BK Legislation Letter

you might want to send similar letters to your representative. You can find addresses to Representatives at http://www.house.gov/, and to the Senate at http://www.senate.gov.

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RE: Bankruptcy legislation (P.L. 109-8)

Dear :

It is our understanding the House [or Senate] Judiciary Committee may consider legislation to correct technical problems in recently enacted P.L. 109-8 (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) before this law takes effect on October 17, 2005.

We believe that this is an appropriate time to fix three provisions in this law that are pernicious to lawyers but which do not accomplish any legitimate reform that was the basis for this new law.

Unless these provisions are fixed before the October 17 effective date of this new law, they will have serious adverse effects on the nation’s entire bankruptcy system, as well as on the availability of pro bono legal representation to the many victims of Hurricane Katrina. To avoid these problems, we respectfully request that you support efforts to reconsider and reverse these provisions and replace them with the proposed amendments drafted by the American Bar Association.

The three provisions unfairly, unnecessarily, and unproductively increase the personal liability and administrative burdens on debtors’ attorneys in bankruptcy cases without achieving any meaningful reform.

If these three provisions are allowed to take effect on October 17, 2005, they could drive many debtors’ bankruptcy attorneys from the practice altogether, leaving thousands of debtors without any legal representation at all.

Public Law 109-8 will require debtors’ attorneys to: (1) certify the accuracy of the debtor’s bankruptcy schedules under penalty of harsh court sanctions; (2) certify the debtor’s ability to make payments under a reaffirmation agreement;

and (3) identify, advertise, and conduct themselves as “debt relief agencies” subject to a host of new intrusive regulations.

These attorney liability provisions will be very harmful to the nation’s bankruptcy system for many reasons:

· By holding debtors’ attorneys personally liable for the accuracy of their clients’ schedules, the measure will force the attorney to hire private investigators and appraisers to independently verify the existence and value of all the client’s assets, adding thousands of dollars to the cost of representing a debtor in bankruptcy. Most individual debtors will not be able to afford these new expenses, resulting in many thousands of pro se debtors clogging up the court system.

· These provisions will create a harsh new liability standard for debtors’ attorneys who do not conduct a lengthy investigation and appraisal of the client’s assets. If these costly steps are not taken and the Chapter 7 petition is dismissed or converted to a Chapter 13, the court could then impose harsh sanctions and civil penalties on the attorney personally. In addition, most malpractice carriers are expected to exclude this new liability from coverage under their policies.

· As a result of these harsh new liability provisions, many attorneys will no longer agree to represent debtors in bankruptcy. In addition, because the new certification standards apply to all debtors’ attorneys whether or not they charge a fee, these provisions will strongly discourage lawyers from providing essential pro bono bankruptcy services to the very debtors who need them most – including many debtors who will be forced into bankruptcy by the devastation caused by Hurricane Katrina.

We have been working with the Illinois State Bar Association and the American Bar Association for several years to persuade Congress to delete these provisions and in lieu thereof substitute more practical and equitable solutions.

The ABA’s suggested changes, which were described in their letter to all members of the House Judiciary Committee dated September 16, 2005, may be found at this link:

http://www.abanet.org/poladv/bankrtupcymaterials.html

We appreciate your consideration of our views on this subject. Thank you.

Sincerely,

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Glenda Sharp, CAE

DCBA Executive Director

gsharp@dcba.org