Most Americans hope that when they seek the advice of a bankruptcy attorney, the attorney will be free to advise them on the course of action they believe is best. However, if you left it up to some legislators and their handlers, bankruptcy attorneys would face the mute button. Currently there is a federal law that restricts what advice a bankruptcy attorney can give to clients and the Supreme Court is now hearing both sides of the debate.
The current law prohibits bankruptcy attorneys from advising clients to incur debt if they are considering bankruptcy. However there are certain debts that are legal and may be smart to incur such as refinancing a mortgage or buying a car to get to work. While those debts may be included in a later bankruptcy, most debtors would not attempt to discharge those debts because they were incurred in an effort to keep the property.
Already, there is a law that restricts a debtor's ability to discharge debt that was incurred right before filing bankruptcy, so why do we need to restrict the free speech of attorneys when advising their clients?
Ethical bankruptcy attorneys do not advise their clients to go out and charge up vacations and flat screen televisions before filing bankruptcy. But that same bankruptcy attorney might believe refinancing an adjustable rate mortgage would be a prudent and legal course of action if it will help them avoid foreclosure and keep their home. Even during a Chapter 13 bankruptcy , the bankruptcy court may allow a debtor to incur more debt if it will help the debtor earn income and repay their existing creditors.
For example, if a debtor needs a vehicle to get to and from work, the bankruptcy court may allow that debtor to purchase a new vehicle. This is both legal and ethical and does not abuse the bankruptcy code. Our legislators need to spend less time attempting to tie the hands of bankruptcy attorneys and spend more time fighting the corruption in the banking industry that has help to create a financial mess of so many American lives.