U.S. District Court in Texas Holds BAPCPA Partially Unconsitutional
The U.S. District Court for the Northern District of Texas ruled today that section 526(a)(4)'s restriction on legal advise violates the attorney's First Amendment Rights.
In Hersch v. United States of America, et al., the court rejected the attorney plaintiff's contention that the debt relief agency provisions of BAPCPA were not applicable to attorneys, stating that the plain language of the statute and the legislative history, combined with Congress's failure to include attorneys in the explicitly listed exceptions, outweighed any minor inconsistencies within the statute.
However, the court went on to state that section 526(a)(4) was not sufficiently narrow. The court pointed out that there are situations in which it may be both lawful and advisable for a client to incur additional debt in "contemplation" of bankruptcy, and that section 526(a)(4) thus "prevents lawyers from giving clients their best advice."
The court dismissed the plaintiff's other claims, finding that section 527 did not unconstitutionally compel speech because, although the attorney's first amendment rights were implicated, the government had advanced a sufficiently compelling interest and the provision did not unduly burden either the attorney-client relationship or the ability of a client to seek bankruptcy.
Finally, the court dismissed the 5th amendment right to counsel claim for lack of standing.
