New § 526. Restrictions on
debt relief agencies
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, cannot:
- Fail to perform a service it informed the assisted person it
would perform. §526(a)(1)
- Make a false or misleading statement. §526(a)(2)
- Counsel an assisted person to make a false or misleading
statement in a bankruptcy document that is untrue and misleading
or that the agency should have been known upon exercise of
reasonable care to be untrue or misleading. §526(a)(2)
- Misrepresent the services the agency will provide or the
benefits and risks if a person becomes a debtor. §526(a)(3)
- Advise a person to incur more debt prior to filing. §526(a)(4)
- Advise a person "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." §526(a)(4)
A "debt relief agency" is liable to the assisted person
for fees charged, actual damages, and attorneys fees, if the agency
is found to have:
- Intentionally or negligently failed to comply with §526,
§527, or §528.
§526(c)(2)(A)
- Provided assistance in a case dismissed or converted because
of the agency's intentional or negligent failure to file
required documents. §526(c)(2)(B)
- Intentionally or negligently disregarded material requirements
of the bankruptcy code or rules. §526(c)(2)(C)
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. |
§ 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--
(i) the services that such agency will
provide to such person; or
(ii) 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
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 attorney fees as determined by the court.
(4) The United States District Court for any
district 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 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.
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