Petition Mill (Bankruptcy) Law and Legal Definition

Petition mill is a type of bankruptcy fraud perpetrated by a third party. The perpetrator poses as a financial advisor, sometimes as a credit counselor or paralegal. For example they can pose as a consulting service helping the debtor from becoming evicted. The firm takes all information of the debtor and charges large fees, claiming they are fighting the eviction. In reality, they have filed for bankruptcy, ruined the debtor's credit score, and drained the cash resources.

In other petition mill schemes, the fraudster simply creates summary bankruptcy filings for the victim. The victim is then told to file pro se in court and deny that anyone helped prepare the documents.

At present these types of bankruptcy fraud schemes are on the rise in the U.S.