Under 11 U.S.C. Section 101(12A), a 'debt relief agency' is any 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. The Supreme Court confirmed in Milavetz, Gallop & Milavetz, P.A. v. United States (559 U.S. 229, 2010) that attorneys who provide bankruptcy assistance to consumer debtors are debt relief agencies subject to Sections 526, 527, and 528. Most consumer-bankruptcy attorneys and many small-business bankruptcy firms qualify.
Quick Answer
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) added 11 U.S.C. § 526, § 527, and § 528 to the Bankruptcy Code. These sections create a parallel federal-statutory regulatory regime for "debt relief agencies" - which the Supreme Court confirmed in Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010), includes attorneys who provide bankruptcy assistance to consumer debtors.
The federal track creates four independent enforcement mechanisms:
- Section 526(c)(1) — engagement contracts that do not comply with the material requirements are void at the assisted person's election
- Section 526(c)(2) — assisted persons have a private right of action for recovery of fees, actual damages, and attorneys' fees
- Section 526(c)(3) — state attorneys general have parens patriae authority to enforce on behalf of state residents
- Section 526(c)(5) — the bankruptcy court has authority to enjoin violations and impose civil penalties on motion or sua sponte
The principle: A bankruptcy attorney's compliance failures are not regulated only by state-bar discipline. The federal Bankruptcy Code creates an independent enforcement architecture that operates on a different timeline, with different remedies, and through different enforcement actors.
Who Qualifies as a 'Debt Relief Agency'
11 U.S.C. § 101(12A) defines "debt relief agency":
"The term 'debt relief agency' means any 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 under section 110, but does not include — (A) any person who is an officer, director, employee, or agent of a person who provides such assistance or of the bankruptcy petition preparer; (B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986; (C) a creditor of such assisted person, to the extent that the creditor is assisting such assisted person to restructure any debt owed by such assisted person to the creditor; (D) a depository institution (as defined in section 3 of the Federal Deposit Insurance Act) or any Federal credit union or State credit union (as those terms are defined in section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such depository institution or credit union; or (E) an author, publisher, distributor, or seller of works subject to copyright protection under title 17, when acting in such capacity."
Milavetz: Attorneys Are Debt Relief Agencies
In Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010), the Supreme Court resolved the question whether attorneys are covered. The Court held that attorneys who provide bankruptcy assistance to consumer debtors are "debt relief agencies" within the meaning of § 101(12A) and are subject to §§ 526, 527, and 528. The decision is authoritative and binding nationwide.
'Assisted Person' Definition
11 U.S.C. § 101(3) defines "assisted person" as "any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $204,425." The threshold is adjusted periodically; check current values via the U.S. Courts or the Federal Register. Most consumer-bankruptcy clients fall within the definition.
Bankruptcy Assistance
"Bankruptcy assistance" is defined at § 101(4A) and is broad: "any goods or services sold or otherwise provided to an assisted person with the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance at a creditors' meeting or appearing in a case or proceeding on behalf of another or providing legal representation with respect to a case or proceeding under this title."
Section 526: Restrictions on Debt Relief Agencies
The text of 11 U.S.C. § 526(a) ("Restrictions on debt relief agencies"):
"A debt relief agency shall not —
(1) fail to perform any service that such agency informed an assisted person or prospective assisted person it would provide in connection with a case or proceeding under this title;
(2) make any statement, or counsel or advise any assisted person or prospective assisted person to make a statement in a document filed in a case or proceeding under this title, that is untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading;
(3) misrepresent to any assisted person or prospective assisted person, directly or indirectly, affirmatively or by material omission, with respect to — (A) the services that such agency will provide to such person; or (B) the benefits and risks that may result if such person becomes a debtor in a case under this title; or
(4) advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title."
The 526(a)(1) Failure-to-Perform Provision
This is one of the most underused provisions. When a debt relief agency informs the assisted person that it will provide a specific service (in the engagement letter, in the fee disclosure, in oral representations confirmed in writing) and then fails to provide that service, § 526(a)(1) is violated. Failure-to-perform claims do not require proof of bad intent; the violation is established by the gap between what was promised and what was delivered.
