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Nos. 08-1119 and 08-1225

 

In the Supreme Court of the United States

MILAVETZ, GALLOP & MILAVETZ, P.A., ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA

UNITED STATES OF AMERICA, PETITIONER

v.

MILAVETZ, GALLOP & MILAVETZ, P.A., ET AL.

ON WRITS OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES

ELENA KAGAN
Solicitor General
Counsel of Record
TONY WEST
Assistant Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
WILLIAM M. JAY
Assistant to the Solicitor
General
MARK B. STERN
MARK R. FREEMAN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

RAMONA D. ELLIOTT
General Counsel
P. MATTHEW SUTKO
Associate General Counsel
Executive Office for United
States Trustees
Washington, D.C. 20530

QUESTIONS PRESENTED

In the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23, Congress enacted regulations governing the profes sional conduct of any "debt relief agency," a term that Congress defined to include "any person who provides any bankruptcy assistance" to a consumer debtor for valuable consideration, with enumerated exceptions. 11 U.S.C. 101(12A). Section 526(a)(4) of Title 11 provides that a "debt relief agency" may not advise a debtor "to incur more debt in contemplation of" filing a bankruptcy petition. Section 528 of Title 11 requires "debt relief agencies" to include certain disclosures in advertise ments to the public of bankruptcy-related services. The questions presented are as follows:

1. Whether an attorney who provides bankruptcy assistance to a consumer debtor in return for valuable consideration, and who does not fall within one of the listed exceptions, is a "debt relief agency" under the Bankruptcy Code.

2. Whether Section 526(a)(4) precludes only advice to incur more debt with a purpose to abuse the bank ruptcy system.

3. Whether Section 526(a)(4), construed with due regard for the principle of constitutional avoidance, vio lates the First Amendment.

4. Whether the advertising-disclosure requirements of Section 528 violate the First Amendment.

In the Supreme Court of the United States

No. 08-1119

MILAVETZ, GALLOP & MILAVETZ, P.A., ET AL.,

PETITIONERS

v.

UNITED STATES OF AMERICA

No. 08-1225

UNITED STATES OF AMERICA, PETITIONER

v.

MILAVETZ, GALLOP & MILAVETZ, P.A., ET AL.

ON WRITS OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES

 

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-28a) is reported at 541 F.3d 785.1 The opinion of the district court denying the government's motion to dismiss (Pet. App. 29a-44a) is reported at 355 B.R. 758.

JURISDICTION

The judgment of the court of appeals was entered on September 4, 2008. A petition for rehearing was denied on December 5, 2008 (Pet. App. 47a). The petition for a writ of certiorari in No. 08-1119 was filed on March 5, 2009. On February 20, 2009, Justice Alito extended the government's time within which to file a petition for a writ of certiorari to and including April 6, 2009, and the petition in No. 08-1225 was filed on April 3, 2009. The petitions for writs of certiorari were granted on June 8, 2009. The jurisdiction of this Court rests on 28 U.S.C. 1254(1).

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

The First Amendment provides, in relevant part, that "Congress shall make no law * * * abridging the freedom of speech." The pertinent statutory provisions are reprinted in the appendix to this brief. App., infra, 1a-14a.

STATEMENT

This case involves a pre-enforcement challenge un der the First Amendment to provisions of the Bank ruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA or 2005 Act), Pub. L. No. 109-8, 119 Stat. 23. The 2005 Act established certain minimum standards of professional conduct for "debt relief agen cies." The district court held that two of those provi sions violate the First Amendment and that the statu tory term "debt relief agency" does not encompass li censed attorneys. Pet. App. 29a-44a.

The court of appeals reversed in part. The court held that attorneys may be "debt relief agencies" under the 2005 Act, and it upheld the statute's advertising-disclo sure requirements. Pet. App. 3a-10a, 15a-21a. By a di vided vote, however, the court held that the statutory provision restricting debt relief agencies from advising their clients to take on new debt "in contemplation of" bankruptcy violates the First Amendment. Id. at 10a- 15a; see id. at 22a-28a (Colloton, J., concurring in part and dissenting in part).

1. The 2005 Act was "a comprehensive package of reform measures" designed "to improve bankruptcy law and practice by restoring personal responsibility and integrity in the bankruptcy system and ensure that the system is fair for both debtors and creditors." H.R. Rep. No. 31, 109th Cong., 1st Sess. Pt. 1, at 2 (2005) (House Report). Described by the House Committee as "the most comprehensive set of [bankruptcy] reforms in more than 25 years," id. at 3, the 2005 Act both modified the substantive standards for bankruptcy relief and adopted new measures intended to curb a variety of abu sive practices that Congress concluded had come to per vade the bankruptcy system.

After extensive hearings, Congress determined that misleading and abusive practices by bankruptcy profes sionals, including attorneys, had become a substantial cause of unnecessary bankruptcy petitions and had sometimes jeopardized debtors' ability to obtain a dis charge of their debts. For example, Congress heard evidence that a civil enforcement initiative undertaken by the United States Trustee Program had "consistently identified * * * misconduct by attorneys and other professionals" as among the sources of abuse in the bankruptcy system. House Report 5 (citation omitted). Congress responded to that evidence by "strengthening professionalism standards for attorneys and others who assist consumer debtors with their bankruptcy cases." Id. at 17.

The 2005 Act added or enhanced a variety of regula tions on bankruptcy professionals' conduct. Those regu lations are intended to protect the clients and prospec tive clients of bankruptcy professionals, the creditors of clients who do enter bankruptcy, and the bankruptcy system. The regulations require additional disclosures to clients about their rights and the professional's re sponsibilities; they protect clients against being over charged, or charged for services never provided; and they discourage misuse of the bankruptcy system. See, e.g., 11 U.S.C. 110(b)-(h), 526-528, 707(b)(4)(C)-(D).

Many of the regulations apply to "debt relief agenc[ies]" generally. Under the Bankruptcy Code's definition, "any person" becomes a debt relief agency by providing "any bankruptcy assistance" for a fee to a con sumer debtor, known as an "assisted person."2 11 U.S.C. 101(12A). "Bankruptcy assistance" includes, inter alia, "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." 11 U.S.C. 101(4A).3

Section 526 of Title 11 sets out four basic rules of professional conduct for debt relief agencies, each of which protects clients against specific unethical prac tices. Section 526(a)(1) requires debt relief agencies to perform all promised services. Section 526(a)(2) prohib its debt relief agencies from advising assisted persons to make statements that are untrue or misleading in seek ing bankruptcy relief. Section 526(a)(3) precludes debt relief agencies from misrepresenting the services they will provide or the benefits and risks attendant to filing for bankruptcy. And Section 526(a)(4), the provision held unconstitutional below, states:

A debt relief agency shall not * * * advise an as sisted 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 bank ruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title.

11 U.S.C. 526(a)(4).

Section 528 includes several disclosure requirements that apply when a debt relief agency advertises its ser vices to the general public. First, advertisements that promote either "bankruptcy assistance services" or "the benefits of bankruptcy" must make clear that the ser vices or benefits "are with respect to bankruptcy relief under [the Bankruptcy Code]." 11 U.S.C. 528(a)(3); see 11 U.S.C. 528(b)(1) (defining what advertisements are covered). Second, advertisements that promote "assistance with respect to" certain consumer debt or credit problems must disclose that the assistance "may involve" filing for bankruptcy relief. 11 U.S.C. 528(b)(2)(A). Third, advertisements in either of these two categories must also include either a specified disclaimer-"We are a debt relief agency. We help peo ple file for bankruptcy relief under the Bankruptcy Code."-"or a substantially similar statement." 11 U.S.C. 528(a)(4) and (b)(2)(B).4

The principal remedy for violations of Sections 526 and 528 is a civil action by the debtor to recover his "ac tual damages," including any fees already paid. 11 U.S.C. 526(c)(2). For violations of Section 526, the stat ute also authorizes state attorneys general to sue for debtors' actual damages or for injunctive relief to pre vent violations. 11 U.S.C. 526(c)(3). For intentional or recurring violations of that provision, the bankruptcy court may also impose an injunction or "an appropriate civil penalty," either on its own motion or at the request of the United States Trustee or the debtor. 11 U.S.C. 526(c)(5).

2. Petitioners are a law firm, two of the firm's attor neys, and two prospective clients. J.A. 37a-38a. They filed this action against the United States, seeking a declaratory judgment that the attorney respondents are not obligated to comply with several of the BAPCPA's provisions regulating debt relief agencies' professional conduct, including Section 526(a)(4) and the advertising- disclosure provisions of Section 528. Petitioners con tended that licensed attorneys are not "debt relief agen c[ies]" within the meaning of the statute, even if they provide bankruptcy-related advice to debtors. They also argued that, to the extent the statute encompasses li censed attorneys, the challenged provisions violate the First Amendment. Pet. App. 2a.

The district court denied the government's motion to dismiss, Pet. App. 29a-44a, and then granted summary judgment for petitioners, id. at 45a. The district court held that Section 526(a)(4) and the advertising-disclo sure requirements of Section 528 violate the First Amendment. Id. at 33a-41a. The court further held, apparently in the alternative, that attorneys do not fall within the statutory definition of "debt relief agency." Id. at 41a-43a.

3. The government appealed, contending that attor neys unambiguously fall within the definition of "debt relief agency" and that the district court's constitutional holdings were premised on a misreading of the statute. In particular, the government explained that the phrase "in contemplation of" bankruptcy in Section 526(a)(4) has a long historical pedigree in bankruptcy law: in this context, the phrase is properly construed to forbid only advice encouraging a client to take on new debt on the eve of bankruptcy with the intent of abusing the bank ruptcy system. The government further contended that, to the extent the term "in contemplation of" is ambigu ous, the doctrine of constitutional avoidance supports the government's narrow reading of the term, which avoids the overbreadth that the district court perceived.

4. The court of appeals affirmed in part and re versed in part. The court unanimously held that attor neys may fall within the definition of "debt relief agency," and it reversed the district court's invalidation of the advertising disclosure requirements in Section 528. The court held by a divided vote, however, that Section 526(a)(4) as applied to attorneys violates the First Amendment. See Pet. App. 1a-28a.

