New Bankruptcy Code Section Declared Unconstitutional

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New Bankruptcy Code Section Declared Unconstitutional
2006-08-12
U.S. District Judge David Godbey of Dallas recently ruled that a controversial provision in the new bankruptcy code that restricts the advice bankruptcy lawyers can give to their clients is unconstitutional. Godbey made the decision on July 26 in Susan B. Hersh v. United States, et al., a suit filed last year by a Dallas bankruptcy lawyer who challenged three sections of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act that relate to how attorneys interact with their clients. [See the judge's opinion.] BAPCPA, which went into effect on Oct. 17, 2005, was crafted by Congress as a way to get tough on debtors who abuse the bankruptcy system. In his Memorandum Opinion and Order, Godbey found that 526(a)(4) of BAPCPA, which restricts lawyers from advising their clients to incur new debt before filing for bankruptcy, is "facially unconstitutional" because it restricts an attorney's free-speech rights.
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