The 526(a)(2) Untrue-Or-Misleading-Statement Provision
Reaches both statements made by the debt relief agency itself and statements the agency counsels or advises the debtor to make in case filings. The standard is "untrue and misleading, or that upon the exercise of reasonable care, should have been known... to be untrue or misleading." The "reasonable care" element creates a negligence standard - intentional falsehood is not required.
The 526(a)(3) Misrepresentation Provision
Reaches misrepresentations "directly or indirectly, affirmatively or by material omission" about (A) the services the agency will provide or (B) the benefits and risks of bankruptcy. The "material omission" reach is particularly significant - silence about a material fact that creates a misleading impression is itself a violation.
The 526(a)(4) Pre-Filing Debt Advice Provision
Prohibits two specific types of advice: (i) advising the assisted person to incur more debt in contemplation of filing; and (ii) advising the assisted person to pay attorney or petition-preparer fees with borrowed money in contemplation of filing. Both categories of advice are unconditionally prohibited.
Section 526(c): The Civil Enforcement Architecture
The text of 11 U.S.C. § 526(c):
526(c)(1): Contracts Are Void at Assisted Person's Election
"Any contract for bankruptcy assistance between a debt relief agency and an assisted person that does not comply with the material requirements of this section, section 527, or section 528 shall be void and may not be enforced by any Federal or State court or by any other person, other than such assisted person."
The provision is the federal-statutory unenforceability rule. When the engagement contract fails to comply with the material requirements (including the § 527(a) disclosures, § 527(b) prescribed-form notices, § 528(a)(1) written-contract-within-five-business-days, § 528(a)(2) clear-and-conspicuous description of services), the debt relief agency cannot enforce the contract. The assisted person retains the option to enforce or to disclaim - but the agency cannot.
526(c)(2): Private Right of Action
"Any debt relief agency shall be liable to an assisted person in the amount of any fees or charges in connection with providing bankruptcy assistance to such person that such debt relief agency has received, for actual damages, and for reasonable attorneys' fees and costs if such agency is found, after notice and a hearing, to have —
(A) intentionally or negligently failed to comply with any provision of this section, section 527, or section 528 with respect to a case or proceeding under this title for such assisted person;
(B) provided bankruptcy assistance to an assisted person in a case or proceeding under this title that is dismissed or converted to a case under another chapter of this title because of such agency's intentional or negligent failure to file any required document including those specified in section 521; or
(C) intentionally or negligently disregarded the material requirements of this title or the Federal Rules of Bankruptcy Procedure applicable to such agency."
The 526(c)(2) damages are layered:
- Recovery of all fees and charges received by the debt relief agency in connection with the matter — this remedy is automatic on a finding of violation, independent of any consequential damage
- Actual damages — consequential damages from the violation
- Reasonable attorneys' fees and costs — fee-shifting attorney's fees to the assisted person if the violation is established
526(c)(3): State Attorney General Parens Patriae Authority
"In addition to such other remedies as are provided under State law, whenever the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating this section, the State —
(A) may bring an action to enjoin such violation;
(B) may bring an action on behalf of its residents to recover the actual damages of assisted persons arising from such violation, including any liability under paragraph (2); and
(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorneys' fees as determined by the court."
The parens patriae authority gives state attorneys general independent enforcement authority. The state AG can seek injunctive relief, recover damages on behalf of residents, and is entitled to attorneys' fees on a successful action. The state-AG track does not require any state-bar coordination and can proceed in parallel with state-bar discipline.
526(c)(5): Bankruptcy Court Authority
"Notwithstanding any other provision of Federal law and in addition to any other remedy provided under Federal or State law, if the court, on its own motion or on the motion of the United States trustee or the debtor, finds that a person intentionally violated this section, or engaged in a clear and consistent pattern or practice of violating this section, the court may —
(A) enjoin the violation of such section; or
(B) impose an appropriate civil penalty against such person."
