In response to a request posted as a comment on my June 22nd blog, here is additional information on the Supreme Court case regarding freedom of speech and bankruptcy.
“First, the plaintiffs contend that the prohibition against a consumer debtor with limited assets to ‘incur more debt in contemplation of such [debtor] filing’ for bankruptcy, 11 U.S.C. § 526(a)(4),violates the attorney plaintiffs’ First Amendment right, the client plaintiffs’ First and Fifth Amendment rights, and the separation of powers principle. Second, they contend that the requirement that a debt relief agency provide certain written disclosures to such consumer debtors, 11 U.S.C. § 527, violates the First Amendment. Third, plaintiffs contend that the requirement that a debt relief agency insert a written disclosure in advertisements for bankruptcy assistance, 11 U.S.C. § (a)(3)-(4), violates the First Amendment. Fourth, they challenge the requirement that a debt relief agency execute a written contract describing the services to be provided and the fees for such service, 11 U.S.C. § 528(a)(1)-(2). Finally, plaintiffs claim that the professional standards imposed on debt relief agencies violate their due process rights. Based on these claims, they seek a preliminary injunction enjoining defendants from enforcing Sections 526, 527 and 528 against the plaintiffs, the members of their organization, and others similarly situated. These allegations fail to state a claim for which relief can be granted. Accordingly, their complaint should be dismissed and their request for a preliminary injunction denied (U.S. Trustee Program, Department of Justice).”
These issues have generated some debate. A detailed discussion related to this issue can also be found at the following government site: http://www.usdoj.gov/osg/briefs/2008/0responses/2008-1119.resp.pdf .
Note that last year in St. Louis, the 8th U.S. Circuit Court of Appeals ruled that certain attorneys can be considered debt relief agencies and also ruled that the facet of the bankruptcy law that prevents lawyers from counseling their clients to take on more debt if they are thinking about filing bankruptcy violates the lawyers’ First Amendment rights. “In a case challenging application of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), summary judgment for plaintiff is affirmed in part and reversed in part where: 1) attorneys providing bankruptcy assistance are ‘debt relief agencies’ under the BAPCPA, 11 U.S.C. section 526(a)(4) is unconstitutional as applied to these attorneys; but 2) sections 528(a)(4) and (b)(2) are constitutional (caselaw site).” Milavetz v. United States, 08-1119, and United States v. Milavetz, 08-1225, are the cases involved.
Here is a link to the amendments to the Federal Rules of Bankruptcy Procedure that have been adopted by the Supreme Court of the United States pursuant to Section 2075 of Title 28, United States Code, which was submitted to the Congress, April of last year: http://www.supremecourtus.gov/orders/courtorders/frbk08p.pdf .
I hope these resources are helpful. Thanks for your interest.
