publication: States News Service

July 7, 2008 Monday

The following information was released by the American Bankruptcy Institute: The American Bankruptcy Institute Endowment Fund has awarded a $7,500 grant to researchers from Harvard Law School to examine the effect of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) on bankruptcy attorney's pro bono assistance (or free legal representation) for struggling consumer debtors. Many bankruptcy professionals have expressed concern that BAPCPA has reduced the delivery of bankruptcy pro bono services since its enactment in October 2005 because of potential liability concerns for attorneys under provisions of the law. Attorneys have been concerned with controversial provisions included in BAPCPA that could potentially subject counsel providing pro bono services to liability as a "debt relief agency" under the revised Code. Section 101 of BAPCPA classifies professionals providing "bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration" to be a debt relief agency. As "valuable consideration" is not currently defined within the Code, attorneys providing pro bono assistance to meet state bar requirements could be subject to the debt relief agency provisions of the Code. The attorneys would then be subject to a host of additional requirements such as prohibitions on the types of advice that they could give the debtor, providing lengthy disclosures by the attorney to the debtor and additional advertising requirements.