30 Sep What Does the Connecticut Debt Relief Agent Case Mean for Attorneys?
Recently the U.S. District Court in Connecticut ruled that parts of the revised Bankruptcy Code were unenforceable. (See “Federal Court Strikes Down Bankruptcy Code Provisions”) But some parts of the case remain undecided. While the Court decided that attorneys not engaged in the practice of bankruptcy law did not have to comply with certain provisions of the act, the Court did not decide the applicability of the moniker “Debt Relief Agent”. The Court also never once mentioned the sole consumer who was a plaintiff in the case and what effect the statute had on her rights as a consumer.
The Court did find that attorneys involved in bankruptcy practice were not harmed by the remaining requirements of revised Bankruptcy Code. So three parts of the revised Bankruptcy Code remain in place that all attorneys must obey. They are:
- Attorneys must advertise that they are “Debt Relief Agents” and include a disclaimer in all advertisements that they “help people file for bankruptcy”. This simple language can be an indicator that the attorney is aware of the legal requirements and does not “dabble” in bankruptcy practice.
- Attorneys active in bankruptcy practice and bankruptcy petition preparers must provide certain disclosures to potentially assisted persons within three days of the first consultation. The exact language is included in the statute. These disclosures include, among others, a statement that you must be truthful and complete in the information placed on a bankruptcy petition, that an attorney is unnecessary to file for bankruptcy, but only an attorney can render legal advice and that a bankruptcy case can involve additional litigation or a reaffirmation of debts. Experienced bankruptcy attorneys will always provide these types of disclosures, but the specified disclosures are not complete and can be confusing.
- The attorney must execute a contract with the client within five days after a first consultation defining the terms of any work to be performed in a bankruptcy case as well as the fees and costs therein. A smart consumer will require a written retainer agreement, but the law as written only gives five days for that agreement to be executed and returned to the attorney.