U.S. Supreme Court Hears Argument On Question Of Attorneys As Debt Relief Agencies

U.S. Supreme Court Hears Argument On Question Of Attorneys As Debt Relief Agencies

WASHINGTON, D.C. — An attorney representing a law firm which contends federal bankruptcy law is unconstitutional on Dec. 1 told the U.S. Supreme Court that the law “proscribes truthful information about entirely lawful activity,” and “creates an impossible situation” for attorneys (United States of America v. Milavetz, Gallop & Milavetz, et al., No. 08-1225 and Milavetz, Gallop & Milavetz, et al. v. United States of America, No. 08-1119, U.S. Sup.).


G. Eric Brunstad, arguing for the law firm, argued there was no indication in the legislative history of the BAPCPA that Congress intended to import the abuse provision of 11 U.S. Code Section 707(b) into 11 U.S. Code Section 526.


Brunstad faced questions from Justices Ruth Bader Ginsburg, Antonin Scalia and John Paul Stevens regarding the abuse standard in 11 U.S. Section 707(b) and the phrase “in contemplation of bankruptcy” which appears in 11 U.S. Code Section 526.


Brunstad contended that the U.S. Government attempted to “tease out” an abuse standard from the “in contemplation of” language in 11 U.S. Code Section 526.




William M. Jay, of the Office of the U.S. Solicitor General, maintained that attorneys fit the criteria of “debt relief agencies” under the terms of the Bankruptcy Code because they provide specified services to specific clients for pay.


Moreover, Jay argued that the term “debt relief agencies” was newly coined by Congress in 2005 because it had to come up with an amalgamated term which included both attorneys and bankruptcy petition preparers.


Chief Justice John Roberts asked Jay to explain how the attorney-client relationship functions if the attorney is considered a debt relief agency, because under the government’s reading of the law, an attorney cannot give advice in contemplation of bankruptcy.

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