The “Wal-Mart” Footnote – Milavetz v. U.S.

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

I think the key part of the entire recent United States Supreme Court Opinion in Milavetz v. United States, 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. 

Update 3.11.10: Lawyers Weekly article on the case

John Rogers – Kentucky Bankruptcy Attorney

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4 Responses to “The “Wal-Mart” Footnote – Milavetz v. U.S.”

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I think instead of Wal-Mart it should maybe be the dollar store. I love the “Wal-Mart” analogy and I think this is one example of the Supreme Court missing the issues of the challenge on 526(a)(4). The challege was facial not an as-applied like 528(b)(2)(B). I guess they just forgot this.

Good point ! Most of my clients do thier grocery shopping at Wal-Mart…. probably why I used that analogy.
I think the clear thing we, as bankruptcy attorneys, learned from this opinion, is pointed out by Justice Sotomayor on page 16 of the Opinion:
“Covered professionals remain free to “tal[k] fully and candidly about the incurrence of debt in contemplation of filing a bankruptcy case.”

In other words, Mr. Debtor, IF you were to purchase a vehicle prior to filing bankruptcy, there here is the effect that purchase could have IF you file bankruptcy.

What do you think?

What is the bad thing in footnote ?


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