 

a. The court of appeals first concluded that attor neys for consumer debtors may fall within the definition of "debt relief agency." Pet. App. 3a-10a. The court noted that Congress had specifically defined both "debt relief agency" and several terms used in the definition of "debt relief agency." Id. at 4a-5a. Those definitions "sweep[] broadly," the court concluded, "and clearly cover[] the legal services provided by attorneys to debt ors in bankruptcy unless excluded by another provi sion." Id. at 9a. The court noted that Congress had adopted five specific exceptions to the definition of "debt relief agency," none of which covered petitioners. Ibid. The court of appeals also concluded that constitu tional-avoidance considerations could not justify petition ers' reading of the term "debt relief agency" because that reading was foreclosed by the statute's plain lan guage. Id. at 8a.

b. The court of appeals rejected petitioners' consti tutional challenge to Section 528's disclaimer require ments. Pet. App. 15a-21a. The court concluded that, because Section 528 regulates potentially misleading commercial advertising by imposing disclosure require ments, it is not subject to any of the forms of heightened scrutiny that apply to restrictions on commercial speech. Id. at 18a (citing Zauderer v. Office of Disciplinary Counsel of the Supreme Court, 471 U.S. 626, 651 n.14 (1985)). Applying the Zauderer standard, the court held that Section 528 is "directed precisely at the problem targeted by Congress: ensuring that persons who ad vertise bankruptcy-related services to the general public make clear that their services do in fact involve filing for bankruptcy." Id. at 19a. The court noted that the state ments contained in the required disclaimer are "factu ally correct" because attorneys subject to the require ment are "debt relief agenc[ies]" as the Code uses that term. Id. at 20a. The court of appeals also observed that, because the statute permits the substitution of a "substantially similar" disclaimer, any attorney who does not actually assist with bankruptcy filings can "tai lor" the disclosure statement to assuage any concern about its accuracy. Id. at 20a n.12.

c. The court of appeals further held, over Judge Col loton's dissent, that Section 526(a)(4) violates the First Amendment. Pet. App. 10a-15a; see id. at 22a-28a (Col loton, J., concurring in part and dissenting in part). The court rejected the government's proposed narrowing construction of the statute. The court concluded that, under what the majority described as the only permissi ble interpretation of the statute's "plain language," Sec tion 526(a)(4) prohibits debt relief agencies from advis ing consumer clients "to incur any additional debt when the assisted person is contemplating bankruptcy." Id. at 12a. The court stated that "this prohibition would in clude advice constituting prudent prebankruptcy plan ning that is not an attempt to circumvent, abuse, or un dermine the bankruptcy laws." Id. at 13a.

Based on that broad construction, the court of ap peals held that Section 526(a)(4) is unconstitutionally overbroad. Pet. App. 12a-15a. The court explained that advice to take on new debt just before bankruptcy will sometimes be legitimate. As examples, the court ob served that "it may be in the assisted person's best in terest to refinance a home mortgage in contemplation of bankruptcy to lower the mortgage payments," or to pur chase a car to ensure "dependable transportation * * * to and from work." Id. at 13a-14a. The court further posited that "[f]actual scenarios other than these few hypothetical situations no doubt exist." Id. at 14a. The court concluded that the First Amendment prohibits regulation of such legitimate advice and that Section 526(a)(4) is therefore "unconstitutional as applied to attorneys who provide bankruptcy assistance to assisted persons." Id. at 15a.5

d. Judge Colloton dissented in relevant part. Pet. App. 22a-28a. He explained that, in his view, "[t]he text, structure, and legislative history of § 526(a)(4) provide adequate support for a narrowing construction," under which "the statute should be construed to prohibit only advice that a client engage in conduct for the purpose of manipulating the bankruptcy system." Id. at 25a. Judge Colloton concluded that Section 526(a)(4), so con strued, is constitutional. See id. at 22a, 25a, 28a.

First, Judge Colloton observed that the phrase "in contemplation of bankruptcy" is a term with a long his tory and "has been construed * * * to mean actions taken with the intent to abuse the protections of the bankruptcy system." Pet. App. 25a; see id. at 25a-26a (collecting authorities). Second, Judge Colloton pointed out that the remedies for a violation of Section 526(a)(4) "emphasize actual damages," and he reasoned that a debtor who follows his attorney's bankruptcy advice is unlikely to be harmed as a result unless he is induced to file "an abusive bankruptcy petition, where the debtor may suffer damages if the petition is dismissed as abu sive." Id. at 27a (citing 11 U.S.C. 707(b)(1)). Third, he identified legislative history reflecting Congress's desire to address "abusive" practices by bankruptcy profes sionals and by debtors who "knowingly load up" on debt before filing for bankruptcy. Id. at 27a-28a (quoting House Report 5, 15). Judge Colloton concluded: "Given our duty to construe an Act of Congress in a manner that eliminates constitutional doubts, there is no need to adopt a construction that [petitioners] say[] is absurd, that the [government] says was unintended by Con gress, and that sweeps in salutary legal activity that would be a strange target for a statute entitled the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." Id. at 28a.

5. The court of appeals denied the government's petition for rehearing en banc by a vote of 6-5. See Pet. App. 47a.

SUMMARY OF ARGUMENT

I. Attorneys are not exempt from the definition of "debt relief agency" under the Bankruptcy Code. The definition encompasses "any person" who provides spec ified services to specified clients, subject to five specific exceptions. None of those exceptions includes attor neys, either expressly or by implication. 11 U.S.C. 101(12A). Attorneys therefore are debt relief agencies if they provide the specified clients with the specified services, known as "bankruptcy assistance." Ibid. In deed, "bankruptcy assistance" is expressly defined to include certain services that can only be performed by lawyers, such as providing "legal representation" or "appearing in a [bankruptcy] case" on behalf of a con sumer debtor. 11 U.S.C. 101(4A). That language would be surplusage if attorneys were categorically ineligible to be debt relief agencies. And the legislative history confirms that Congress was targeting abusive conduct by attorneys in bankruptcy cases.

Petitioners contend, on various theories, that their reading must prevail in the absence of an express refer ence to "attorneys" in the statute. But the statute's ap plication to attorneys is clear. In light of the broad stat utory definition of "debt relief agency" and the unmis takable inclusion of legal services within the scope of "bankruptcy assistance," the absence of the term "attor ney" from the definitions is immaterial. When a person provides the services specified, he falls within the cover age of the statute, regardless of whether he possesses a law license. Nor, contrary to petitioners' arguments, does this natural reading of the statute create any ab surd results.

In any event, there is no reason to adopt a clear statement rule, as petitioners suggest, in interpreting the term "debt relief agency." Congress's regulation of debt relief agencies does not infringe on any traditional power of the States; federal laws, agencies, and courts (including this Court) have long regulated the conduct of attorneys and other professionals within federal spheres of interest, such as bankruptcy. And the doc trine of constitutional avoidance provides no reason to adopt petitioners' proposed construction of the statute. That construction itself would not fully cure the consti tutional problem petitioners perceive, and it would ex empt attorneys from a variety of client-protection mea sures to which there is no constitutional objection. The Court therefore should reject petitioners' proposed in terpretation even if it finds that the statute does not plainly cover lawyers.

II. Section 526(a)(4) is not unconstitutionally over broad. The court of appeals' decision to the contrary rested on its view that the statute prohibits advice "to incur any additional debt when the assisted person is contemplating bankruptcy." Pet. App. 12a (emphasis omitted). But the statute does not use the temporal term "when" at all; rather, it uses the phrase "in con templation of [bankruptcy]," a phrase that has long been read to incorporate an element of intent to abuse the bankruptcy laws. Read in accordance with that long history, Section 526(a)(4) prohibits only advice to take on debt with an intent to abuse the bankruptcy laws, such as advice to charge a vacation, concert tickets, or some similar purchase to a credit card, knowing that the purchaser will enjoy the full benefit of the purchase and then shed most or all of the debt in bankruptcy.

The structure and legislative history of the statute confirm that Congress regulated only abusive bank ruptcy advice. The problem that Congress sought to combat was the phenomenon of "loading up" on debt with the intent of gaining relief through bankruptcy. That purpose is manifest in the other provisions Con gress adopted to limit eligibility for a complete dis charge under Chapter 7 of the Bankruptcy Code; in deed, those provisions create incentives to take on more debt to affect the eligibility determination. Section 526(a)(4) is properly read as a reasonable and targeted way of combating those incentives. Surrounding provi sions of the statute, which specify other rules of profes sional conduct and provide remedies for clients injured by the unethical advice, confirm the correctness of this reading.

The court of appeals rejected this construction in a single terse reference to the "plain language" of the statute. Pet. App. 12a. Petitioners likewise insist that Section 526(a)(4) should be read more broadly- unconstitutionally broadly. But petitioners must estab lish not only that their reading of Section 526(a)(4) is the better one (which they cannot), but that it is the only plausible one. In light of the long history of the key phrase that Congress used and the history and structure of the statute, petitioners cannot rebut "the reasonable presumption that Congress did not intend the alterna tive which raises serious constitutional doubts." E.g., Hawaii v. Office of Hawaiian Affairs, 129 S. Ct. 1436, 1445 (2009) (citation omitted).

Adopting the correct interpretation of Section 526(a)(4) eliminates the overbreadth that the court of appeals perceived. By narrowly prohibiting attorneys from advising clients to commit acts that are criminal, fraudulent, or (at a minimum) abusive of the federal ju dicial system, Section 526(a)(4) parallels a long-accepted principle of legal ethics that has been enshrined in state law for decades. This Court has established that attor neys in judicial proceedings may be "subject to ethical restrictions on speech to which an ordinary citizen would not be." Gentile v. State Bar, 501 U.S. 1030, 1071 (1991). Attorneys representing clients at the bar of a federal bankruptcy court owe a professional obligation to the tribunal not to counsel their clients to take action that directly subverts the bankruptcy system. The First Amendment does not excuse attorneys from that obliga tion, nor does it prevent Congress from providing feder ally enforceable remedies for clients harmed by their attorneys' breach of that obligation.

III. The court of appeals correctly upheld the advertising-disclosure requirements of Section 528. Disclosure requirements applied to commercial speech receive more deferential scrutiny than do restrictions on the content of commercial advertising. As this Court has squarely held, a requirement that attorney advertis ing include specified factual disclosures need only be "reasonably related to the State's interest in prevent ing deception of consumers." Zauderer v. Office of Dis ciplinary Counsel of the Supreme Court, 471 U.S. 626, 651 (1985). Petitioners' reliance on cases involving forced political speech and outright restrictions on truthful commercial speech therefore is unavailing: Zauderer sets out the controlling standard here.

The advertising-disclosure requirements readily sat isfy that standard. Congress documented the problem it sought to combat: misleading attorney advertise ments that offered to provide relief from debt, a halt to foreclosure, and the like, without adequately disclosing that obtaining these forms of relief requires filing for bankruptcy and suffering the attendant consequences. Congress was entitled to determine that such advertise ments are misleading unless they properly disclose that the benefits touted entail a bankruptcy filing.

Petitioners contend that the two-sentence disclaimer specified in the statute is misleading and, therefore, un constitutional. But petitioners principally object to in cluding the phrase "debt relief agency," a statutorily defined term whose natural and legal meanings encom pass consumer bankruptcy attorneys. Requiring debt relief agencies to identify themselves as such is entirely accurate and proper. Petitioners may well desire to call themselves "attorneys" in their advertising, but nothing in Section 528 precludes them from doing so, or from providing any additional information they wish. Indeed, Congress also specified that debt relief agencies may vary the text of the prescribed disclosure and use any "substantially similar statement." 11 U.S.C. 528(a)(4) and (b)(2)(B). Accordingly, Section 528 is constitutional on its face.

Petitioners also argue, for the first time in this litiga tion, that their advertising is not misleading and does not require any disclaimer. But petitioners' past adver tisements are not in the record, nor are their plans for future advertising. This late-raised as-applied challenge therefore provides no basis to disturb the judgment of the court of appeals.

