Bankruptcy

I'm not just an Arizona Bankruptcy Attorney; I'm also a Debt Relief Agency!

By Joseph McDaniel, Esq.

The rules of ethics and other rules controlling attorney conduct have traditionally been issues left to the states.

The BARF Act takes it upon itself to tinker with the attorney client relationship in a several ways.

On the one hand, instead of making bankruptcy lawyers wear the cone of shame or a funny hat, they are classified as debt relief agencies. So I am now a human being, an Arizona bankruptcy lawyer, and a "Debt Relief Agency", and I'm required to let people know that; and I can live with the label requirement.

At another level, the rules of ethics of the various states are uniform in one regard. Lawyers have an ethical duty to give the best advice to their clients that they can.

Prior to the enactment of the BARF Act, the issue of a new car could have come up in discussions with a bankruptcy lawyer. And I can imagine a situation in which a debtor still had good credit but saw a bankruptcy coming. And I can also think of a situation where a potential debtor could be best served by advice to buy a new car while the potential debtor still has good credit, because that that time, the debtor could get a much better interest rate than just after the bankruptcy.

Under the BARF Act, that advice, however well meaning, and however helpful and useful to a potential debtor, is simply forbidden. A "debt relief agency" cannot give advice to incur any new debt for any reason whatsoever.

So what if, from a state ethical rules perspective, a lawyer would be required to advise such a course of action to a client, because it's just the best advice under the circumstances?

Tough tomatoes, said the Supreme Court of the United States as to that potential issue.

The citation to the case is Milavetz v. United States, 559 U.S. ____ (2010).

While I believe that the portions of the Bankruptcy Code are about as unconstitutional as is possible, and clearly not in the best interest of anybody but banks, being a Supreme means never having to say you're sorry.

And accordingly, no prohibited advice from this particular debt relief agency!

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on May 20, 2010 (boomark / email).