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Milavetz, Gallop & Milavetz, P.A. v. US, No. 08-1119

By FindLaw Staff | Last updated on

Milavetz, Gallop & Milavetz, P.A. v. US, No. 08-1119, involved an action by a law firm seeking declaratory relief, arguing that plaintiff was not bound by the Bankruptcy Abuse Prevention and Consumer Protection Act's (BAPCPA) debt relief agency provisions and therefore could freely advise clients to incur additional debt and need not make the requisite disclosures in its advertisements.

As the Court wrote:  "Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA or Act) to correct perceived abuses of the bankruptcy system. Among the reform measures the Act implemented are a number of provisions that regulate the conduct of "debtrelief agenc[ies]"--i.e., professionals who provide bankruptcy assistance to consumer debtors.  See 11 U. S. C. §§101(3), (12A).  These consolidated cases present the threshold question whether attorneys are debt relief agencies when they provide qualifying services."

The Supreme Court affirmed the court of appeals' order in part on the grounds that: 1) attorneys who provided bankruptcy assistance to assisted persons were debt relief agencies under the BAPCPA; and 2) BAPCPA section 528's requirements were reasonably related to the government's interest in preventing consumer deception.  However, the Court reversed in part, holding that BAPCPA section 526(a)(4) prohibited a debt relief agency only from advising a debtor to incur more debt because the debtor was filing for bankruptcy, rather than for a valid purpose.

Sotomayor, J., delivered the opinion of the Court, in which Roberts, C. J., and Stevens, Kennedy, Ginsburg, Breyer, and Alito, JJ., joined, in which Scalia, J., joined except for n. 3, and in which Thomas, J., joined except for Part III-C. Scalia, J., and Thomas, J., filed opinions concurring in part and concurring in the judgment.


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