§526 Restrictions on debt relief agencies

Summary

Debt relief agencies must not break promises or mislead people who ask for help with bankruptcy. They cannot fail to do services they told a client they would do. They cannot give false or misleading statements or advise a client to put false information in bankruptcy papers. They cannot hide or lie about the services they will provide or the benefits and risks of filing for bankruptcy. They also cannot tell a person to borrow more money to get ready to file for bankruptcy or to pay a fee to an attorney or petition preparer just to prepare the case. Any waiver by a client of these protections cannot be enforced in court against the client, though it might be enforced against the agency. Contracts that do not follow this rule or the rules in sections 527 or 528 are void except as the client agrees. An agency that intentionally or negligently breaks these rules can be ordered, after notice and a hearing, to return fees it received, pay actual damages, and pay lawyers’ fees and costs. A court can stop violations or fine the agency for intentional or repeated violations. State officials can also sue to stop violations, get damages for residents, and recover costs and lawyers’ fees. These rules do not override state laws unless they conflict, and they do not limit states’ or federal courts’ power to set lawyer qualifications.