Duties of Debtor’s Counsel

This is when people use an attorney to file for bankruptcy and do not do it yourself bankruptcy.

Attorney’s “Certification” of the Accuracy of the Schedules

Section 707(b)(4)(C) states that debtor’s counsel must: (i) perform a reasonable investigation into the circumstances that gave rise to the petition, pleading, or written motion; and (ii) determine that the petition, pleading, or written motion: (I) is well grounded in fact; and (II) is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law and does not constitute an abuse of the provisions of chapter 7.
Section 707(b)(4)(D) states that debtor’s counsel, by signing the petition, is certifying that he or she “has no knowledge after an inquiry that the information in the schedules filed with such petition is incorrect.”

Debtor’s Counsel as a “Debt Relief Agency”

The BAPCPA has defined a “Debt Relief Agency” to be any “person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration.” [11 U.S.C. §101(12A)] An assisted person is defined as a “person whose debts consist primarily of consumer debts and the value of whose nonexempt assets are below $150,000.” [11 U.S.C. §101(3)] While a number of different agencies are excluded, attorneys, in general, are not. Therefore it would appear that an attorney giving bankruptcy advice for a fee to an “assisted person” is a debt relief agency and must meet the requirements of debt relief agencies.

New Section 526 “Restrictions on Debt Relief Agencies”
“(a) A debt relief agency shall not-
“(1) fail to perform any service that such agency informed an assisted person … it would provide in connection with a case or proceeding under this title; (2) make any statement, or counsel or advise any assisted person … to make a statement. . . that is untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading; (3) misrepresent. . . directly or indirectly, affirmatively or by material omission, with respect to—
(A) the services that such agency will provide to such person; or
(B) the benefits and risks that may result if such person becomes a debtor in a case under this title; or
(4) advise an assisted person … to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title.”
“(c)(l) Any contract for bankruptcy assistance . . . that does not comply with the material requirements of this section, section 527, or section 528 shall be void and may not be enforced . . . other than (by) such assisted person.
(2) Any debt relief agency shall be liable to an assisted person in the amount of any fees or charges in connection with providing bankruptcy assistance to such person that such debt relief agency has received, for actual damages, and for reasonable attorneys’ fees and costs if such agency is found, after notice and a hearing, to have—
(A) intentionally or negligently failed to comply with any provision of this section, section 527, or section 528 with respect to a case or proceeding under this title for such assisted person;
(B) provided bankruptcy assistance to an assisted person in a case or proceeding under this title that is dismissed or converted to a case under another chapter of this title because of such agency’s intentional or negligent failure to file any required document including those specified in section 521; or
(C) intentionally or negligently disregarded the material requirements of this title or the Federal Rules of Bankruptcy Procedure applicable to such agency.
New Section 527 Disclosure Requirements for Debt Relief Agencies
New Section 527 requires a debt relief agency providing bankruptcy assistance to an assisted person to provide the written notice required to be provided by the Clerk before the commencement of a case pursuant to Section 341(b)(l) (i.e., a brief description of chapters 7, 11, 12, and 13 and the general Debtor’s Counsel as a “Debt Relief Agency”

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