Posted by Chris O'Sullivan
Article by Rachel Feintzeig (WSJ)
Bankruptcy got its moment in the Supreme Court spotlight yesterday when the justices heard oral arguments in two bankruptcy-related cases: one centered on the issue of discharging student loans in Chapter 13 and one challenging changes to the Bankruptcy Code.
The latter case could potentially have the biggest impact on bankruptcy attorneys, who are currently barred from encouraging clients who are considering filing for bankruptcy protection to take on more debt. That provision was added to the Bankruptcy Code during the 2005 revisions, along with a requirement that attorneys identify themselves as “debt-relief agencies.”
Minnesota law firm Milavetz, Gallop & Milavetz P.A. is challenging both provisions, arguing that they violate the first amendment. The firm’s attorney, G. Eric Brunstad of Dechert LLP, faced off against the U.S. Department of Justice yesterday on Capitol Hill.
The provision “basically proscribes or tells the lawyer you can’t give perfectly legitimate advice, and that’s wrong,” Brunstad said in an interview following the arguments. “The government has no compelling reason to prohibit that kind of advice.”