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Friday, March 19, 2010
Courts - More on: Attorneys who provide bankruptcy assistance are debt-relief agencies
Updating this ILB entry from March 8, 2010 on the SCOTUS ruling in Milavetz, Gallop & Milavetz, P.A. v. United States, Thomas B. Scheffey of the Connecticut Law Tribune writes in an article that begins:
Bankruptcy lawyers will need to remain cautious about what sort of advice they offer clients, following a ruling by the U.S. Supreme Court last week.The justices ruled the portion of the 2005 bankruptcy reform act that bars lawyers from advising clients to take on "any debt" is constitutional, though it may be less restrictive than first thought.
Still, lawyers are unhappy at being muzzled in any way by a law that they don't believe should apply to them. "Most attorneys were hoping [the Supreme Court] would strike down as unconstitutional the provision about not counseling your client to take on any debt, and I found it disappointing that they didn't do that," said Matthew K. Beatman, a partner in the Bridgeport, Conn., bankruptcy boutique firm of Zeisler & Zeisler.
He did, however, call it "helpful" that the Court explained that the prohibition refers to abusing the bankruptcy law by running up debt that can't be collected by creditors, and doesn't apply to lawful actions.
Writing for a unanimous Court, Justice Sonya Sotomayor ruled that bankruptcy lawyers fit the definition of "debt relief agencies" under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, even though neither the words "lawyer" nor "attorney" are specifically mentioned in the law.
As such, the justices said, the government can legitimately require lawyers with bankruptcy practices to include in their advertising the following message: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code."
Posted by Marcia Oddi on March 19, 2010 10:12 AM
Posted to Courts in general