Ruling blocks part of overhaul to bankruptcy

A federal judge on Tuesday partially blocked one element of the nation's recently overhauled bankruptcy law, calling a restriction on advice lawyers can give unconstitutional.

Organizations representing thousands of attorneys filed the lawsuit in 2006, objecting to a requirement that they give specific advice to bankruptcy clients, including not to go deeper into debt.

U.S. District Court Judge Christopher Droney in Hartford ruled the restriction was too broad because it prohibits attorneys from advising their clients to incur any debt, including debts that are legal and desirable in some cases.

“A lawyer who represents consumers contemplating bankruptcy bears the duty of zealous representation and the prohibition on giving legal advice unnecessarily interferes with this duty,” Droney wrote. “If the government seeks to prevent manipulation of the bankruptcy system, a more narrowly tailored approach would be to penalize those who take on certain types of debts.”

Droney granted a preliminary injunction that prohibits enforcing that provision on the attorneys who sued.

Droney ruled for the government on other issues, including an objection to a provision of the law suggesting a person does not need an attorney to file for bankruptcy.

Plaintiffs include the Connecticut Bar Association and the National Association of Consumer Bankruptcy Attorneys. In effect since 2005, the law bars those of above-average incomes from Chapter 7 – where debts can be wiped out – except in special circumstances.