BAPCPAs Requirements Regarding Attorney Communication to Clients on Debt Advice Prior to Bankruptcy Filing Found to be Overly Restrictive According to ABI Poll
BAPCPAs Requirements Regarding Attorney Communication to Clients on Debt Advice Prior to Bankruptcy Filing Found to be Overly Restrictive According to ABI Poll
Contact: John Hartgen
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BAPCPA’S REQUIREMENTS REGARDING ATTORNEY COMMUNICATION TO CLIENTS
ON DEBT ADVICE PRIOR TO BANKRUPTCY FILING FOUND TO BE OVERLY
RESTRICTIVE, ACCORDING TO
January 14, 2008,
Alexandria, Va. —A large majority of respondents (73
percent) in
Seventeen percent of respondents, however, did not agree that §526(a)(4) was overly restrictive and has a chilling effect on the speech of attorneys seeking to advise clients to incur new debt prior to filing for bankruptcy protection. Thirteen percent “strongly disagreed” and 4 percent “somewhat disagreed” that §526(a)(4) is overly restrictive and has a chilling effect on the speech of attorneys seeking to advise clients to incur new debt prior to filing for bankruptcy protection. Seven percent of the respondents did not know or had no opinion on the issue.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) created new §526(a)(4), which prohibits 'debt relief agencies,' including attorneys, from providing advice to clients to incur debt. In Olsen v. Gonzales, three attorneys (two of whom represented consumer debtors in bankruptcies, and one of whom advised clients regarding bankruptcies but did not file bankruptcy petitions or represent clients in bankruptcy cases) challenged the constitutionality of BAPCPA provisions prohibiting 'debt relief agencies' from providing advice to clients to incur debt. The court agreed that the restrictions on attorneys advising clients to incur debt in contemplation of bankruptcy were constitutionally overbroad.
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