Michael A. Cibik, Esq.
writes a regular column titled “Understanding Bankruptcy” that appears in the Philly Record
. This is that column.
The term debt relief agency
appears in a legal context for the first time in bankruptcy law in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 [The Act]. The first chapter of this new bankruptcy reform law can be found at Title 11 U.S.C. 101. This is the General Provisions chapter and it contains definitions of words of art used throughout the Act, and includes the term “debt relief agency”.
Section 101(12A) defines the term debt relief agency to be any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer under section 110. Persons who fail to disclose this status are subject to penalties that could include payment of damages and attorney fees.
In Milavetz vs United States, the Supreme Court of the United States was asked to decide whether bankruptcy lawyers
had to comply with the requirement to call themselves a debt relief agency. The Court ruled in a unanimous 9-0 decision that the debt relief agency provisions of the bankruptcy reform act applied to lawyers.
Although the phrase contains the word agency, the definition clearly refers to any person. You may see and hear media advertisements such as newspaper ads
, radio spots, or internet ads
where a person refers to oneself as an agency. While that appears to be grammatically incorrect, it is in keeping with the legal definition set forth in the new bankruptcy reform law
An important note, the same section excludes certain types of persons or organizations from being a debt relief agency. including officers, directors, employees or agents. Also excluded are certain creditors, non-profit institutions, and some financial institutions. As are authors, publishers, and distributors of books excluded. A complete list can be found in the statute.