The U.S. Trustee Program has filed a complaint against a California lawyer and her firm for its so-called “no money down” billing practices in Chapter 7 cases. Peter C. Anderson, the U.S. trustee for the Central District of California, sued Patricia Ashcraft and the Law Offices of Gregory Ashcraft, APC, related to attorney fees collected for a Chapter 7 bankruptcy the firm filed for Mary Anne Gilmore on May 2.
The Dec. 12 complaint from the Justice Department’s trustee unit overseeing bankruptcies seeks disgorgement, or repayment, of attorneys’ fees, sanctions, and an order preventing such billing in future cases. According to the complaint, the firm bifurcates its representation into two components—representation pre-petition and representation post-petition. It has separate retainer agreements for the services, the complaint stated. It provides its pre-petition services for free, and bills for its work for post-petition services on a monthly basis.
According to the firm’s website, Ashcraft partners with a company called BK Billing, LLC, the complaint said. BK Billing funds the firm by a payment, in this case $2,100, and bills the client the entire fee, $3,000, at a rate of $250 per month for 12 months, according to the complaint.
Ashcraft doesn’t disclose that the client is paying financing fees or interest amounting to more than 40 percent, the complaint said. Additionally the cost of filing the bankruptcy is almost doubled compared to her prior fees prior to the zero down program.
The facts of the case can be read below.