/ September 10, 2008

Controversial Section of the Bankrupcty Law Ruled Unconstitutional

The time consuming process of representing a bankruptcy client may now be lessened thanks to a federal judge in Hartford, Conn.  Yesterday, U.S. District Court Judge Christopher Droney ruled a component of the 2005 update to the bankruptcy law unconstitutional, stating that limiting the advice attorneys can give to clients is unlawful.  Plaintiffs in the case, including the Connecticut Bar Association and the National Association of Consumer Bankruptcy Attorneys, filed in 2006 in opposition to the requirement of explicit guidance, specifically not acquiring any more debt.

Droney found the element of the law too broad because it restricts attorneys from advising clients to take on any debt, even beneficial debt, such as refinancing a home to a lower rate, or buying a car with a lower monthly payment, prior to filing for bankruptcy.  He stated that to regulate and prevent bankruptcy fraud the government would need a more modified and specific law.  He did rule in favor of the feds on some of the issues with the law, including an opposition to an element stating a person can file for bankruptcy without and attorney.
If you have an opinion on this issue, please post a comment below!
Source: Forbes

Comments are closed.