ARGUMENT

I. THE BAPCPA'S "DEBT RELIEF AGENCY" PROVISIONS ENCOMPASS ATTORNEYS AS WELL AS OTHER BANK RUPTCY PROFESSIONALS

Petitioners contend (Br. 12-35) that the BAPCPA's "debt relief agency" regulations do not apply to licensed attorneys. As the court of appeals recognized, that ar gument is foreclosed by the plain language of the stat ute. Pet. App. 3a-10a; accord Hersh v. United States ex rel. Mukasey, 553 F.3d 743, 749-752 (5th Cir. 2008) (same), petition for cert. pending, No. 08-1174 (filed Mar. 18, 2009).

A. Attorneys Who Provide "Legal Representation" Or Other "Bankruptcy Assistance" To Consumer Debtors Are "Debt Relief Agencies"

1. Attorneys who provide paid legal representation to consumer debtors in bankruptcy proceedings are "debt relief agencies" under a straightforward reading of the pertinent statutory definitions. See Burgess v. United States, 128 S. Ct. 1572, 1577 (2008) ("Statutory definitions control the meaning of statutory words . . . in the usual case.") (quoting Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 201 (1949)). Subject to five enumerated exceptions that make no reference to attor neys, Congress defined the term "debt relief agency" to include "any person" who, for a fee, "provides any bank ruptcy assistance to an assisted person." 11 U.S.C. 101(12A). "Assisted person[s]" include consumer debt ors. 11 U.S.C. 101(4A); see note 2, supra. "Bankruptcy assistance" means:

any goods or services sold or otherwise provided to an assisted person with the express or implied pur pose of providing information, advice, counsel, docu ment preparation, or filing, or attendance at a credi tors' meeting or appearing in a case or proceeding on behalf of another or providing legal representa tion with respect to a case or proceeding under this title.

11 U.S.C. 101(4A) (emphases added). The term "debt relief agency" thus encompasses "any person" who "advi[ses]," "counsel[s]," "appear[s] in a [bankruptcy] case or proceeding on behalf of," or provides "legal rep resentation with respect to a [bankruptcy] case" to, a consumer debtor in exchange for a fee.

Bankruptcy attorneys fall within that definition when they perform one or more of the specified services for the specified type of client. "[A]ny person" is a capa cious term that encompasses any attorney. See Ali v. Federal Bureau of Prisons, 128 S. Ct. 831, 832 (2008) ("any" is naturally read to have an expansive meaning); 11 U.S.C. 101(41) (broad definition of "person"). And the services defined as bankruptcy assistance are often provided by lawyers. Indeed, because only attorneys can provide "legal representation" or "appear[] in a [bankruptcy] case" on behalf of a consumer debtor, see, e.g., 11 U.S.C. 110(e)(2)(A) (bankruptcy petition prepar ers may not provide legal advice), petitioners' reading of the term "debt relief agency" would render those as pects of the statutory definition superfluous.6 That alone is a sufficient reason to reject petitioners' con struction. See, e.g., TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001); Kawaauhau v. Geiger, 523 U.S. 57, 62 (1998).

In light of those unambiguous textual indicia, the absence of the word "attorney" from the definition of "debt relief agency" is immaterial. A debt relief agency is defined by the services it performs and the clients for whom it performs them, and "any person" who performs those services may qualify. See 11 U.S.C. 101(4A) and (12A), 110(a). Analogously, the Fair Debt Collection Practices Act does not specifically refer to lawyers or the practice of law, but it defines a "debt collector" as "any person" who engages in the debt collection busi ness, 15 U.S.C. 1692a(6), and this Court has held that attorneys are debt collectors "whenever they meet the general 'debt collector' definition." Heintz v. Jenkins, 514 U.S. 291, 295 (1995). Indeed, the Court in Heintz held that any reading of the term "debt collector" that would exempt lawyers per se was "outside the range of reasonable interpretations of the [statute's] express lan guage." Id. at 298. Accord, e.g., Goldfarb v. Virginia State Bar, 421 U.S. 773, 787-788 (1975) (noting the "heavy presumption against implicit exemptions," and accordingly refusing to construe the Sherman Act to exempt lawyers). To construe the BAPCPA term "debt relief agency" to exclude lawyers would be even more unwarranted, because that term is defined by reference to services some of which only lawyers can perform.

2. The BAPCPA's definition of "debt relief agency" is subject to five exceptions, none of which mentions attorneys, and none of which encompasses attorneys as a class. Rather, the exceptions apply to employees of regulated entities, tax-exempt nonprofits, credi- tors, banks, and copyright owners. See 11 U.S.C. 101(12A)(A)-(E). As the court of appeals observed, Con gress's decision to include five carefully tailored excep tions from the definition of "debt relief agency" but not to make an exception for attorneys strongly implies that no such exception was intended. Pet. App. 9a; see Hersh, 553 F.3d at 751; accord, e.g., NLRB v. Town & Country Elec., Inc., 516 U.S. 85, 90-91 (1995).

Petitioners contend (Br. 19-23) that two of the ex emptions implicitly suggest that the term "debt relief agency" does not encompass attorneys. Neither exemp tion can bear the weight petitioners place on it. The exclusion of "any person who is an officer, director, em ployee, or agent of a person who provides [bankruptcy] assistance," 11 U.S.C. 101(12A)(A), ensures that a regu lated attorney's administrative assistant or process server is not separately required to comply with the no tice and disclosure provisions of the statute.7 The exclu sion for creditors, which applies only "to the extent that the creditor is assisting such assisted person to restruc ture any debt owed by such assisted person to the credi tor," 11 U.S.C. 101(12A)(C), makes clear that an attor ney acting solely in her capacity as a creditor of the debtor (e.g., a divorce lawyer to whom the debtor owes fees) is not required to comply with the debt relief agency provisions of the Act. That exemption says noth ing about whether attorneys are covered when they pro vide bankruptcy assistance.

3. The relevant legislative history confirms the plain meaning of the statutory text. The abuses of the bank ruptcy system that Congress sought to address in the 2005 Act included abuses committed by-and at the en couragement of-debtors' professional representatives. The House Report cited a study by the United States Trustee Program that "consistently identified," among the sources of bankruptcy abuse, "misconduct by attor neys and other professionals." House Report 5 (quoting Antonia G. Darling & Mark A. Redmiles, Protecting the Integrity of the System: The Civil Enforcement Initia tive, Am. Bankr. Inst. J., Sept. 2002, at 12 (Darling & Redmiles)). Similarly, in adopting the advertising dis closure requirements in 11 U.S.C. 528, Congress heard evidence of "increasingly aggressive lawyer advertising" that offered to make consumers' "debts disappear," but failed to explain that such relief would require a petition for bankruptcy having significant consequences for the debtor's ability to obtain credit in the future. Bank ruptcy Abuse Prevention and Consumer Protection Act of 2003, and the Need for Bankruptcy Reform: Hearing on H.R. 975 Before the Subcomm. on Commercial and Administrative Law of the House Comm. on the Judi ciary, 108th Cong., 1st Sess. 55 (2003) (2003 Hearings) (statement of Dean Sheaffer, National Retail Federa tion). Congress responded by enacting the debt relief agency provisions of the 2005 Act to "strengthen[] pro fessionalism standards for attorneys and others who assist consumer debtors with their bankruptcy cases." House Report 17 (emphasis added).

B. Construing The Term "Debt Relief Agency" To Encom pass Attorneys Does Not Lead To Absurd Results

Petitioners contend (Br. 24) that treating attorneys as debt relief agencies would lead to "absurd" results. For the most part, the supposed absurdities repackage petitioners' claims of unconstitutionality, see id. at 24, 28, and may be rejected for the same reasons, see pp. 27, 28-46, 64-68, infra. In addition, however, petitioners argue that an attorney who represents small creditors in bankruptcy cases could be deemed a "debt relief agency" on the theory that a creditor with debts con sumer of his own may be an "assisted person." A "debt relief agency" must include in its public advertising the sentence "We help people file for bankruptcy relief un der the Bankruptcy Code," or "a substantially similar statement." 11 U.S.C. 528(a)(4). Petitioners contend (Br. 24) that if an attorney represents a client who ap pears as a creditor in a bankruptcy proceeding but whose own unrelated consumer debts bring the client within the statutory definition of "assisted person," the attorney's public advertising must state that he "help[s] people file for bankruptcy relief," even if the attorney does not actually provide such assistance and the state ment is consequently untrue.

The premise of petitioners' argument is mistaken. A creditor in a bankruptcy proceeding is not an "assisted person" within the most natural reading of that statu tory term, even if the creditor owes debts of his own. An "assisted person" is "any person whose debts consist primarily of consumer debts and the value of whose non exempt property is less than" an inflation-adjusted sum, currently $164,250. 11 U.S.C. 101(3); see note 2, supra. Nothing in the bankruptcy laws depends on whether a creditor's own debts are "primarily * * * consumer debts," or on the value of a creditor's "nonexempt prop erty." Indeed, the very concept of "exempt" property presupposes a bankruptcy filing by the person whose assets are at issue. See 11 U.S.C. 522(b) (describing the property that "an individual debtor may exempt from [the] property of the estate") (emphasis added). The natural inference is that the term "assisted person" is limited to debtors in actual or potential bankruptcy pro ceedings and does not encompass creditors in such pro ceedings who happen to owe unrelated debts.8

In any event, petitioners do not suggest that the BAPCPA's "debt relief agency" provisions will produce absurd results as applied to petitioners themselves or to bankruptcy lawyers generally-only that the provisions cannot sensibly be applied to bankruptcy attorneys who represent creditors exclusively. And if the term "as sisted person" is read to encompass certain creditors in bankruptcy proceedings, construing the term "debt re lief agency" to exclude lawyers will not eliminate the anomalous consequences that petitioners identify, be cause non-attorneys who assist such creditors in bank ruptcy cases and advertise their services are also re quired to make the disclosure mandated by Section 528(a)(4). For those reasons too, the absurdities peti tioners purport to fear are best avoided not by reading attorneys out of the term "debt relief agency," but by construing the term "assisted person," in accordance with Congress's evident intent, as limited to debtors in actual or potential bankruptcy proceedings.

C. The Application Of The BAPCPA To Attorney Conduct Does Not Intrude On Any Traditional State Prerogative

Petitioners suggest (Br. 33-34) that construing the term "debt relief agency" to encompass attorneys would "displace" the role of States in an area they have tradi tionally regulated. Petitioners contend on that basis (Br. 35) that this Court should require a clear statement of intent to cover attorneys, and that the BAPCPA's definition of "debt relief agency" does not contain the requisite clear statement because it "does not even men tion the word 'attorney.'" Those arguments are miscon ceived.

First, construing the term "debt relief agency" to encompass lawyers does not bar the States from regu lating attorney conduct performed in connection with actual or potential bankruptcy proceedings. To the con trary, state law that is not inconsistent with the BAPCPA is expressly saved from preemption. 11 U.S.C. 526(d)(1). A statute allowing concurrent regulation of attorney conduct does not raise any concern that might call for a clear-statement rule.

