In an eagerly awaited opinion, the Supreme Court today unanimously upheld the key features of BAPCPA aimed at those attorneys representing debtors in consumer cases. Milavetz, Gallop & Milavetz v. United States.  The opinion by Justice Sotomayor held that attorneys who provide bankruptcy assistance to debtors are, in fact, “debt relief agencies” under the 2005 law, and are bound to comply with BAPCPA’s other ethical and disclosure requirements. Upheld specifically was the prohibition of advising the assisted person to “incur more debt in contemplation of” filing for bankruptcy, which debtors’ counsel had argued impermissibly restricted speech and the attorney-client relationship by encompassing any advice given to a debtor with the awareness that he might soon file for bankruptcy.

The Court here read the statute in a narrower way,  concluding that BAPCPA  prohibits only advice to incur more debt “because the debtor is filing for bankruptcy, rather than for a valid purpose.” The Court found valid Congress’ stated concerns with the practice of “loading up on debt prior to filing,” and that advising a client to “incur more debt because of bankruptcy presents a substantial risk of injury to both debtors and creditors.”  The Court also found       that the challenged disclosure requirements of BAPCPA valid as applied in that they are designed at addressing misleading commercial speech, and thus were found reasonably related to the government’s interest in preventing deceptive advertising. Click here to read the Supreme Court’s ruling.

The ABI will hold a media briefing on the Supreme Court’s opinion tomorrow at 2 p.m. ET.  Participants on the call will be Joseph R. Prochaska of Prochaska Thompson Quinn & Ferraro, P.C. (Nashville, Tenn.), Prof. Nancy B. Rapoport of the William S. Boyd School of Law, University of Nevada and William H. Schorling of Buchanan Ingersoll & Rooney, and ABI Resident Scholar Juliet Moringiello will be the moderator. If you would like to listen to the live teleconference, please reply to this message or contact John Hartgen at 703-894-5935 for the dial-in instructions. Due to media joining the call, the number of members looking to participate in the live teleconference at 2 p.m. tomorrow will be limited to 30, so please send your request ASAP. If you are unable to listen in, ABI will be posting an archive audio file of the teleconference in the Newsroom section of the Web site within the week.