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The New Bankruptcy Code
 

New 527. Disclosures

A "debt relief agency," which is defined by 101(12A) to be anyone who provides bankruptcy assistance for money, specifically including "bankruptcy petition preparers" defined in 110(a)(1), and presumably includes attorneys, but does not include "any person that is an officer, director, employee or agent" of the debt relief agency, nonprofit organizations, creditors, or authors of copyrighted materials, is required:

Under 527(a)(1), to provide the written notice which the court is required to give under 342(b)(1), which includes:

  • A description of chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of proceeding under each of those chapters.
  • A description of the types of services available from credit counseling agencies;
  • A statement that  a person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a bankruptcy case shall be subject to fine, imprisonment, or both; and
  • A statement that all information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General.

Under 527(a)(2), within 3 days after first offering to provide bankruptcy assistance, the agency must also advise assisted persons that:

  • All information that the assisted person is required to provide with a petition and thereafter during a case under this title is required to be complete, accurate, and truthful;
  • All assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset as defined in section 506 of this title must be stated in those documents where requested after reasonable inquiry to establish such value;
  • Current monthly income, disposable income, are required to be stated after reasonable inquiry; and
  • Information may be audited, and that failure to provide such information may result in dismissal of the case under this title or other sanction including, in some instances, criminal sanctions.

Under 527(b), before commencement of the case (presumably since that is when the clerk is to give the notice required under 342(b)(1), although no time is specified when the agency must give the same notice, and this notice is to be given at the same time as the agency is to give that notice), the agency is to give a specific notice stated in 527(b) in a separate document including:

  •  The debtor may represent himself, can hire an attorney, or bankruptcy petition preparer.
  • That the law requires a written contract specifying what the cost will be and what the attorney or preparer will do.
  • That the debtor or the attorney should analyze the debtor's eligibility.
  • That a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly.
  • The debtor will have to attend the required first meeting of creditors.
  • That in chapter 7 the debtor may be asked to reaffirm a debt.
  • That in chapter 13 the debtor will repay creditors what the debtor can afford over 3 to 5 years.
  • That the bankruptcy case may also involve litigation.
  • That only attorneys, not bankruptcy petition preparers, can givelegal advice.

Under 527(c), except to the extent the debt relief agency provides the required information itself, reasonably sufficient information on how to provide required information, including:

  • How to value assets at replacement value, determine current monthly income and deductions, and in a chapter 13 case, how to determine disposable income.
  • How to complete the list of creditors.
  • How to determine what property is exempt and how to value exempt property at replacement value.

Text appearing below in blue is the same in H.R.333 and S.420. Text in maroon is only in H.R.333. Text in green is only in S.420.

527. Disclosures

(a) A debt relief agency providing bankruptcy assistance to an assisted person shall provide--

(1) the written notice required under section 342(b)(1) of this title; and

(2) to the extent not covered in the written notice described in paragraph (1), and not later than 3 business days after the first date on which a debt relief agency first offers to provide any bankruptcy assistance services to an assisted person, a clear and conspicuous written notice advising assisted persons that--

(A) all information that the assisted person is required to provide with a petition and thereafter during a case under this title is required to be complete, accurate, and truthful;

(B) all assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset as defined in section 506 of this title must be stated in those documents where requested after reasonable inquiry to establish such value;

(C) current monthly income, the amounts specified in section 707(b)(2), and, in a case under chapter 13, disposable income (determined in accordance with section 707(b)(2)), are required to be stated after reasonable inquiry; and

(D) information that an assisted person provides during their case may be audited pursuant to this title, and that failure to provide such information may result in dismissal of the case under this title or other sanction including, in some instances, criminal sanctions.

(b) A debt relief agency providing bankruptcy assistance to an assisted person shall provide each assisted person at the same time as the notices required under subsection (a)(1) with the following statement, to the extent applicable, or one substantially similar. The statement shall be clear and conspicuous and shall be in a single document separate from other documents or notices provided to the assisted person:

IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.

If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help in some localities from a bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST.

Ask to see the contract before you hire anyone.

The following information helps you understand what must be done in a routine bankruptcy case to help you evaluate how much service you need. Although bankruptcy can be complex, many cases are routine.

Before filing a bankruptcy case, either you or your attorney should analyze your eligibility for different forms of debt relief made available by the Bankruptcy Code and which form of relief is most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a `trustee' and by creditors.

If you choose to file a chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so and a creditor is not permitted to coerce you into reaffirming your debts.

If you choose to file a chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge.

If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what needs to be done from someone familiar with that type of relief.

Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice.

(c) Except to the extent the debt relief agency provides the required information itself after reasonably diligent inquiry of the assisted person or others so as to obtain such information reasonably accurately for inclusion on the petition, schedules or statement of financial affairs, a debt relief agency providing bankruptcy assistance to an assisted person, to the extent permitted by nonbankruptcy law, shall provide each assisted person at the time required for the notice required under subsection (a)(1) reasonably sufficient information (which shall be provided in a clear and conspicuous writing) to the assisted person on how to provide all the information the assisted person is required to provide under this title pursuant to section 521, including--

(1) how to value assets at replacement value, determine current monthly income, the amounts specified in section 707(b)(2)) and, in a chapter 13 case, how to determine disposable income in accordance with section 707(b)(2) and related calculations;

(2) how to complete the list of creditors, including how to determine what amount is owed and what address for the creditor should be shown; and

(3) how to determine what property is exempt and how to value exempt property at replacement value as defined in section 506 of this title.

(d) A debt relief agency shall maintain a copy of the notices required under subsection (a) of this section for 2 years after the date on which the notice is given the assisted person.


This page was last revised: 04/07/01