Justices reject First Amendment challenges to bankruptcy law

Posted on March 9, 2010. Filed under: Uncategorized |

This summary of today’s opinion from First Amendment Scholar David L. Hudson, Jr. and the First Amendment Center:

click here for the article        click here for the USSC opinion

I have not read the opinion itself, but in reading Mr. Hudson’s summary, it sounds as if the United States Supreme Court once again does not appreciate the practical application of the bankruptcy code to day to day practice. 

From the summary that Mr. Hudson provides, it sounds as if Justice Sotomayor is saying to bankruptcy attorneys, don’t worry about that law, it really doesn’t mean what it says.  You can still advise clients to incur debt, just not too much debt and only advise it at certain times !  I will read the opinion and provide my own assessment tomorrow !

Update – March 9th, 2010

I think the key part of the entire opinion, as far as any legible understanding of what debtor’s attorneys can and can not advise clients is in Footnote 6 of the opinion, which is found on page 18, the pertinent part is as follows:

“Thus, advice to refinance a mortgage or purchase a reliable car prior to filing because doing so will reduce the debtor’s interest rates or improve his ability to repay is not prohibited, as the promise of enhanced financial prospects, rather than the anticipated filing is the impelling cause. Advice to incur additional debt to buy groceries, pay medical bills, or make other purchases “reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor,” … is similarly permissible.”

This should be called the “Wal-Mart”  footnote.  Basically, the Court is saying that there is no prohibition on an attorney advising a debtor to use their credit card to purchase groceries prior to filing bankruptcy, as long as they need them. 

John Rogers, Kentucky Bankruptcy Attorney

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