Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

Don’t Be Concerned With the Term ‘Debt Relief Agency’

If you are falling into financial difficulties, and you are about to discuss your situation with a New York bankruptcy lawyer, you might be told you are consulting with a “debt relief agency.” This phrase might be confusing, as it sounds a lot like “debt settlement,” which is entirely different from bankruptcy. What exactly is a “debt relief agency,” and why does it matter?

According to the Bankruptcy Code’s definitions statute, a “debt relief agency” is:

[A]ny 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.

“Bankruptcy assistance” and “assisted person” are also special terms in the definitions section. The latter means someone whose debts are primarily consumer debts and whose nonexempt property is less than $204,425, an amount that’s increased from $186,825 in the Bankruptcy Code due to the code’s automatic inflation adjustments. Essentially, assisted persons are designed to be just about anyone who files a consumer bankruptcy. “Bankruptcy assistance” largely means what it sounds like.

In short a “debt relief agency” includes bankruptcy lawyers, bankruptcy petition preparers, and similar service providers.

Why does it matter that a bankruptcy lawyer is a “debt relief agency”? Because when Congress changed the bankruptcy law in 2005, it wanted to codify the responsibilities that bankruptcy lawyers would have regarding their clients. Since the law claimed to be focused on bankruptcy abuse and consumer protection, specifying lawyers’ duties and punishing breaches of those duties served that purpose.

The duties that “debt relief agencies” are obligated to discharge are listed in Sections 526 to 528 of the Bankruptcy Code. They are categorized as “restrictions,” “disclosures,” and “requirements.” Generally, these rules restrict bankruptcy lawyers’ work. For instance Section 527(b) gives a series of text examples of notices that “debt relief agencies” are obligated to give to assisted persons. In some cases, the restrictions can frustrate the relationship between a debtor and his or her bankruptcy attorney, such as preventing the bankruptcy lawyer from advising the debtor to take on more debt before filing bankruptcy. In truth, it might be necessary for a debtor to do so, e.g. if the debtor needs a new car to drive to work. The U.S. Supreme Court in Milavetz, Gallop & Milavetz, P.A. v. U.S. (08-1119) clarified that bankruptcy lawyers can advise debtors to accumulate debts so long as they’re for a valid purpose.

Generally, though, the “debt relief agency” requirements and the “assisted person” definition do little to provide relief for debtors. However, confusing terminology should not prevent you from discussing your financial situation with an experienced New York bankruptcy lawyer.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney Brooklyn NY Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

How Bankruptcy Can Lead the Way to Homeownership

Many people aspire to homeownership, but if they have filed bankruptcy they often believe it’s an unreachable goal. This isn’t true. In fact there are several ways bankruptcy can help someone become a homeowner. (1)  Bankruptcy can improve credit scores and other creditworthiness metrics. It’s avoiding bills and creditors that causes problems. In this sense,

Read More »

Obtain a Credit Report Before Filing Bankruptcy in New York

One thing good New York bankruptcy lawyers tell their clients to do is to obtain a credit report in preparation for filing bankruptcy. (In fact, it’s probably a good idea to get the report even before your first consultation with your bankruptcy lawyer.) This can easily be accomplished through Web sites like, which allow

Read More »

What Are Bankruptcy Risk Scores?

People considering filing bankruptcy in New York are well aware of the consequences of a bad credit score. They can be denied credit; potential employers might not hire them; and landlords might decline to rent to them. Consequently there’s plenty of advice about how to maintain and buoy a credit score. What isn’t out there,

Read More »

What Are the Components of a Credit Score?

One thing debtors are concerned about is their credit scores and the impact filing bankruptcy might have on them. Indeed, as the economy continues to struggle, the importance of credit scores has grown. Although they are not the be-all and end-all of one’s creditworthiness, banks, landlords, insurers, and even potential employers often use them to

Read More »

4 Ways Identity Theft Can Lead to Bankruptcy in New York

Few things are more aggravating than someone impersonating you to obtain credit. To make things worse, fraud on your accounts can force you into bankruptcy. Here are four types of information that if inadequately protected can lead you into bankruptcy. (1)  Social Security information. A common way people steal identities is through Social Security numbers.

Read More »

Stay Clear of Credit Rehabilitation Scams

Most of the time when New York bankruptcy lawyers discuss scams, they’re worried about con artists taking debtors’ money and forcing them into bankruptcy. The most common scam is debt settlement. A less common but sometimes more problematic scam occurs post-bankruptcy: the “credit rehabilitation scam.” The point is to deceive people into promising to repay

Read More »
Scroll to Top