EagleTribune.com, North Andover, MA

Merrimack Valley

March 24, 2013

AG: Pinnacle clients paid for defective bankruptcy petitions

LAWRENCE — As a last resort, Pinnacle Financial Consulting LLC advised their clients they needed to file bankruptcy petitions to save their homes.

“When their loan modification efforts fail, sometimes just days before the distressed homeowner’s home is scheduled to be sold at foreclosure, defendants pressure distressed homeowners into paying defendants thousands of dollars to file bankruptcy on their behalf in order to delay the foreclosure sale,” according to a lawsuit the state Attorney General’s Office filed against the downtown business.

But about a quarter of the bankruptcy cases prepared by Pinnacle Financial were defective, according to court records filed in connection with the complaint.

“Defendants’ bankruptcy filings on behalf of consumers are often incomplete or consist of erroneous paperwork, ultimately resulting in the dismissal of the bankruptcy proceedings,” the lawsuit alleged.

“The U.S. Bankruptcy Trustee of Region I, District of Massachusetts, has identified, and the Commonwealth is aware of, 107 bankruptcy cases initiated by Defendants, at least 27 of which had fundamental defects in the documents Defendants prepared and filed,” the complaint noted.

In eight of those cases, the U.S. Trustee has initiated disgorgement proceedings against defendants for illegally-prepared bankruptcy petitions.

A Dracut woman who paid Pinnacle Financial to prepare a loan modification to avoid foreclosure said the company later intended to charge her $850 to prepare a bankruptcy petition – something the company said was needed to avoid losing her home, according to court records.

She said Pinnacle Financial and its owner Robert Burton completed the petition without soliciting any input from her,

“At 1 p.m. on Jan. 31, 2012, the day before the foreclosure auction was scheduled at my home, a Pinnacle staff member brought the completed bankruptcy paperwork to my workplace in Salem, N.H., and told me to sign the entire stack of documents,” the woman said in a court affidavit.

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