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Attorneys Are “Debt Relief Agencies” Under Bankruptcy Code

On March 8, 2010, the United States Supreme Court in Milavetz, Gallop & Milavetz, P.A. v. United States (2010) 559 U S ____, 2010 US Lexis 2206, 10 C.D.O.S. 2797 ruled that attorneys fall within the definition of “debt relief agencies” in Bankruptcy Code §101(12A). This means that advertising rules in Bankruptcy Code §528(a)(4) and limitations on advice to debtors in Bankruptcy Code §526(a)(4) apply to attorneys.

The plaintiffs in that case had argued, among other issues, that the limitations on what a debt relief agency could tell its client were so vague that the prohibition would chill protected speech. They argued that the code would  prevent attorneys from advising clients to incur debt before filing bankruptcy for legitimate purposes. The court held that there was no constitutional violation because at the very least attorneys could still talk about these issues.

A press release from the law firm of Milavetz, Gallop & Milavetz concluded that the Supreme Court opinion

[P]rovides clarity for the public and for attorneys [that] Bankruptcy practitioners must call themselves Debt Relief Agenc[ies], and if they choose to advertise, use certain language.

The case discussed and decided several issues. For further discussion see the listings at the SCOTUSBlog and the SCOTUSWiki.

4 replies on “Attorneys Are “Debt Relief Agencies” Under Bankruptcy Code”

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