The bankruptcy court has direct enforcement authority on motion of the UST or the debtor, or sua sponte. The threshold is "intentional violation" or "clear and consistent pattern or practice." Available remedies include injunctive relief and civil penalties.
Section 527: Required Disclosures
11 U.S.C. § 527 imposes specific disclosure obligations on debt relief agencies:
527(a)(1): Notices Within Three Business Days
Within three business days after first offering bankruptcy assistance, the debt relief agency must provide the assisted person with the "Important Information About Bankruptcy Assistance Services from an Attorney or Bankruptcy Petition Preparer" notice, in the form prescribed by § 527(b). The notice must be received by the assisted person before any bankruptcy assistance is provided.
527(b): Prescribed Form Disclosure
Section 527(b) prescribes the exact text of a notice that the debt relief agency must provide. The text describes the assisted person's rights, the agency's obligations, the major chapters of the Bankruptcy Code, and the standard of representation. Failure to provide the § 527(b) notice in its prescribed form is a material § 526(c)(1) violation rendering the contract void at the assisted person's election.
527(c): Reasonably Sufficient Information Regarding Schedules
The agency must provide reasonably sufficient information to enable the assisted person to complete the schedules, statement of financial affairs, and other required documents accurately and completely. The provision establishes a competence floor; agencies that delegate document preparation entirely to assisted persons without providing the required guidance are in violation.
527(d): Record Retention
The agency must maintain a copy of each notice provided under § 527(a) and (b) for two years after the date of provision. Records-retention failures are independent violations.
Section 528: Advertising and Contract Requirements
11 U.S.C. § 528 imposes specific contract and advertising requirements:
528(a)(1): Written Contract Within Five Business Days
The debt relief agency must execute a written contract with the assisted person setting forth clearly and conspicuously the services the agency will provide and the fees or charges, including terms of payment. The contract must be executed not later than five business days after the first date on which the agency provides bankruptcy assistance. Failure to execute the contract within the deadline is a § 528(a)(1) violation triggering § 526(c)(1) unenforceability.
528(a)(2): Clear and Conspicuous Description
The contract must explain in clear and conspicuous form the services the agency will provide and the fees and charges for those services.
528(a)(3) and 528(a)(4): Advertising Disclosure Requirements
"A debt relief agency shall —
(3) inform the assisted person in a clear and conspicuous writing that — (A) all information that the assisted person is required to provide with a petition and thereafter during a case under this title is required to be complete, accurate, and truthful; (B) all assets and liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset as defined in section 506 must be stated in those documents where requested after reasonable inquiry to establish such value; ...
(4) clearly and conspicuously use the following statement in such advertisement: 'We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.' or a substantially similar statement."
The advertising disclosure requirement of § 528(a)(4) is widely violated. Many bankruptcy firms' websites, billboards, and online advertisements omit the required language. Each omission is a § 528 violation enforceable through § 526(c).
Why the Federal Track Often Operates in Parallel With State-Bar Discipline
The federal § 526 / § 527 / § 528 track is procedurally and substantively distinct from state-bar discipline. Both can address the same underlying conduct, but they differ in important respects:
- Standard of culpability. § 526(c)(2) reaches "intentional or negligent" violations - a lower bar than the "knowing" or "intentional" standards in many state-bar contexts.
- Available remedies. § 526(c)(2) provides the assisted person with a private right of action including fee recovery, actual damages, and attorneys' fees. State-bar discipline provides no civil compensation.
- Statute of limitations. § 526(c) does not include an internal limitations period; courts have generally applied state-law analogous limitations periods, often longer than the state-bar discipline window.
- Procedural forum. The federal track operates in the bankruptcy court or federal district court. The state-bar track operates within the relevant state-bar disciplinary process. Different forums, different procedures.
- Burden of proof. Civil bankruptcy court actions typically use the preponderance-of-evidence standard. State-bar discipline typically uses clear-and-convincing evidence. The federal track has the lower burden.
