66 East Main Street, 3rd Floor Little Falls, NJ 07424

Bad Attorney Violates Bankruptcy Code

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May 8, 2018

Background

  • Attorneys instructed clients to use their credit cards to pay bankruptcy related legal fees.
  • At the attorney’s direction, clients used 2 different credit cards to pay the initial retainer and the next 3 installments.
  • A bankruptcy law firm is a debt relief agency.
  • A debt relief agency cannot advise a prospective client or assist a person to incur more debt.

Court Ruling

  • This newly acquired debt could compromise the debtor’s dischargeability in Bankruptcy.
  • This could prohibit a fresh start for the client.
  • Debt leaves a diminished estate for creditors.
  • Attorney violated Section 526(a)(4 – Attorney cannot advise client to incur more debt or to run up debt to pay attorney fees.

Attorneys Cannot Advise Bankruptcy Clients to Charge their Fees

It is important to Hire a Board Certified Bankruptcy Attorney to avoid issues like this.