Second, the BAPCPA's regulation of bankruptcy at torneys is of a piece with a long history of federal regu lation of lawyers who practice before federal tribunals or in areas of uniquely federal concern. E.g., 11 U.S.C. 105(a) (recognizing bankruptcy courts' authority to "tak[e] any action or mak[e] any determination neces sary or appropriate to enforce or implement court or ders or rules, or to prevent an abuse of process"); 11 U.S.C. 329 (requiring bankruptcy lawyers to surrender certain unreasonable fees); Fed. R. Bankr. P. 9011(c); see 28 U.S.C. 1927; Fed. R. Civ. P. 11(c); Fed. R. App. P. 46(c); Sup. Ct. R. 8.1; see also Goldsmith v. United States Bd. of Tax Appeals, 270 U.S. 117, 121-123 (1926) (upholding an Article I tribunal's authority to admit law yers and accountants to practice and prescribe qualifica tions for admission); 15 U.S.C. 7245 (providing for the Securities and Exchange Commission to issue "minimum standards of professional conduct for attorneys appear ing and practicing before the Commission"); 31 C.F.R. 10.20 et seq. (rules for practice before the Internal Reve nue Service); 37 C.F.R. 10.20 et seq. (Patent and Trade mark Office Code of Professional Responsibility). See generally Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980) ("The power of a court over members of its bar is at least as great as its authority over litigants."). Federal rules of practice in an area of direct federal in terest can even preempt state unauthorized-practice laws, see Sperry v. Florida ex rel. Florida Bar, 373 U.S. 379, 400 n.43, 403 (1963), a step Congress did not deem necessary here, see 11 U.S.C. 526(d)(2)(A). Bankruptcy is a subject of particular federal concern, see U.S. Const. Art. I, § 8, Cl. 4, and there is nothing improper or un usual in Congress's decision in BAPCPA to regulate attorney conduct that threatens the integrity of the bankruptcy system.

Third, even if a clear-statement requirement applied in this setting, it would be satisfied here. Section 101(4A)'s inclusion of "legal representation" as a service that triggers debt-relief-agency status eliminates any reasonable doubt that attorneys are covered, even though that definitional provision does not contain the term "attorney" or "lawyer." A clear-statement rule is not a magic-words requirement; the requisite clear statement may even come from reading multiple provi sions together, so long as the meaning is unambiguous. See BFP v. RTC, 511 U.S. 531, 546 (1994) ("The Bank ruptcy Code can of course override by implication when the implication is unambiguous."); cf. Kimel v. Florida Bd. of Regents, 528 U.S. 62, 76 (2000).

D. The Canon Of Constitutional Avoidance Provides No Basis For Construing The Term "Debt Relief Agency" To Exclude Attorneys

Petitioners further contend that the Court should construe the term "debt relief agency" to exclude attor neys in order to avoid constitutional difficulties. Peti tioners correctly state (Br. 31) the general proposition that the avoidance canon permits-indeed, requires-a court to adopt any permissible construction of a statute that avoids a serious constitutional question. See gener ally pp. 43-46, infra. That principle, however, provides no sound basis for departing from the BAPCPA's ex plicit definition of "debt relief agency."

First, by referring to "legal representation" and other services specific to attorneys, Congress has fore closed petitioners' purported saving construction, which would render those terms superfluous. See pp. 17-18, supra. The avoidance canon is a tool for choosing among permissible constructions; it is not a basis for adopting a construction that the statute unambiguously pre cludes. See, e.g., HUD v. Rucker, 535 U.S. 125, 134-135 (2002); Miller v. French, 530 U.S. 327, 341 (2000). The text of the statute and its "legislative history and pur pose," CFTC v. Schor, 478 U.S. 833, 841 (1986), make clear that the term "debt relief agency" encompasses lawyers who perform the relevant bankruptcy-related services.

Second, construing the term to exclude attorneys would not avoid the constitutional questions. Petition ers' constitutional challenges go to the statute's substan tive requirements, not directly to the inclusion of attor neys. On petitioners' theory, for example, Section 528(b)(2) is unconstitutional as applied to bankruptcy petition preparers as well, because "no person" would voluntarily refer to himself as a "debt relief agency" in his advertising. Pet. Br. 88. Adopting petitioners' read ing of "debt relief agency" therefore would not avoid the constitutional questions that petitioners identify; it would postpone them only until a non-attorney plaintiff filed a similar suit.

Third, petitioners' construction would undermine the efficacy of other statutory provisions whose constitution ality is not in question. See, e.g., 11 U.S.C. 526(a)(1) (debt relief agencies may not fail to perform services they promised to undertake); 11 U.S.C. 527(a)(2) (debt relief agencies must provide their clients with certain admonitions about the requirements of the bankruptcy process). Application of those requirements to attor neys raises no serious constitutional concern. But peti tioners' interpretation of the 2005 Act would make all BAPCPA regulation of "debt relief agencies" inapplica ble to lawyers. That would disserve Congress's intent to establish "professionalism standards for attorneys and others who assist consumer debtors with their bank ruptcy cases." House Report 17 (emphasis added).

II. SECTION 526(a)(4) IS NOT UNCONSTITUTIONALLY OVERBROAD

The court of appeals erred in holding that Section 526(a)(4) violates the First Amendment. The court in terpreted Section 526(a)(4) to prohibit attorneys from advising debtors to incur "any" additional debt prior to bankruptcy. Pet. App. 13a. In the court's view, "this prohibition would include advice constituting prudent prebankruptcy planning that is not an attempt to cir cumvent, abuse, or undermine the bankruptcy laws." Ibid. In so holding, the court rejected the government's proposed narrowing construction of Section 526(a)(4) in a single sentence, asserting that the statute's "plain lan guage" precludes any construction other than an uncon stitutionally overbroad one. Id. at 12a.

Both the court's statutory premise and its constitu tional conclusion are flawed. "The first step in over breadth analysis is to construe the challenged statute; it is impossible to determine whether a statute reaches too far without first knowing what the statute covers." United States v. Williams, 128 S. Ct. 1830, 1838 (2008). As the text, structure, and purposes of Section 526(a)(4) demonstrate, Congress forbade only advice to incur new debt for the purpose of abusing the bankruptcy system or defrauding creditors. The First Amendment does not prevent Congress from regulating the professional con duct of bankruptcy attorneys in this manner. Because Section 526(a)(4) may reasonably be read in a manner that preserves its constitutional validity, the judgment of the court of appeals should be reversed.

A. Section 526(a)(4) Regulates Advice To Incur New Debt For The Purpose Of Abusing The Bankruptcy Code Or Defrauding Creditors

1. The court of appeals ignored the historical meaning of the phrase "in contemplation of bankruptcy"

a. The court of appeals concluded that Section 526(a)(4) "broadly prohibits a debt relief agency from advising an assisted person (or prospective assisted per son) to incur any additional debt when the assisted per son is contemplating bankruptcy." Pet. App. 12a (em phasis omitted). Section 526(a)(4), however, does not use the temporal language "when the assisted person is contemplating bankruptcy." Rather, the statute forbids attorneys from advising clients "to incur more debt in contemplation of [bankruptcy]." 11 U.S.C. 526(a)(4) (emphasis added). As Judge Colloton observed, "the phrase 'in contemplation of' has been construed in the bankruptcy context to mean actions taken with the in tent to abuse the protections of the bankruptcy system." Pet. App. 25a; see Hersh, 553 F.3d at 758 (Congress's use of the phrase "in contemplation of" bankruptcy "suggests that the statute is directed at situations in which a debtor intends to abuse the bankruptcy sys tem").

Black's Law Dictionary, for example, defines "con templation of bankruptcy" as "[t]he thought of declaring bankruptcy because of the inability to continue current financial operations, often coupled with action designed to thwart the distribution of assets in a bankruptcy pro ceeding." Black's Law Dictionary 336 (8th ed. 2004) (emphasis added). That understanding of the term goes back more than a century and a half, to both American and English authorities examining whether particular transfers made just before bankruptcy were in fact made "in contemplation of bankruptcy." See Black's Law Dictionary 257 (2d ed. 1910) (citing cases). Those authorities read the phrase as incorporating an element of intent to frustrate the bankruptcy law, not simply an awareness that a bankruptcy was impending.

Members of Congress have used the term "in con templation of bankruptcy" in the same manner. See, e.g., S. Rep. No. 65, 98th Cong., 1st Sess. 9 (1983) (1983 Senate Report) (describing the problem of "[e]xcessive debts incurred within a short period prior to the filing of the petition" as "'loading up' in contemplation of bank ruptcy"); ibid. ("In many instances, the debtor will go on a credit buying spree in contemplation of bankruptcy at a time when the debtor is, in fact, insolvent."); Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. No. 137, 93d Cong., 1st Sess. Pt. I, at 11 (1973) (Bankruptcy Commission Report) ("[T]he most serious abuse of consumer bankruptcy is the num ber of instances in which individuals have purchased a sizable quantity of goods and services on credit on the eve of bankruptcy in contemplation of obtaining a dis charge.").

b. Of the cases treating "in contemplation of bank ruptcy" as incorporating an element of abusive purpose, most have involved preferential transfers-i.e., pay ments made on the eve of bankruptcy to one or more favored creditors. Such transfers are generally contrary to the bankruptcy-law principle that all similarly situ ated creditors should share proportionately in the bank rupt's remaining assets. See, e.g., 11 U.S.C. 547(b). Some early bankruptcy statutes in this country and in England provided that transfers "in contemplation of bankruptcy" were void. Interpreting those statutes, several courts held that they required proof of intent to violate the bankruptcy laws' framework for protecting creditors-i.e., an "intention of giving a preference in contemplation of bankruptcy." Jones v. Howland, 49 Mass. (8 Met.) 377, 386 (1844); accord In re Pearce, 19 F. Cas. 50, 53 (D. Vt. 1843) (No. 10,873) (concluding that an act was done "in contemplation of bankruptcy" if a per son did it "in anticipation of breaking or failing in his business, of committing an act of bankruptcy, or of being declared bankrupt at his own instance, on the ground of inability to pay his debts, and intending to defeat the general distribution of effects, which takes place under a proceeding in bankruptcy.") (emphasis added); see also Paulding v. Chrome Steel Co., 94 N.Y. 334, 338, 340- 341 (1894) (interpreting state law that voided transfers "in contemplation of the insolvency of [the] company").

As the court explained in Jones, the indispensable element under those statutes was the debtor's "design" or "view to give [the transferee] a preference over the general creditors." 49 Mass. (8 Met.) at 385, 386. The court drew on English decisions establishing that princi ple. See id. at 384 (construing "'the meaning of those words' (in contemplation of bankruptcy)" as requiring an "'intent to defeat the general distribution of effects which takes place under a commission of bankrupt'") (quoting Morgan v. Brundrett, 5 Barn. & Ad. 289, 296, 110 Eng. Rep. 798, 801 (K.B. 1833) (Parke, J.)); id. at 385 (an act made in contemplation of bankruptcy "must be intended in fraud of the bankrupt laws") (quoting Fidgeon v. Sharpe, 5 Taunt. 539, 545-546, 128 Eng. Rep. 800, 802-803 (C.P. 1814) (Gibbs, C.J.)).

