Thursday, December 3, 2009

For the debtors' lawyers...

Until yesterday, this site had a decidedly pro-creditor vibe. In order to keep the current momentum, I would like to offer some words of interest to any bankruptcy lawyers out there.

On Tuesday, the U.S. Supreme Court heard arguments in a case involving a provision of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA").

The case, Milavetz, Gallop & Milavetz v. United States, No. 08-1119, concerns the provision which prohibits lawyers from advising their clients “to incur more debt in contemplation of” a bankruptcy filing.

Penalties for violations of this provision can be severe. I have read articles which suggest that this provision prevents lawyers from accepting credit card payments for payment of their fees. Also, how is a bankruptcy lawyer to respond when a client informs him that he or she needs emergency medical treatment just days before the petition is filed? It may be a criminal offense to advise your client to go ahead with that treatment.

At issue is whether that particular provision is an unconstitutional prohibition on free speech. The plaintiff is a Minnesota law firm.

The Supreme Court is not expected to rule for several months. Check back for updates.

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