Governmental Affairs mobilizes on bankruptcy provisions

The ABA Governmental Affairs Office is fighting to repeal provisions of the new bankruptcy law that place the burden of certifying a debtor’s bankruptcy allegations and ability to make repayment under a reaffirmation agreement on the lawyer.

Earlier this year, President Bush signed into law bankruptcy reform legislation that includes provisions that will prove onerous to lawyers. Now more than ever, in light of the Hurricane Katrina disaster, these provisions create serious obstacles. The law requires debtors’ lawyers–even those who are working on a pro bono basis–to comb through extensive records and even to hire a private detective in order to certify a client’s financial situation.

As part of the ABA efforts, letters (PDF) were written and sent to the chairs and ranking minority members of the Senate and House Judiciary Committees reaffirming our opposition to those provisions. Among the reasons for the ABA’s opposition are that they will establish separate legal standards for one type of lawyer, that legal representation will become unaffordable for many debtors, and that the provisions will discourage many lawyers from agreeing to represent debtors at all.

In addition, the ABA Section of Business Law has developed a bankruptcy disaster relief working group to look at ways it might assist lawyers who are helping the victims of Katrina and Rita in light of the new bankruptcy law, including developing a primer on the new law and a “bankruptcy buddy” list to allow volunteer lawyers to contact committee members with questions.

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