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TITLE 11.
BANKRUPTCY · UNITED STATES CODE
Chapter 5.
Creditors, the Debtor and the Estate
Subchapter II. Debtor's Duties and Benefits
11
USC § 526. Restrictions on debt relief agencies
(a) A debt relief agency shall not--
(1) fail to perform any service that such agency
informed an assisted person or prospective assisted person it would provide
in connection with a case or proceeding under this title;
(2) make any statement, or counsel or advise any
assisted person or prospective assisted person to make a statement in a
document filed in a case or proceeding under this title, that is untrue and
misleading, or that upon the exercise of reasonable care, should have been
known by such agency to be untrue or misleading;
(3) misrepresent to any assisted person or
prospective assisted person, directly or indirectly, affirmatively or by
material omission, with respect to--
(A) the services that such agency will provide to such person; or
(B) the benefits and risks that may result if such person becomes a
debtor in a case under this title; or
(4) advise an assisted person or prospective
assisted person to incur more debt in contemplation of such person filing a
case under this title or to pay an attorney or bankruptcy petition preparer
fee or charge for services performed as part of preparing for or
representing a debtor in a case under this title.
(b) Any waiver by any assisted person of any
protection or right provided under this section shall not be enforceable
against the debtor by any Federal or State court or any other person, but may
be enforced against a debt relief agency.
(c)
(1) Any contract for bankruptcy assistance
between a debt relief agency and an assisted person that does not comply
with the material requirements of this section, section
527, or section
528 shall be void and may not be enforced by any Federal or State court
or by any other person, other than such assisted person.
(2) Any debt relief agency shall be liable to an
assisted person in the amount of any fees or charges in connection with
providing bankruptcy assistance to such person that such debt relief agency
has received, for actual damages, and for reasonable attorneys' fees and
costs if such agency is found, after notice and a hearing, to have--
(A) intentionally or negligently failed to
comply with any provision of this section, section
527, or section
528 with respect to a case or proceeding under this title for such
assisted person;
(B) provided bankruptcy assistance to an
assisted person in a case or proceeding under this title that is dismissed
or converted to a case under another chapter of this title because of such
agency's intentional or negligent failure to file any required document
including those specified in section
521; or
(C) intentionally or negligently disregarded
the material requirements of this title or the Federal Rules of Bankruptcy
Procedure applicable to such agency.
(3) In addition to such other remedies as are
provided under State law, whenever the chief law enforcement officer of a
State, or an official or agency designated by a State, has reason to believe
that any person has violated or is violating this section, the State--
(A) may bring an action to enjoin such
violation;
(B) may bring an action on behalf of its
residents to recover the actual damages of assisted persons arising from
such violation, including any liability under paragraph (2); and
(C) in the case of any successful action
under subparagraph (A) or (B), shall be awarded the costs of the action
and reasonable attorneys' fees as determined by the court.
(4) The district courts of the United States for
districts located in the State shall have concurrent jurisdiction of any
action under subparagraph (A) or (B) of paragraph (3).
(5) Notwithstanding any other provision of
Federal law and in addition to any other remedy provided under Federal or
State law, if the court, on its own motion or on the motion of the United
States trustee or the debtor, finds that a person intentionally violated
this section, or engaged in a clear and consistent pattern or practice of
violating this section, the court may--
(A) enjoin the violation of such section; or
(B) impose an appropriate civil penalty
against such person.
(d) No provision of this section, section
527, or section
528 shall--
(1) annul, alter, affect, or exempt any person
subject to such sections from complying with any law of any State except to
the extent that such law is inconsistent with those sections, and then only
to the extent of the inconsistency; or
(2) be deemed to limit or curtail the authority
or ability--
(A) of a State or subdivision or
instrumentality thereof, to determine and enforce qualifications for the
practice of law under the laws of that State; or
(B) of a Federal court to determine and
enforce the qualifications for the practice of law before that court.
[Rev. 5-12-05]
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