In many of the above cases, the debtor had made a payment to a favored creditor on the eve of bankruptcy, and the question was whether he had done so with the abusive purpose of preventing the equal distribution of assets that the bankruptcy system seeks to achieve. Section 526(a)(4), conversely, is directed at the amass ment of additional debt (rather than the distribution of the debtor's existing assets) on the eve of bankruptcy. In both instances, the debtor intends to disfavor a sub set of creditors by taking advantage of the bankruptcy system.9

c. In light of that history, Congress's use of the phrase "in contemplation of [bankruptcy]" suggests a focus on the accumulation of debt with intent to abuse the bankruptcy system or defeat the bankruptcy laws. For example, advising a debtor to obtain unsecured credit on the eve of bankruptcy and then to dissipate it on purchases (e.g., a vacation or lavish banquet) that do not become part of the bankruptcy estate, knowing that the bankruptcy discharge will allow her to avoid repay ment of the debt, is an abuse of the bankruptcy system. Cf. Attorney Grievance Comm'n v. Culver, 849 A.2d 423, 443-444 (Md. 2004) (attorney violated state ethics rules by urging a client to obtain new credit cards and new cash advances with the intent of discharging the debt in bankruptcy). Similarly, advising a debtor to take on additional debt as a way of circumventing the Bank ruptcy Code's means testing mechanism is an attempt to defeat the bankruptcy laws. As discussed more fully below, eligibility for a Chapter 7 discharge often turns on a means test that examines the amount by which the debtor's income exceeds his statutorily allowed ex penses, including expenses for secured debt. See pp. 35- 37, infra. If a client is presumed ineligible under this means test, an unscrupulous attorney who advises the client to take on additional debt as a way of becoming eligible for a complete discharge under Chapter 7 is abusing the bankruptcy system. Section 526(a)(4) pro hibits an attorney or other debt relief agency from ad vising debtors to engage in such manipulative conduct.

2. The legislative history of Section 526(a)(4), and its place in the larger statutory scheme, confirm that it targets abusive practices and does not broadly en compass all advice to incur new debt at a time when bankruptcy is imminent

a. Congress has long been aware that the relief af forded by the bankruptcy laws creates a perverse incen tive for debtors to amass additional debt with the expec tation of obtaining a discharge. Congress has also rec ognized that this practice poses a fundamental threat to the Bankruptcy Code's twin goals of affording debtors a fresh start while providing an orderly and equitable system of resolving creditors' claims.

As early as 1973, Congress was informed that "the most serious abuse of consumer bankruptcy is the num ber of instances in which individuals have purchased a sizable quantity of goods and services on credit on the eve of bankruptcy in contemplation of obtaining a dis charge." Bankruptcy Commission Report 11. A decade later, Congress enacted 11 U.S.C. 523(a)(2)(C) (1988), which created a presumption that certain eve-of-bank ruptcy debts are not dischargeable. The accompanying Senate Report emphasized that "[e]xcessive debts in curred within a short period prior to the filing of the petition present a special problem: that of 'loading up' in contemplation of bankruptcy." 1983 Senate Report 9. The report explained that "[a] debtor planning [to] file a petition with the bankruptcy court has a strong eco nomic incentive to incur dischargeable debts for either consumable goods or exempt property," noting that "[i]n many instances, the debtor will go on a credit buying spree in contemplation of bankruptcy at a time when the debtor is, in fact, insolvent." Ibid. As the report con cluded, "[n]ot only does this result in direct losses for the creditors that are the victims of the spree, but it also creates a higher absolute level of debt so that all credi tors receive less in liquidation. During this period of insolvency preceding the filing of the petition, creditors would not extend credit if they knew the true facts." Ibid.

Congress has enacted a number of protections against eve-of-bankruptcy attempts to abuse the sys tem's protections. Even before the 2005 Act, Congress authorized bankruptcy courts to dismiss a petition for "substantial abuse," 11 U.S.C. 707(b) (2000), which could include the debtor's purposeful accumulation of debt in contemplation of bankruptcy. E.g., Price v. United States Tr. (In re Price), 353 F.3d 1135, 1139-1140 (9th Cir. 2004). Congress also precluded debtors from ob taining a discharge for debts arising from the fraudulent acquisition of money or credit, 11 U.S.C. 523(a)(2)(A) (2000), and as noted above, it provided that certain cate gories of debts are presumed nondischargeable if they are incurred on the eve of bankruptcy, 11 U.S.C. 523(a)(2)(C) (2000).

b. When Congress enacted the BAPCPA in 2005, the House Committee expressed concern that those earlier measures had not adequately restricted the ability of debtors to "knowingly load up with credit card pur chases or recklessly obtain cash advances and then file for bankruptcy relief." House Report 15. Accordingly, Congress strengthened each of the aforementioned protections against bankruptcy abuse. See, e.g., BAPCPA § 310, 119 Stat. 84 (11 U.S.C. 523(a)(2)(C)). In particular, Congress greatly expanded the bankruptcy courts' authority to dismiss petitions or deny relief for "abuse" of the bankruptcy system, including in cases in which debtors purposefully incur additional debt in con templation of filing a petition. See BAPCPA § 102, 119 Stat. 27 (11 U.S. 707(b)); House Report 48-49. Among other reforms, Congress permitted dismissal of a peti tion based on a less stringent showing of abuse, see § 102(a)(2)(B)(i)(III), 119 Stat. 27 (11 U.S.C. 707(b)(1)); authorized "any party in interest" to file a motion to dismiss for abuse (except in some cases involving lower- income debtors), see 11 U.S.C. 707(b)(1) and (6); and repealed the pre-existing presumption in favor of grant ing the relief sought by the debtor, see 11 U.S.C. 707(b) (2000). See generally House Report 49.

Congress also made another significant change that underscored the need for direct regulation of attorneys who practice in the federal bankruptcy system. The "principal consumer bankruptcy reform" in the 2005 Act was the adoption of a "means testing" mechanism in tended to ensure that debtors who have the ability to repay at least some of their debts will do so, through a structured repayment plan entered under Chapter 13 of the Bankruptcy Code, instead of obtaining a complete discharge under Chapter 7. House Report 48; see id. at 2 (describing means testing as the "heart" of the 2005 Act's reform provisions). See generally 11 U.S.C. 109(b) and (e) (eligibility for Chapter 7 and Chapter 13).

Under the means test, a debtor's petition for com plete relief under Chapter 7 is presumed to be abusive if the debtor's current monthly income exceeds his stat utorily allowed expenses, including payments for se cured debt, by more than a prescribed amount. See 11 U.S.C. 707(b)(2)(A)(i) and (iii).10 If the court finds a peti tion to be abusive under this standard, it can dismiss the debtor's case or, with the debtor's consent, convert it to Chapter 13, which involves a repayment plan. 11 U.S.C. 707(b)(1). The means test, however, exacerbates the incentive for debtors to manipulate the system by "load ing up" on certain debt in contemplation of filing, be cause payments on secured debts that qualify under Sec tion 707(b)(2)(A)(iii) offset the debtor's monthly income under the formula. Increasing the amount of such pay ments may therefore reduce the difference between the debtor's income and his allowable expenses, and thus allow the debtor to remain eligible for a complete and immediate discharge of unsecured debt under Chapter 7.

Congress was accordingly concerned that the intro duction of the means test would give attorneys an incen tive to counsel their clients to take on additional debt before filing for bankruptcy. As one bankruptcy judge testified, "[t]he more debt that is incurred prior to filing, the more likely the debtor will qualify for chapter 7." Bankruptcy Reform Act of 1998: Hearing on H.R. 3150 Before the Subcomm. on Commercial and Administra tive Law of the House Comm. on the Judiciary, 105th Cong., 2d Sess. Pt. I, at 25 (1998) (1998 Hearings) (statement of Judge Randall J. Newsome). Thus, the bankruptcy judge testified that, "[p]erverse as it may seem, I can envision debtor's counsel advising their cli ents to buy the most expensive car that someone will sell them, and sign on to the biggest payment they can af ford (at least until the bankruptcy is filed) as a way of increasing their deductions under [the means test]." Ibid.; see also Bankruptcy Reform Act of 1999: Hearing on H.R. 833 Before the Subcomm. on Commercial and Administrative Law of the House Comm. on the Judi ciary, 106th Cong., 1st Sess. Pt. II, at 30 (1999) (1999 Hearings) (statement of Judge William Brown). And as discussed above, see p. 21, supra, Congress credited evidence compiled by the United States Trustee Pro gram that "consistently identified," among the sources of bankruptcy abuse, "misconduct by attorneys and other professionals [and] problems associated with bankruptcy petition preparers." House Report 5 (quot ing Darling & Redmiles 12).

c. Congress responded to these concerns by "streng thening professionalism standards for attorneys and others who assist consumer debtors with their bank ruptcy cases" in return for a fee. House Report 17. Un der the amended provisions of the Code, an attorney who represents a consumer debtor in filing a bankruptcy petition must make her own reasonable investigation into the circumstances giving rise to the debtor's peti tion, including a specific inquiry into the veracity of the debtor's debt and asset schedules. See 11 U.S.C. 707(b)(4)(C)-(D). By signing the petition, the attorney personally certifies that the debtor's petition "is well grounded in fact," 11 U.S.C. 707(b)(4)(C)(ii)(I); that the attorney has "no knowledge * * * that the information in the schedules filed with such petition is incorrect," 11 U.S.C. 707(b)(4)(D); and that the debtor's petition "does not constitute an abuse" under Section 707(b), 11 U.S.C. 707(b)(4)(C)(ii)(II). Congress thus effectively required bankruptcy attorneys to warrant that their clients' pre- petition conduct and financial circumstances-including any assumption of debt in contemplation of bank ruptcy-do not provide grounds for dismissal of the peti tion as an abuse of the bankruptcy system.

As the foregoing discussion demonstrates, Congress enacted the BAPCPA to protect creditors and the bank ruptcy system from abusive eve-of-bankruptcy conduct. That overall statutory focus reinforces the conclusion that the phrase "in contemplation of [bankruptcy]" in Section 526(a)(4) should be construed, in accordance with its historically accepted meaning, as limited to ad vice that debtors incur additional debt to abuse the bankruptcy system or defeat the administration of the bankruptcy laws. See Davis v. Michigan Dep't of the Treasury, 489 U.S. 803, 809 (1989) ("It is a fundamental canon of statutory construction that the words of a stat ute must be read in their context and with a view to their place in the overall statutory scheme.").

d. Section 526(a)(4) is one of four subsections of Sec tion 526(a). The other three subsections establish rules of professional conduct that are clearly designed to pro tect debtors from abusive practices by their attorneys and other debt relief agencies. See 11 U.S.C. 526(a)(1) (requiring debt relief agencies to perform all promised services); 11 U.S.C. 526(a)(2) (prohibiting debt relief agencies from advising debtors to make false or mislead ing statements to obtain bankruptcy relief); 11 U.S.C. 526(a)(3) (prohibiting debt relief agencies from misrep resenting to debtors the costs or benefits of bank ruptcy). The placement of Section 526(a)(4) as the fourth item in this list strongly implies that Congress likewise intended that provision to target abusive con duct by debt relief agencies.11

The BAPCPA's remedial provisions similarly belie petitioners' contention that Section 526(a)(4) prohibits debt relief agencies from advising debtors to incur addi tional debt in circumstances where such conduct would be lawful and prudent. As the Fifth Circuit observed, the principal remedy for a violation of Section 526(a)(4) is a suit against the attorney to recover the debtor's "actual damages," as well as restitution of any fees paid by the debtor. Hersh, 553 F.3d at 759-760 (citing 11 U.S.C. 526(c)). "Congress's emphasis on actual damages for violations of section 526(a)(4) strongly suggests that Congress viewed that section as aimed at advice to debt ors which if followed would have a significant risk of harming the debtor." Id. at 760. By contrast, "legal and appropriate advice that would be protected by the First Amendment, yet prohibited by a broad reading of § 526(a)(4), should cause no damage at all." Pet. App. 27a (Colloton, J., concurring in part and dissenting in part). "The remedial focus of § 526 thus bolsters the proposition that § 526(a)(4) was aimed only at advice given by a debt relief agency that is designed to abuse the bankruptcy process." Ibid.12

3. A federal rule of professional conduct in this setting serves an important function

Amici NACBA et al. assert (Br. 18-20) that reading Section 526(a)(4) as an ethical rule of this nature would render the provision "superfluous," because the Bank ruptcy Code already penalizes debtors when they en gage in abusive bankruptcy conduct and attorneys are already subject to state-law ethical obligations. That reasoning is flawed.

