Milavetz, Gallop & Milavetz, P.A., et al v. United States – Supreme Court Holds that Attorneys are “Debt Relief Agencies”

On March 8, 2010, the Supreme Court ruled in Milavetz, Gallop & Milavetz, P.A., et al v. United States, 130 S. Ct. 1324 (2010), that attorneys are “debt relief agencies” who are limited in their ability to provide pre-bankruptcy planning advice to consumers and obligating them to provide additional disclosures in their advertisements.
The Supreme Court rejected the Eighth Circuit’s holding that the prohibition of 11 USC § 526(a)(4) upon debt relief agencies to “advise an assisted person either to incur more debt in contemplation of filing bankruptcy” was unconstitutional as applied to attorneys.
The Supreme Court articulated that the prohibition was to preclude attorneys from advising client to “load up” on debt that would be discharged in bankruptcy.
Finally, the Supreme Court held that the additional disclosure requirements imposed by 11 USC § 528 are constitutional as applied to attorneys. The statutory disclosures require an attorney to include in their advertisements pertaining to bankruptcy assistance services that they “help people file for bankruptcy relief.” Under the more relaxed standard governing commercial speech, the Supreme Court held that these disclosures do not restrain speech but instead merely require the addition of certain language to advertisements pertaining to bankruptcy assistance services. The Supreme Court also found that the statute has flexibility so that debt relief agencies may tailor their disclosures so long as the resulting statements are substantially similar to the statutory examples.

 
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  • LH&M is considered a debt relief agency.
    LH&M helps people file for bankruptcy relief under the Bankruptcy Code.

    Attorney advertisement. Prior results do not guarantee a similar outcome.