- Settlement leverage. A pending § 526(c)(2) action creates settlement leverage independent of state-bar proceedings. Many debt relief agencies will settle a § 526(c) action before state-bar findings are made because the financial exposure under § 526(c) is direct and quantifiable.
Strategic note: The federal track can be pursued whether or not state-bar discipline is also pursued. Many debtors pursue both in parallel. The state-bar track addresses the lawyer's professional standing; the federal track addresses the debtor's financial recovery. They serve different purposes and reinforce each other.
How to Pursue a § 526 Violation
Track 1: Document the Violations
For each suspected violation, document: (a) the specific subsection violated (e.g., § 526(a)(2), § 527(b), § 528(a)(4)), (b) the conduct constituting the violation, (c) the date of the violation, (d) any communications or records demonstrating the violation, and (e) the assisted person's awareness of and reliance on the violation. Most § 526 violations have a paper-trail dimension; build the documentary record.
Track 2: § 526(c)(1) Disclaim the Contract
If the engagement contract fails to comply with material requirements (failure to execute within five business days, missing § 527(b) disclosures, missing § 528 disclosures), the assisted person may treat the contract as void at the assisted person's election. The disclaimer is straightforward: written notice to the debt relief agency identifying the material non-compliance and notifying the agency that the contract is treated as void under § 526(c)(1).
Track 3: § 526(c)(2) Private Action
File an adversary proceeding (if in pending bankruptcy) or a separate federal-court action seeking recovery of fees paid, actual damages, and attorneys' fees under § 526(c)(2). The action requires "notice and a hearing" but does not require proof of consequential damage for fee recovery - the fee recovery is automatic on a finding of violation.
Track 4: § 526(c)(3) Report to State Attorney General
Submit a documentary report to the state attorney general's consumer-protection division, identifying the violations and providing supporting documents. State AGs accept consumer complaints and have authority under § 526(c)(3) to bring parens patriae actions. Even when an individual AG does not file an immediate action, the complaint record contributes to pattern analysis and potential broader action.
Track 5: § 526(c)(5) Motion in Bankruptcy Court
In a pending bankruptcy case, the assisted person (or the United States Trustee) may move under § 526(c)(5) for injunctive relief and civil penalties. The motion threshold is "intentional violation" or "clear and consistent pattern or practice." Repeat violations across multiple cases by the same debt relief agency strengthen the pattern-or-practice argument.
Track 6: United States Trustee Referral
Submit a documentary report to the United States Trustee for the relevant region. The UST has independent enforcement authority and is mandated to address fraud, abuse, and disclosure violations by professionals in bankruptcy cases. Each UST region has a complaint portal; check justice.gov/ust for the relevant office.
Filing Channels by State (State AG Consumer Protection)
- Kansas: Kansas AG Consumer Protection
- Missouri: Missouri AG Consumer Protection
- Illinois: Illinois AG Consumer Protection
- Wisconsin: Wisconsin DATCP Consumer Protection
- United States Trustee Program: justice.gov/ust
- Consumer Financial Protection Bureau: consumerfinance.gov/complaint — for related consumer-financial-services concerns
Related Reading
- How to File a Bar Complaint
- Bar Complaint Generator (free tool)
- CFPB Complaint Generator
- State Attorney General Complaint Generator
- Fee Disgorgement Under 11 U.S.C. § 329(b)
- Law Firm Supervisory Responsibility (Rule 5.1)
- Attorney Conflict of Interest (Rule 1.7)
- Attorney Candor and Truthfulness (Rules 3.3 / 4.1 / 8.4(c))
- Attorney Marketing Misconduct (Rules 7.1 / 7.3)
About This Guide
This page is published by the Open Bankruptcy Project (EIN 41-5159631), a 501(c)(3) nonprofit. It is general legal information about Sections 526, 527, and 528 of the Bankruptcy Code (BAPCPA debt relief agency provisions). It is not legal advice. All citations link to official sources: the Legal Information Institute at Cornell Law School for the U.S. Code; the U.S. Trustee Program for federal enforcement; state Attorney General offices for state enforcement.