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BAPCPAs Restriction on Attorney Advice is Unconstitutional According to Latest ABI Quick Poll

Contact: John Hartgen
             703-739-0800
             jhartgen@abiworld.org

BAPCPA’S RESTRICTION ON ATTORNEY ADVICE IS UNCONSTITUTIONAL, ACCORDING TO LATEST ABI QUICK POLL

 

May 8, 2009, Alexandria, Va. — A majority of respondents (59 percent) in a recent ABI Quick Poll thought that BAPCPA’s restriction on attorney advice concerning a debtor’s acquisition of pre-petition debt is unconstitutional on its face. Fifty percent “disagreed strongly” and 9 percent “somewhat disagreed” with the statement that the “restriction within the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 on attorney advice concerning a debtor’s acquisition of pre-petition debt is not unconstitutional on its face.” Section 526(a)(4) of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides that a 'debt relief agency' may not advise a client (whether or not in bankruptcy) to incur more debt in contemplation of such person filing a case, or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing. A 'debt relief agency' under this section is defined as 'any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration.” (11 U.S.C. 101(12A)).

In a departure from rulings by the U.S. Court of Appeals for the Eighth Circuit and several lower courts, the U.S. Court of Appeals for the Fifth Circuit held in Susan B. Hersh v. United States of America, No. 07-10226 (5th Cir. 12/18/08), that §526(a)(4) passes constitutional scrutiny and that attorneys could be considered 'debt relief agencies.'

Thirty-three percent of respondents agreed that BAPCPA’s restriction on attorney advice concerning a debtor’s acquisition of pre-petition debt is not unconstitutional on the surface. Twenty-seven percent “agreed strongly” and 6 percent “somewhat agreed” that §526(a)(4) is not unconstitutional. Seven percent of respondents did not know or had no opinion on the issue.

ABI members and members of the public were welcome to submit their response to the statement: “BAPCPA’s restriction on attorney advice concerning a debtor’s acquisition of pre-petition debt [sec 526(a)(4)] is not unconstitutional on its face. Hersh v. United States (5th Cir. 12/18/08).”

ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.