President Bush signed into law sweeping bankruptcy legislation, S. 256, containing provisions that will dramatically increase the liability and administrative burdens of debtor bankruptcy attorneys and seriously impinge on the effective legal representation of many Wisconsinites.
Bankruptcy "reform" signed into law, "lawyer-unfriendly" provisions
remain to be addressed
April 21, 2005
On April 20, President Bush signed into law sweeping
legislation, S. 256, containing provisions that will dramatically
the liability and administrative burdens of debtor bankruptcy
seriously impinge on the effective legal representation of many
The State Bar vigorously opposed three provisions in the bill that
attorney liability and intrude on the attorney-client relationship.
will require debtor attorneys to: 1) certify the accuracy of the
schedules of assets, under penalty of harsh court sanctions; 2)
ability of the debtor to make future payments under reaffirmation
and 3) identify and advertise themselves as “debt relief
to a host of intrusive regulations that would interfere with the
During the Senate floor and House Judiciary Committee debates on S.
month, several amendments were offered that would have removed the
attorney liability provisions from the bill. Despite substantial
the amendments in the Senate and on the committee, the amendments were
adopted. The State Bar will continue to work with House and Senate
Committee leaders in an effort to address the attorney liability
contained in S. 256 before the legislation becomes effective on Oct.
Wisconsin delegation, including State Bar President Michelle Behnke
for the Bar, will head to Washington D.C. next week to join with the
Bar Association’s lobbying efforts to remove these provisions
The new Bankruptcy Reform Act, which makes several sweeping changes,
an eight-year effort by banks and credit card interests to enact
will, among other things, make it harder for most consumers to
in Chapter 7 bankruptcies. Proponents argue the reforms in the Act are
to prevent abuse of the bankruptcy system by making it more difficult
individuals to file for bankruptcy under Chapter 7 of the Bankruptcy
which erases most of an individual’s debt after assets are
to pay creditors. The Act establishes a means test to force more
to file under Chapter 13, which requires individuals to repay some of
debt within three to five years.
This legislation will affect a large number of our (your) clients.
to learn more about the Bankruptcy Reform Act and how it may affect
and clients, watch closely for other highlights and in-depth seminars
topic in the coming weeks and months.
- State Bar Bankruptcy, Insolvency &
Section CLE program, May 4, at the State
Bar Annual Convention.
- State Bar Seminars Northwestern
Wisconsin Bankruptcy Institute, May 13, Eau Claire
- A critical issues and highlights “dial-up” teleseminar
be presented by State Bar CLE Seminars on June 9.
- State Bar CLE Seminars also will present live half-day seminars
4 and 5 in Milwaukee and Madison, respectively. The Aug. 5 seminar
be presented as a Webcast.
- An article will be published in the July Wisconsin
- The State Bar is updating it consumer pamphlet, “Answering
About Bankruptcy” for distribution to clients.
- CLE Books plans to release a new book in the fall of 2005.
For more information, visit the American Bankruptcy
Institute or the American
Bar Association Web