Why the Bankruptcy Bill is Bad for Lawyers (and non-Lawyers)

I have to admit that I hadn't read the new Bankruptcy Bill. I knew it was bad but it turns out that it's even worse than one might have thought. Not only are we apparently bringing back debtor's prison, but for those without means, it may be next to impossible to find legal assistance.

According to BBA President M. Ellen Carpenter. "This new, proposed regulatory scheme represents an intrusion into the relationship between a lawyer and client, and is certain to have a chilling effect on pro bono representation of low-income people in the Bankruptcy Courts."

Here are some excerpts from a letter sent by the Boston Bar to Senator Edward Kennedy:

Following is a summary of some of those provisions, more details of which are provided in the letter dated March 1, 2005 from the American Bar Association (ABA) to the Senate, a copy of which is also enclosed:

1. The bill provides that a debtor's attorney can be held financially responsible for any factual errors contained in the debtor's petition or schedules.
   
2. The bill provides that if a debtor's schedules or petition are found to violate Rule 9011, and the debtor is then denied a discharge under a means test outlined in the bill, the debtor's attorney could be subject to sanctions and held personally liable for the attorneys' fees of the trustee who contested the discharge.
   
3. In the case of reaffirmation of debt where the debtor is presumed to be under a financial hardship, the debtor's attorney will be required, under the bill, to certify as a fact that the debtor is able to make the payments.
   
4. The bill also would require bankruptcy attorneys to identify and advertise themselves as "debt relief agencies", and make them subject to various regulations and other requirements, including providing a written statement to the client that a debtor need not be represented by a lawyer in the bankruptcy or in related litigation, which in many cases, as the ABA has pointed out, is bad advice. A "debt relief agency" would also be required to provide the debtor with preprinted government-approved advice on bankruptcy law, and comply with other additional burdens.

This administration really wants to make sure that people have no legal recourse. I guess they aren't confident that stacking the courts with their extremely conservative judicial nominations is going to be enough of an advantage.