partial trust deeds are being transferred into the name of an existing debtor, so that the person in the property on the deed could allege that the automatic stay stopped a foreclosure sale. Debtors are regularly showing up at relief from stay hearings stating that they have no idea why the property at issue is in their name, as they have nothing to do with it. Many of these debtors are facing foreclosure themselves, and the fact of their bankruptcy filing may be well known to one of the BPPs who assisted them in filing their case. What the debtors do not know is that their case is being used to further the “foreclosure defense” efforts that the BPP is conducting for another client. A better understanding of who is bringing these cases to court may assist in deterring this insidious scheme.

The Debtor ID Program requires that an individual filing any document without an attorney of record be asked to provide photo identification. When a person other than the debtor files, the Court keeps a copy of the identification presented in order to determine who controlled the filing. The Debtor ID Program was piloted in late 2011 in three of the Central District’s divisions: San Fernando Valley, Northern, and Riverside. Orders to Appear were issued to debtors and third-party filers in cases filed by someone other than the debtor. The hearings have presented excellent opportunities to address problem BPPs and to educate self-represented parties.

Closer study of cases brought to court by someone other than the debtor reveals more about this segment of the self-represented population. Of the 498 cases in the sample, 87 percent did not disclose the involvement of a BPP. Where no BPP was disclosed, 170 cases had hallmarks of being prepared by someone other than the debtor. Cases in this category were filed by a “messenger” who filed other cases as well, or had handwritten “x” marks noted next to signature lines where the debtor was required to sign, or had unique case filing software peculiarities that were similar to other known BPP-prepared cases. In some cases, the debtor stated that someone else prepared the case during subsequent hearings.

When debtors were asked to come in and explain who filed the case, volunteer attorneys were available to provide proper legal assistance, and, where possible, they provided guidance to confused debtors. A few of the debtors had no idea that a bankruptcy had been filed in their names. Some had paid far more than the $200 fee the BPP is permitted to charge. Many had false expectations about what the bankruptcy filing would accomplish and only realized at the hearing that they were being defrauded.

Many of the “messengers” or BPPs who responded were involved in either the foreclosure prevention or “loan modification” business, or were realtors attempting to stall foreclosure while they completed a short sale. The hearings held in these cases can only present a partial picture of this subgroup because over 50 percent of the debtors and 40 percent of the messengers did not appear in response to the Court’s orders. The violations of §110 that were proven resulted in 49 disgorgement orders or fines.

To date, 432 of the 498 cases in this project have come to a resolution. Approximately 92 percent of the debtors did not receive a discharge. All debtors who filed a chapter 13 case and did not convert to chapter 7 have had their cases dismissed. Approximately 60 percent of the debtors filing chapter 7 did not receive discharges. While self-represented debtors receive discharges at a lower rate than represented debtors, the group that did not personally file the cases at the courthouse had their cases dismissed at double the already high rate. The program has shed valuable information on the most troubled group of self-represented cases filed at the Court. The project is being evaluated at this time to determine whether it should be implemented district-wide.

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