In a decision on Wednesday, July 26, 2006, the United States District Court in Dallas ruled that a portion of the new bankruptcy law, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (also known as BAPCPA), unconstitutionally restricts attorneys when they provide legal advice to their clients.
These provisions were part of BAPCPA’s focus on consumers and the restrictions were aimed at preventing attorneys — who are apparently included within the term "debt relief agency" under BAPCPA — from advising individuals, among other things, to take on more debt if they are contemplating bankruptcy. The court also held that other related provisions were constitutional, specifically one requiring disclosure of certain specific information to individuals who are considering filing for bankruptcy.
While the decision does not affect businesses directly, it’s important to know when a court holds part of the bankruptcy law unconstitutional. For those interested in learning more about the decision and the consumer-related provisions involved, I recommend that you read David Rosendorf’s excellent post on the American Bankruptcy Institute’s BAPCPA blog and Steve Jakubowski’s equally informative post on his Bankruptcy Litigation blog.
Bob Eisenbach
Listed in The Best Lawyers in America® for Bankruptcy and Creditor-Debtor Rights Law, and recognized as one of Northern California’s Super Lawyers®, Bob focuses his practice on restructuring, bankruptcy, distressed M&A, and related litigation. He is regularly involved in cases throughout the country, including California, Delaware, and New York.