Wednesday, November 22, 2006

First Amendment vs. BAPCPA: Connecticut Court Strikes Down Section 526(a)(4)

Another U.S. District Court has found that Sec. 526(a)(4), which prohibits advising an assisted person to incur debt in contemplation of bankruptcy, violates the First Amendment. In Zelotes v. Martini, No. 3:05vc1591, 2006 U.S. Dist. LEXIS 81385 (D. Ct. 11/7/06), Judge Peter Dorsey of the U.S. District Court for the District of Connecticut found that attorney Zenas Zelotes had standing to challenge the law and that the particular section was facially unconstitutional. Judge Dorsey noted that the law would prohibit attorneys from giving advice to refinance a debt with one at a lower interest rate, to purchase and automobile which would allow the debtor to work as well as other legitimate actions. "By prohibiting lawyers from advising clients to take lawful, prudent actions as well as abusive ones, Sec. 526(a)(4) is abusive and restricts attorney speech behond what is 'narrow and necessary' to further the governmental interest."

Zelotes is the third opinion to find Sec. 526(a)(4) to be unconstitutional. Previously, Olsen v. Gonzales, No. 05-6365-HO, 2006 U.S. Dist. LEXIS 56197 (D. Or. 8/11/06) and Hersh v. United States, 347 B.R. 19 (N.D. Tex. 2006) had reached the same result. Another case pending in Connecticut District Court, Connecticut Bar Association v. United States, has challenged multiple sections of BAPCPA. That case is still pending.

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