To be sure, the client who takes the attorney's uneth ical advice may well suffer adverse consequences under bankruptcy law, including having her petition dismissed. 11 U.S.C. 707(b)(2) and (3). Congress determined, how ever, that when such a consequence results from an at torney's misconduct, remedies should lie against the attorney-including compensation for the client. See 11 U.S.C. 526(c)(2)(A). Invalidation of Section 526(a)(4) would render that remedy unavailable with respect to a significant category of improper attorney advice.

Although an attorney who engages in the conduct that Section 526(a)(4) prohibits may be subject to disci pline by a state bar, providing a federal remedy under the Bankruptcy Code serves important purposes. First, the Code creates a uniform nationwide standard, appro priate to bankruptcy practice. Second, the Code gives a client a private right of action against an unethical attor ney who has violated Section 526(a)(4), and it encour ages such actions in the public interest by providing for fee-shifting. 11 U.S.C. 526(c)(2). State bar rules rarely if ever are privately enforceable. Third, the Code per mits the federal court to enjoin an attorney from violat ing Section 526 again in any State or district, 11 U.S.C. 526(c)(3)(A) and (5)(A), whereas an unethical practitio ner who has been sanctioned under the law of one juris diction may continue to provide unethical advice in an other. Indeed, a practitioner in a particular bankruptcy court may not even be licensed by that State's bar. See, e.g., Rittenhouse v. Delta Home Improvement, Inc. (In re Desilets), 291 F.3d 925, 930-931 (6th Cir. 2002).

4. Section 526(a)(4) does not cover petitioners' examples of appropriate debt counseling or the provision of in formation concerning a client's legal options

For the reasons set forth above, Section 526(a)(4) does not cover the hypothetical scenarios that troubled the court of appeals. See Pet. App. 13a-14a (postulating two situations in which "it would likely be in the assisted person's, and even the creditors', best interest for the assisted person to incur additional debt" before bank ruptcy, and speculating that "[f]actual scenarios other than these few hypothetical situations no doubt exist"). Contrary to the court's interpretation, an attorney would be free to advise a client to refinance her home mortgage at a lower rate to prevent bankruptcy, pro vided all appropriate disclosures were made to the lender.13 See id. at 13a. Likewise, an attorney could lawfully advise a client to incur "additional secured debt" to purchase a reliable automobile and thereby en sure her ability to get to work, assuming again that ap propriate disclosures were made. See id. at 14a. In nei ther case would the attorney be advising the debtor to incur unnecessary debt for the purpose of abusing the bankruptcy system. See Hersh, 553 F.3d at 761. The similar examples cited by petitioners (Br. 48-53) are outside the scope of the statute for the same reason.

Petitioners also suggest (Br. 41) that Section 526(a)(4) unconstitutionally prohibits attorneys from "participat[ing] in a discussion with the client weighing the pros and cons of a client's pending decision to incur more debt." That contention reflects a misreading of the statutory text, even assuming it refers only to discus sions of "loading up" on debt in contemplation of bank ruptcy. Section 526(a)(4) does not bar discussions about incurring new debt (however abusive the transaction might be), but only affirmative advice "to incur more debt in contemplation of" filing a petition for bank ruptcy. 11 U.S.C. 526(a)(4) (emphasis added).14

Rules governing legal practice commonly distinguish between discussion of options and affirmative advice or encouragement. For example, while the ABA Model Rules of Professional Conduct provide that "[a] lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudu lent," the same rule states that "a lawyer may discuss the legal consequences of any proposed course of con duct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law." Model Rules of Prof'l Conduct R. 1.2(d). The commentary to Model Rule 1.2 underscores the point: "There is a critical dis tinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with im punity." Id. R. 1.2, cmt. 9. Section 526(a)(4)'s use of the phrase "advise * * * to incur more debt" captures the same distinction between discussion and affirmative en couragement. Cf. Webster's Third New International Dictionary 32 (1993) (defining "advise" to mean, inter alia, "counsel" or "recommend").

B. The Court of Appeals Disregarded Basic Principles Of Constitutional Avoidance

To the extent that the proper interpretation of Sec tion 526(a)(4) is open to question, the court of appeals was not justified in adopting the broadest possible inter pretation of the provision and then declaring it unconsti tutional as so construed. Federal courts construe fed eral statutes to avoid, not invite, constitutional difficul ties. Boos v. Barry, 485 U.S. 312, 331 (1988). Particu larly in the context of a First Amendment overbreadth challenge, where the plaintiff contends that a statute is invalid even though it may be legitimately applied in some or many circumstances, the federal courts have not only "the power to adopt narrowing constructions," but "the duty to avoid constitutional difficulties by doing so if such a construction is fairly possible." Id. at 330-331 (emphasis added); see also, e.g., Broadrick v. Oklahoma, 413 U.S. 601, 613 (1973) ("Facial overbreadth has not been invoked when a limiting construction has been or could be placed on the challenged statute.").15 In this case, however, the court of appeals held Section 526(a)(4) unconstitutional without adverting to the doc trine of constitutional avoidance or explaining why its broad interpretation of Section 526(a)(4) was the only available reading of the statute. See, e.g., Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988) ("[E]very rea sonable construction must be resorted to, in order to save a statute from unconstitutionality.") (emphasis added; citation omitted).

This Court has repeatedly applied saving construc tions to avoid invalidating Acts of Congress far less ame nable to a narrowing interpretation. In Boos, the Court considered a First Amendment overbreadth challenge to a statute that made it unlawful "to congregate within 500 feet of any [embassy, legation, or consulate] and refuse to disperse after having been ordered so to do by the police." 485 U.S. at 329 (citation omitted). The Court acknowledged that "[s]tanding alone, this text is problematic * * * because it applies to any congrega tion within 500 feet of an embassy for any reason." Id. at 330. Nevertheless, citing the federal courts' "duty to avoid constitutional difficulties" when a narrowing "con struction is fairly possible," the Court construed the statute to apply "'only when the police reasonably be lieve that a threat to the security or peace of the em bassy is present'"-a limitation unstated in the statu tory text but necessary to ensure the validity of the Act. Id. at 330-331 (citation omitted). See also, e.g., Zad vydas v. Davis, 533 U.S. 678, 689 (2001); Edward J. DeBartolo Corp., 485 U.S. at 576-578. Here, the inter pretation of Section 526(a)(4) that was advanced by the government and endorsed by the dissent below, and that the Fifth Circuit adopted in Hersh, see 553 F.3d at 754, is consistent with the text of that provision and with the BAPCPA's overall structure and purposes. The court of appeals erred in refusing to adopt it.

Petitioners contend (Br. 64-66) that adopting a nar rowing construction, instead of reading the statute to its broadest extent (and then striking it down as over broad), would create a problem of "vagueness" and would therefore "chill" lawful advice. As explained above, however, the government's construction of Sec tion 526(a)(4) as limited to a particular set of abusive practices is firmly tethered to the text, history, and pur pose of the statute. See pp. 28-40, supra. The impropri ety of those practices is already well-established, and even if it were not, any attorney signing a bankruptcy petition must already certify that the petition "does not constitute an abuse under [11 U.S.C. 707(b)(1)]." 11 U.S.C. 707(b)(4)(C)(ii)(II). That certification requires familiarity with longstanding precedent interpreting the Bankruptcy Code's references to "abuse" and "substan tial abuse." See, e.g., Price, 353 F.3d at 1139-1140.16 Thus, attorneys are already required to be on notice of the practices that are treated as abusive under the Bankruptcy Code; Section 526(a)(4) simply bars attor neys from encouraging their clients to commit one such abusive practice.

C. Section 526(a)(4) Is Consistent With The First Amend ment

If Section 526(a)(4) is given the limiting construction described above, the provision easily satisfies the First Amendment. The advice that Section 526(a)(4) covers is subject to reasonable regulation in the service of the gov ernment's valid interests in protecting the bankruptcy system and its participants from unethical conduct.

1. A licensed attorney's ethical obligations to the bench and the profession sometimes require her to exer cise a degree of restraint in what she advocates and how. "'Membership in the bar is a privilege burdened with conditions,' to use the oft-repeated statement of Cardozo, J." Gentile v. State Bar, 501 U.S. 1030, 1066 (1991) (quoting In re Rouss, 221 N.Y. 81, 84 (1917), cert. denied, 146 U.S. 661 (1918)). As the Court held in Gen tile, attorneys are not merely self-interested actors and agents of their clients, but also licensed officers of the courts. For that reason, attorneys may be "subject to ethical restrictions on speech to which an ordinary citi zen would not be." Id. at 1071; see Goldfarb, 421 U.S. at 792 (the government's interest "in regulating lawyers is especially great since lawyers are essential to the pri mary governmental function of administering justice, and have historically been 'officers of the courts'"). "This does not mean, of course, that lawyers forfeit their First Amendment rights, only that a less demanding standard applies." Gentile, 501 U.S. at 1082 (O'Connor, J., concurring).

In articulating those principles, the Court in Gentile broke no new ground. Rather, the Court explained that five Justices in In re Sawyer, 360 U.S. 622 (1959), had agreed that "lawyers in pending cases were subject to ethical restrictions on speech to which an ordinary citi zen would not be." Gentile, 501 U.S. at 1071. Justice Stewart's controlling concurrence in Sawyer rejected the notion "that a lawyer can invoke the constitutional right of free speech to immunize himself from even-handed discipline for proven unethical conduct," because "[a] lawyer belongs to a profession with inher ited standards of propriety and honor, which experience has shown necessary in a calling dedicated to the accom plishment of justice." 360 U.S. at 646 (Stewart, J., con curring in the result). Justice Stewart concluded that "[o]bedience to ethical precepts may require abstention from what in other circumstances might be constitution ally protected speech." Id. at 646-647. Four other Members of the Court agreed. See id. at 666-669 (Frankfurter, J., dissenting). See also Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 460 (1978) (sustaining a restriction on attorney solicitation because the govern ment "bears a special responsibility for maintaining standards among members of the licensed professions"); In re Primus, 436 U.S. 412, 422 (1978); Cohen v. Hurley, 366 U.S. 117, 124 (1961) ("[L]awyers must operate * * * as assistants to the court in search of a just solu tion to disputes.").

