Our San Bernardino bankruptcy attorneys were delighted when the U.S. Supreme Court took up a case seeking to end restrictions on certain advice bankruptcy lawyers may give to their clients. Now, the New York Times reported Dec. 2, the court has heard oral arguments in the case. Milavetz, Gallop & Milavetz v. United States, No. 08-1119, pits a Minnesota law firm against multiple provisions of the federal bankruptcy reform laws of 2005. Chief among the firm's complaints was the new prohibition for lawyers against advising clients to take on more debt just before filing for bankruptcy. This is a violation of the First Amendment's free-speech guarantee, the Milavetz firm argued, and can contradict state laws requiring lawyers to give the best advice possible. The firm also objected to a provision requiring bankruptcy law firms to advertise with a statement that "we are a debt relief agency."
However, the focus of the article was clearly on the restriction on lawyers' advice. Justice Antonin Scalia said that it was a "stupid law," but said the Constitution does not prohibit stupid laws. By contrast, several other justices seemed open to the law firm's argument that the provision violated bankruptcy lawyers' free speech rights. The government's attorney, Assistant Solicitor General William M. Jay, argued that the prohibition applied only to situations where a lawyer advises a client to abuse the bankruptcy system or defraud creditors, both of which are of course illegal. Chief Justice John Roberts told Jay that the language of the law left this ambiguous, forcing attorneys to stop and consider whether they could be prosecuted even for legal, ethical and correct advice. Justice Ruth Bader Ginsberg suggested that the restriction would stop an attorney from suggesting more debt even when it makes sense, such as when the client has just been diagnosed with an expensive-to-treat medical problem like cancer.
This hypothetical by Ginsberg is just one reason why our Fullerton personal bankruptcy lawyers would like the court to overturn this provision. In addition to impermissibly interfering with the attorney-client relationship, the law actually restricts us from giving clients the best possible advice. For a client like the one Ginsberg suggested, it makes much more sense to delay bankruptcy filing until after treatment, because individuals and married couples may file for bankruptcy only once every seven years. We may also advise our clients to take on more debt for practical reasons, such as to refinance a mortgage for a better interest rate, or borrow to pay for required credit counseling. All of this advice is perfectly legal under state law, ethical and sensible -- but under the bankruptcy reform law, it is illegal. And because state ethics laws already forbid attorneys from advising clients to break the law, we believe the reform law, as interpreted by the government, is not even necessary.
Despite the legal requirement that we advertise as a "debt relief agency," Howard Law LLP is also a full-fledged bankruptcy law firm. Based in Anaheim, we represent clients throughout California who need help dealing with debt that they do not believe they can handle on their own. When appropriate, this can include debt settlement services, loan modifications or even predatory lending lawsuits -- but we can also help clients pursue a consumer bankruptcy. Our Escondido bankruptcy attorneys can explain the difference between liquidation (Chapter 7) and payment plan (Chapter 13) bankruptcies, and help you decide which one is best for you. We stand by our clients' sides throughout the bankruptcy, helping explain the process and deflect any creditors that don't stop calling.
If you feel like you're drowning in debt, Howard Law can help throw you a lifeline. To learn more at a free, confidential consultation, please contact us online or call toll-free at 1-800-872-5925.