Brian D. Lerner Immigration Attorney & Deportation Lawyer Blog

New Bankruptcy Case: Attorneys who provide bankruptcy assistance to assisted persons are “debt relief agenc[ies]” under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 because “bankruptcy assistance,” by definition, includes services commonly performed by attorneys such as “advice, counsel [or] document preparation.” A debt relief agency violates 11 U.S.C. Sec. 526(a)(4)–which prohibits “debt relief agenc[ies]” from “advis[ing] an assisted person…to incur more debt in contemplation of [filing for bankruptcy]”–only when the impetus of the advice to incur more debt is the expectation of filing for bankruptcy and obtaining the attendant relief, and statute does not broadly prohibit debt relief agencies from discussing covered subjects but merely proscribes affirmative advice to undertake a particular action; provision, narrowly construed, is not impermissibly vague. Requirements in 11 U.S.C. Sec. 528 that debt relief agencies disclose in their advertisements for certain services that the services are with respect to or may involve bankruptcy relief, and that they identify themselves as debt relief agencies, were not unconstitutional as applied to attorneys because requirements were reasonably related to government’s interest in preventing consumer deception where they were intended to combat the problem of inherently misleading commercial advertisements, entailed only an accurate statement of the advertiser’s legal status and the character of the assistance provided, and did not prevent debt relief agencies from conveying additional information through their advertisements.
Milavetz, Gallop & Milavetz, P.A. v. United States – filed March 8, 2010

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