2. Respondents are incorrect in contending (Br. 66- 67) that Section 526(a)(4), in its application to respon dents' provision of legal advice, is subject to strict scru tiny rather than to the Gentile standard. There is no basis on which to distinguish bar members' obligations when practicing in bankruptcy court, or when counseling debtors who are considering the initiation of bankruptcy proceedings, from Gentile's obligations as a practitioner in the Nevada trial court. Bankruptcy is a judicial func tion performed by judicial officers appointed and super vised by the Article III judiciary. A bankruptcy petition both invokes the "core * * * federal bankruptcy power" to undertake "the restructuring of debtor-credi tor relations," and also potentially brings related adver sary proceedings within the bankruptcy court's jurisdic tion. Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71 (1982) (plurality opinion). And bankruptcy courts generally have the same implicit pow ers as other federal courts to admit and discipline attor neys and otherwise enforce "submission to their lawful mandates," Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting Anderson v. Dunn, 19 U.S. (6 Wheat.) 204, 227 (1821)). See, e.g., Price v. Lehtinen (In re Lehtinen), 564 F.3d 1052, 1058 (9th Cir. 2009), petition for cert. pending, No. 09-113 (filed July 24, 2009); Jones v. Bank of Santa Fe (In re Courtesy Inns, Ltd.), 40 F.3d 1084, 1089 (10th Cir. 1994); see also Marrama v. Citi zens Bank, 549 U.S. 365, 375-376 (2007).

An attorney who advises or otherwise assists in an abuse of the bankruptcy system breaches his obligations to the tribunal and to the judicial system. The fairness and public reputation of bankruptcy proceedings are directly harmed when the bankruptcy discharge is mis used to gain an improper benefit at an unsecured credi tor's expense, or when the standards of eligibility for the discharge are gamed by taking on new and unnecessary debt on the eve of bankruptcy. Cf. Marrama, 549 U.S. at 375 (bankruptcy court's authority "'to prevent an abuse of process'" is "surely adequate" to order a halt to "action prejudicial to creditors") (quoting 11 U.S.C. 105(a)).

Contrary to petitioners' contention (Br. 75-76), the principles announced in Gentile are not limited to attor ney conduct in connection with criminal litigation. Al though Gentile's unethical conduct included public state ments about a pending criminal matter, the ethical rule he violated related to any "adjudicative proceeding," 501 U.S. at 1033 (opinion of Kennedy, J.) (quoting Nev. Sup. Ct. R. 177(1)), and the Court's opinion drew on cases from the civil as well as criminal context, see id. at 1071, 1073-1074. The considerations that were held to justify the ethical rule there-preventing improper con siderations from influencing the outcome of the proceed ing or tainting the venire-were not limited to criminal trials or to trial-level proceedings. See id. at 1075; cf. Caperton v. A.T. Massey Coal Co., 129 S. Ct. 2252, 2259 (2009).

Petitioners' reliance (Br. 35-36, 43) on Legal Services Corp. v. Velazquez, 531 U.S. 533 (2001), is misplaced. The statute at issue in Velazquez conditioned the receipt of federal funds on an attorney's agreement not to chal lenge the validity of state or federal welfare laws. Id. at 538. The provision did not purport to regulate attorney ethics or avoid client abuses, but rather prevented attor neys from making "all the reasonable and well-grounded arguments necessary for proper resolution of the case." Id. at 545. Section 526(a)(4), by contrast, prevents attor neys from subverting the bankruptcy process and jeop ardizing their clients' interests by encouraging abuses of the Bankruptcy Code.

3. Section 526(a)(4) is constitutional under the Gen tile standard. As the Fifth Circuit explained in Hersh, Section 526(a)(4) provides a bankruptcy-specific ana logue to Rule 1.2(d) of the Model Rules of Professional Conduct, which states that an attorney may not "counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent." 553 F.3d at 756 (citation omitted). Versions of that rule are in effect throughout the Nation, including in petitioners' home State. Rule 1.2(d) has never been challenged under the First Amendment, much less held to violate it. Ibid.17 Indeed, the court of appeals acknowledged that Section 526(a)(4) is supported by a legitimate government inter est; the court's conclusion that the statute was nonethe less unconstitutional depended on its adoption of peti tioners' overly broad reading of the statute's scope. See Pet. App. 12a.

Amicus American Bar Association (ABA) suggests (Br. 10-11 & n.15) that Section 526(a)(4) is infirm be cause Congress has not barred debtors from assuming more debt in contemplation of bankruptcy. That argu ment lacks merit, for several reasons. First, in some cases covered by Section 526(a)(4), the client's conduct will itself be illegal. See, e.g., Hersh, 553 F.3d at 755 ("Taking out loans without intending to repay them may also be considered theft under state law."); see also 18 U.S.C. 157 (bankruptcy fraud statute); 1 Collier on Bankruptcy ¶ 7.07[1][a] at 7-121 (Dec. 1996) (Collier) ("Misrepresenting one's financial status, presumably to profit by inducing others to extend goods or services on credit, seems to qualify."). In those cases, the attorney unquestionably has no First Amendment right to advise the client to engage in that conduct. Neither an attor ney nor any other individual has a constitutional right to participate in the commission of a crime. Offers to en gage in unlawful activity "enjoy no First Amendment protection." Williams, 128 S. Ct. at 1841; see also Pitts burgh Press Co. v. Pittsburgh Comm'n on Human Rela tions, 413 U.S. 376, 388-389 (1973) (same rule applies to unlawful activity that is not criminally proscribed). An attorney's recommendation that a client incur additional debt in order to defraud creditors is not constitutionally protected "abstract advocacy of illegality"; it is "speech * * * that is intended to induce or commence illegal activities." Id. at 1842; see also Brandenburg v. Ohio, 395 U.S. 444, 447-448 (1969) (per curiam).

In other cases, the client may not be susceptible to prosecution because he lacks the requisite intent. Cf. Culver, 849 A.2d at 429. Even in that situation, however, the government has a strong interest in preventing the rendering of professional advice that could lead to the subversion of the bankruptcy system. Cf. Roadway Ex press, 447 U.S. at 765 (relying on the "well-acknowl edged inherent power of a court" to remedy and prevent "abusive litigation practices") (citation omitted). That is especially so in a context like this one, in which the sole reason why the client is not guilty of a crime may well be that he has relied on advice from counsel to undertake a particular course of action, which itself may be suffi cient to defeat the intent element. See 1 Collier ¶ 7.07[1][d] at 7-130 (June 2004) (advice of counsel may be a defense to bankruptcy fraud). The ABA's position would insulate attorneys from liability by virtue of their very success in insulating their clients. That double- fisted protection for abusive bankruptcy practices can not be constitutionally required.

Attorneys have long been subject to discipline, or to malpractice liability, for recommending courses of action that are unethical even if not illegal (or tortious). For instance, an attorney may be disciplined for involvement in concealing assets, even if the concealment does not satisfy all of the elements of an unlawful fraudulent con veyance. In re Kenyon, 491 S.E.2d 252, 254 (S.C. 1997) ("We do not have to find fraudulent conveyances-only fraudulent or dishonest conduct."); accord In re Conduct of Hockett, 734 P.2d 877, 882-883 (Or. 1987).

The authority to impose discipline for unethical con duct is on particularly strong ground where, as here, the attorney's improper advice affects not only the client, but the judicial system to which the attorney owes a pro fessional obligation. See Gentile, 501 U.S. at 1075-1076 (describing the "substantial state interest" in "protect[ing] the integrity and fairness of a State's judi cial system" against prejudicial conduct by "officers of the court," who "have a duty to protect its integrity"). Thus, for example, attorneys may be sanctioned for ad vising their clients to engage in various unethical con duct (such as hiring a lawyer strategically to force a judge's recusal) that the client may lawfully undertake but that is prejudicial to the administration of the legal system. See McCuin v. Texas Power & Light Co., 714 F.2d 1255, 1264-1266 (5th Cir. 1983) ("Lawyers are not permitted to do everything for a client that he would stoop to do himself had he but their knowledge."); Griev ance Adm'r v. Fried, 570 N.W.2d 262, 264, 267 (Mich. 1997). The same principle applies here: rules of profes sional conduct "may demand some adherence to the pre cepts of [the judicial] system in regulating [attorneys'] speech as well as their conduct" when that speech, if acted upon, directly undermines that system. Gentile, 501 U.S. at 1074.18

D. The Court Of Appeals Failed To Apply Basic Principles Of Overbreadth Analysis

Because "invalidating a law that in some of its appli cations is perfectly constitutional * * * has obvious harmful effects," this Court has "vigorously enforced the requirement that a statute's overbreadth be substantial, not only in an absolute sense, but also relative to the stat ute's plainly legitimate sweep." Williams, 128 S. Ct. at 1838. The court of appeals failed to adhere to that prin ciple when it struck down Section 526(a)(4) as applied to attorneys without giving proper weight to the statute's admittedly legitimate applications.

As shown above, Section 526(a)(4) may validly be applied to a significant category of unethical attorney advice. Against that legitimate sweep, the court below hypothesized two instances of legitimate, ethical advice to accumulate new debt on the eve of bankruptcy: buy ing a car and refinancing a mortgage. Pet. App. 13a- 14a. The court speculated that "[f]actual scenarios other than these few hypothetical situations no doubt exist." Id. at 14a. On that slim and concededly "hypothetical" basis, the majority held the statute unconstitutional as applied to all attorney conduct, including the abusive practices at which Section 526(a)(4) was directly aimed.

That approach was misconceived. As explained above, Section 526(a)(4) as properly construed does not cover the hypothetical examples discussed by the court. See pp. 41-42, supra. But even if some situations could be hypothesized in which Section 526(a)(4) prohibits attorney speech without a constitutionally adequate jus tification, that is no basis for invalidating all applications of the provision to attorneys, as the court of appeals did here. As Judge Colloton observed, "a facial challenge resting on a 'few hypothetical situations' * * * is un likely to justify invalidating a statute in all of its applica tions, because 'the mere fact that one can conceive of some impermissible applications of a statute is not suffi cient to render it susceptible to an overbreadth chal lenge.'" Pet. App. 24a (quoting Members of the City Council v. Taxpayers for Vincent, 466 U.S. 789, 800 (1984)). That correct understanding of overbreadth analysis precludes invalidation of Section 526(a)(4).

III. THE COURT OF APPEALS CORRECTLY REJECTED PETITIONERS' CHALLENGE TO THE ADVERTISING- DISCLOSURE REQUIREMENTS OF 11 U.S.C. 528

Petitioners' challenge to the advertising-disclosure requirements of 11 U.S.C. 528 is likewise without merit. Those requirements apply only to publicly disseminated offers to perform bankruptcy-related services for a fee; they impose no restriction on what advertisers may say; and they mandate the inclusion of only a brief disclaimer whose substance is factually accurate and whose precise wording may be varied as needed. Applying the First Amendment standard that governs commercial advertis ing disclaimers, the court of appeals correctly concluded that Section 528's modest disclosure requirements are "reasonably and rationally related to the government's interest in preventing the deception of consumer debt ors." Pet. App. 19a.

