It’s called the Fairness in Bankruptcy Reform Act, and by now you know it’s anything but. Now that we know what it says, the lawyers who represent people filing bankruptcy are pointing out the specific problems the new statute will cause for them and their clients. Here’s a story about it from Business First of Columbus, Ohio.
Here are the three main problems they point out in the new bankruptcy statute, which will become effective in October:
Bankruptcy lawyers who represent debtors will be required to certify the accuracy of their clients’ list of assets, and if they’re wrong they could face court sanctions. Bankruptcy lawyers tell me their response to this requirement will be to hire an independent auditor to investigate their clients, which will of course drive up the cost of bankruptcy.
Bankruptcy lawyers will be required to certify their clients’ ability to make scheduled payments, which will dramatically increase the liability exposure of bankruptcy lawyers, which will in turn drive up their legal malpractice premiums.
Bankruptcy lawyers will be required to advertise themselves as “debt relief agencies,” which will require that they provide a great deal of financial advice to their clients that they are not now providing.