11 U.S.C. § 110 — Penalty for persons who negligently or fraudulently prepare bankruptcy petitions

(a) Definitions. This section defines two terms. A "bankruptcy petition preparer" is a person who prepares a document for filing in exchange for payment — but this does not include the debtor's own attorney, or that attorney's employee working under the attorney's direct supervision. A "document for filing" means a bankruptcy petition, or any other paper a debtor prepares to file in a United States bankruptcy court or district court, in connection with a bankruptcy case. (b) Signing and identifying the preparer. A preparer who prepares a document must sign it and print their name and address on it. If the preparer is not an individual person — for example, a company — then one of its officers, principals, responsible people, or partners must sign it and print their own name and address instead. Before preparing any document, or accepting any payment from or for the debtor, the preparer must give the debtor a written notice, using an official form the Judicial Conference of the United States sets under bankruptcy rule 9009. That notice must tell the debtor, in simple language, that the preparer is not an attorney and cannot practice law or give legal advice. It may also give examples of advice a preparer isn't allowed to give. Both the debtor and the preparer must sign the notice — the preparer signs under penalty of perjury — and it must be filed along with any document for filing. (c) Identifying number. A preparer must also place an identifying number on the document, after their signature, that identifies the individuals who prepared it. For an individual preparer, that number is their Social Security number. If the preparer is not an individual, the number used is the Social Security number of the officer, principal, responsible person, or partner involved. (d) Copy to the debtor. The preparer must give the debtor a copy of the document no later than when the document is presented to the debtor for signing. (e) No signing for the debtor, no legal advice. A preparer may never sign a document on the debtor's behalf, and cannot offer the debtor any legal advice. The section gives examples of off-limits advice: whether to file for bankruptcy at all, or which chapter to file under; whether the debtor's debts will be discharged; whether the debtor gets to keep their home, car, or other property; the tax effects of filing, including whether tax debts can be discharged; whether the debtor should promise to repay a debt or sign an agreement keeping it alive; how to describe the debtor's property or debts; and bankruptcy procedures and rights generally. (f) No calling it "legal" services. A preparer cannot use the word "legal," or a similar word, in advertising, and cannot advertise under any category using that word. (g) No collecting court fees. A preparer cannot collect or accept payment, from or for the debtor, to cover the court's own filing fees. (h) Fee limits and fee disclosure. The Supreme Court may set rules, or the Judicial Conference may set guidelines, capping the maximum fee a preparer can charge. If such a cap exists, the preparer must tell the debtor what it is before preparing any document or taking any payment. Along with the bankruptcy petition, the preparer must file a sworn declaration disclosing any fee received from or for the debtor in the past 12 months, and any fee still owed — and, if a fee cap applies, certifying that the preparer told the debtor about it. If a court finds a fee was worth more than the value of the services actually provided over that 12-month period, or broke a fee-cap rule, the court must disallow it and order the preparer to immediately turn it over to the bankruptcy trustee. If the preparer fails to follow subsections (b) through (g), all of their fees in the case can be forfeited. An individual debtor may keep any recovered funds exempt from creditors under section 522(b). The debtor, trustee, a creditor, the United States trustee, or the court itself can ask for this kind of order. A preparer who doesn't turn over funds within 30 days of being ordered to can be fined up to $500 for each failure. (i) Damages for violations. If a preparer violates this section, or does anything the court finds fraudulent, unfair, or deceptive, the court — after a motion and a hearing — must order the preparer to pay the debtor three things: the debtor's actual losses; whichever is larger, $2,000 or twice what the debtor paid the preparer; and reasonable attorney's fees and costs for bringing the claim. If the trustee or a creditor brings this claim on the debtor's behalf instead, the preparer must also pay that mover an extra $1,000, plus their reasonable attorney's fees and costs. (j) Court orders stopping a preparer. The debtor, the trustee, a creditor, or the United States trustee can sue to stop a preparer from breaking this section, or from working as a preparer at all. If the court finds that the preparer broke this section or another bankruptcy law, lied about their experience or education, or committed some other fraudulent, unfair, or deceptive act — and that an injunction is needed to stop it happening again — the court can order the preparer to stop that specific conduct. If the preparer keeps doing it, and stopping just that specific conduct wouldn't be enough — or if they haven't paid a penalty or handed over fees they owe — the court can bar them from working as a preparer altogether. Using its contempt powers, the court can also stop a preparer who has broken an earlier order in this kind of case. A debtor, trustee, or creditor who wins this kind of lawsuit gets their reasonable attorney's fees and costs paid by the preparer. (k) No shield for practicing law illegally. Nothing in this section allows a preparer to do anything already illegal, including practicing law without a license. (l) Fines. A preparer who fails to follow subsections (b) through (h) can be fined up to $500 for each failure. The court must triple that fine if the preparer told the debtor to leave assets or income off their bankruptcy paperwork, told the debtor to use a fake Social Security number, didn't tell the debtor they were actually filing for bankruptcy, or prepared a document in a way that hid who the preparer was. The debtor, trustee, a creditor, or the United States trustee can ask the court to impose this fine. Fines from districts served by United States trustees go to those trustees, who deposit them in the United States Trustee Fund. Fines from districts served by bankruptcy administrators instead go into a federal fund used to help cover the cost of running the courts.