A. Disclosure Requirements In Commercial Advertising Must Bear A "Reasonable Relationship" To A Valid State Interest

1. Attorney advertisements are quintessential com mercial speech. See, e.g., Florida Bar v. Went For It, Inc., 515 U.S. 618, 623 (1995) (Went For It); Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 773 n.25 (1976). While this Court has invalidated categorical bans on advertise ments of legal services, Bates v. State Bar, 433 U.S. 350 (1977), it has recognized that attorney advertising and other forms of solicitation may be regulated without triggering the requirements of strict scrutiny. See, e.g., Went For It, 515 U.S. at 623-624. In addition, the Court has drawn a sharp distinction between commercial- speech regulations that preclude an advertiser from communicating a truthful commercial message, see, e.g., Rubin v. Coors Brewing Co., 514 U.S. 476 (1995); Eden field v. Fane, 507 U.S. 761 (1993), and disclosure re quirements, which simply mandate the inclusion of addi tional information that helps to prevent deception of the public. The Court has held that disclosure requirements are subject to more deferential scrutiny than are out right restrictions on advertising content. See Zauderer v. Office of Disciplinary Counsel of the Supreme Court, 471 U.S. 626, 650-652 (1985); see also In re R.M.J., 455 U.S. 191, 201 (1982); Bates, 433 U.S. at 384 (States may require attorney advertisements to include a "warning or disclaimer * * * so as to assure that the consumer is not misled").

That distinction is particularly significant in the con text of advertising to promote legal advice and related services, such as bankruptcy assistance, because of the difficulty consumers have in evaluating both the promo tion and the provision of these services. The Court has recognized this difficulty on numerous occasions. "[B]ecause the public lacks sophistication concerning legal services, misstatements that might be overlooked or deemed unimportant in other advertising may be found quite inappropriate in legal advertising." Bates, 433 U.S. at 383; see Virginia State Bd. of Pharmacy, 425 U.S. at 773 n.25 (noting that lawyers "do not dis pense standardized products" but "render professional services of almost infinite variety and nature, with the consequent enhanced possibility for confusion and de ception if they were to undertake certain kinds of adver tising"). Disclosure requirements are an important part of the solution to the problem. Even when striking down outright restrictions on advertising, the Court has em phasized that the government "retains the power to cor rect omissions that have the effect of presenting an inac curate picture." Bates, 433 U.S. at 375. Under the First Amendment, "the preferred remedy is more disclosure, rather than less." Ibid.

Because of the lesser burden imposed by disclosure provisions, this Court has prescribed a standard of re view less searching than the intermediate-scrutiny anal ysis it has applied to content prohibitions in the attorney-advertising context. The leading decision is Zauderer, which involved an Ohio attorney disciplined for violating a variety of bar rules related to advertising. The Court upheld a disclosure requirement analogous to Section 528, see 471 U.S. at 650-652, even as it struck down several other bar rules that affirmatively re stricted speech, see id. at 632-633, 639.

Ohio required attorneys who advertise their willing ness to represent clients for a contingency fee to include a statement concerning whether the fee arrangement would require the client to pay court costs even in the event of a loss. The Court specifically rejected the argu ment that the State was required to demonstrate that Zauderer's "advertisement, absent the required disclo sure, would be false or deceptive," that "the disclosure requirement directly advances the relevant governmen tal interest," or that the requirement "constitutes the least restrictive means of doing so." 471 U.S. at 650. Such arguments, the Court explained, "overlook[] mate rial differences between disclosure requirements and outright prohibitions on speech." Ibid. The Court fur ther explained that, "in virtually all [its] commercial speech decisions" up to that point, it had "emphasized that because disclosure requirements trench much more narrowly on an advertiser's interests than do flat prohi bitions on speech, 'warning[s] or disclaimer[s] might be appropriately required . . . in order to dissipate the possibility of consumer confusion or deception.'" Id. at 651 (quoting R.M.J., 455 U.S. at 201).

Accordingly, the Court in Zauderer held that disclo sure requirements applicable to attorney advertising need only be "reasonably related to the State's interest in preventing deception of consumers." 471 U.S. at 651; accord id. at 656 (Brennan, J., concurring in part, con curring in the judgment in part and dissenting in part) (agreeing, "[w]ith some qualifications," that "a State may impose commercial-advertising disclosure require ments" that satisfy that reasonable-relationship stan dard). The Court concluded that the challenged state bar rule "easily pass[ed] muster under this standard" because "[t]he State's position"-that contingent-fee advertising is deceptive if it does not clarify the client's liability for costs-was "reasonable enough to support [the disclosure] requirement." Id. at 652-653.

2. Petitioners fundamentally misconceive these gov erning principles. For example, petitioners compare (Br. 76-77) the disclosure requirements of Section 528 to the kind of forced political speech at issue in Wooley v. Maynard, 430 U.S. 705 (1977) ("Live Free or Die" motto), and West Virginia State Board of Education v. Barnette, 319 U.S. 624 (1943) (Pledge of Allegiance). "[T]he interests at stake in this case," however, are sim ply "not of the same order." Zauderer, 471 U.S. at 650- 651. As in Zauderer, Congress in enacting Section 528 did not seek "to 'prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opin ion,'" but merely prescribed what disclaimers will en sure that a particular class of "commercial advertising" is not misleading. Id. at 651 (quoting Barnette, 319 U.S. at 642). In the latter context, the Court explained, "an advertiser's rights are adequately protected as long as disclosure requirements are reasonably related to the State's interest in preventing deception of consumers." Ibid.19

Petitioners are likewise mistaken in contending (Br. 90-94) that Section 528 must be analyzed under the framework of intermediate scrutiny set out in Central Hudson Gas & Electric Corp. v. Public Service Commis sion, 447 U.S. 557 (1980). This Court rejected the iden tical argument in Zauderer. Although the Court applied the Central Hudson standard in analyzing and invalidat ing Ohio's affirmative restrictions on attorney advertise ments (such as the State's prohibition on the use of even truthful, nonmisleading illustrations), Zauderer, 471 U.S. at 632-633, 639, the Court specifically declined to analyze the disclosure requirement under the same prin ciples, explaining that there are "material differences between disclosure requirements and outright prohibi tions on speech," id. at 650. The Court further ex plained that "the First Amendment interests implicated by disclosure requirements are substantially weaker than those at stake when speech is actually suppressed." Id. at 652 n.14. The court of appeals in this case was therefore correct in analyzing Section 528 under the disclosure principles discussed in Zauderer rather than under Central Hudson. See Pet. App. 18a.20

B. Section 528 Is A Reasonable Means Of Combating A Documented Risk Of Consumer Deception

Section 528 is a reasonable response to the problem Congress identified: advertising that promotes debt- relief services without disclosing that those services en tail a bankruptcy filing and its attendant consequences. By using either the statutory disclaimer or a permissible alternative ("a substantially similar statement") in their public advertising, debt relief agencies make clear the nature of the services they are offering. Under the gov erning Zauderer standard, Section 528 is constitutional.

1. Section 528 responded to "increasingly aggressive lawyer advertising"

In hearings preceding the 2005 Act, Congress heard evidence of "increasingly aggressive lawyer advertising" for bankruptcy services that offered to make consumers' debts "disappear" but failed even to "mention bank ruptcy." 2003 Hearings 55. One retailer testified that some of his customers had been misled by such attorney advertisements and "d[id] not even understand that they ha[d] filed for bankruptcy." 1999 Hearings 123 (state ment of Michael Moore, National Retail Federation). In 1997, the Federal Trade Commission (FTC) warned that many debt-relief advertisements offering to "[w]ipe out" consumer debts, or to "[s]top credit harassment, foreclo sures, [and] repossessions," regularly fail to disclose that such "relief may be spelled b-a-n-k-r-u-p-t-c-y." 1998 Hearings Pt. III, at 90-92. The FTC observed that such advertisements have the potential to mislead con sumers into filing for bankruptcy without knowledge or appreciation of the consequences. See id. at 92 (warning that "bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live").21

The legislative record contains sample advertise ments that gave Congress ample reason for concern. Print advertisements for law firms included such large- print headlines as "Stop Worrying About Your Bills For The New Year" and "ATTENTION: TOO MUCH DEBT?!" 1998 Hearings Pt. III, at 93, 94. Such adver tisements prominently asserted that the law firm could "Consolidate and Lower Your Bills" or that "Federal Law Provides For: (A) Consolidation (one low monthly payment) (B) Liquidation (eliminate debts)." Ibid. Ref erences to the form of relief from debt that the firms would pursue were oblique at best, such as a star foot note referring to "U.S. Bankruptcy law," id. at 94, and a statement that the "forms of consolidation" include "court-assisted consolidation, like Chapter 13 bank ruptcy," id. at 93.

Despite a legislative record extending over at least three hearings and several years, petitioners assert (Br. 92) that Congress did not identify a "substantial" inter est in protecting the targets of such advertisements be cause the evidence did not "actually demonstrate that any consumer has been, in fact, deceived by this adver tising." This Court held in Zauderer, however, that such a showing is not required: "When the possibility of de ception is as self-evident as it is in this case, we need not require the [government] to 'conduct a survey of the . . . public before it [may] determine that the [adver tisement] had a tendency to mislead.'" 471 U.S. at 652- 653 (quoting FTC v. Colgate-Palmolive Co., 380 U.S. 374, 391-392 (1965)) (alterations in original); cf. Hersh, 553 F.3d at 766 (noting that "the government has a com pelling interest in ensuring that those who enter bank ruptcy know what it entails") (citing House Report 4). The evidence in the legislative record was sufficient for Congress reasonably to conclude that advertisements promising debt relief while downplaying the role of bankruptcy are inherently misleading. Cf. Zauderer, 471 U.S. at 653.

2. Section 528 addresses the identified problem directly and flexibly

In enacting Section 528, Congress responded directly to the deceptive practices that the FTC and others had identified. Section 528 requires debt relief agencies to "disclose in any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public" that the advertised services "are with respect to bankruptcy relief under this title." 11 U.S.C. 528(a)(3). In particular, if a debt relief agency's public advertisement offers "bankruptcy assistance services" (ibid.), or "indicat[es] that the debt relief agency pro vides assistance with respect to credit defaults, mort gage foreclosures, eviction proceedings, excessive debt, debt collection pressure, or inability to pay any con sumer debt" (11 U.S.C. 528(b)(2)), the advertisement must include either the statutorily approved statement ("We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.") or a "substantially similar statement." 11 U.S.C. 528(a)(4) and (b)(2)(B).

The solution that Congress devised-a two-line statement that identifies an attorney or other covered person as a "debt relief agency" under governing law and explains that the offered services include "help[ing] people file for bankruptcy relief under the Bankruptcy Code"-"is reasonably and rationally related to the gov ernment's interest in preventing the deception of con sumer debtors." Pet. App. 19a. Indeed, as the court of appeals explained, Section 528 is "directed precisely at the problem targeted by Congress: ensuring that per sons who advertise bankruptcy-related services to the general public make clear that their services do in fact involve filing for bankruptcy." Ibid. Section 528 per forms the modest but important function of enabling consumers to recognize advertisements promoting bank ruptcy services for what they really are.

3. The Section 528 disclosures are factual in nature and are not misleading

The disclosure requirements imposed by Section 528(a)(4) and (b)(2)(B) apply only to persons who are "debt relief agenc[ies]" within the meaning of the BAPCPA. See 11 U.S.C. 528(a) and (b)(2). The disclo sures that those provisions specify-i.e., "We are a debt relief agency" and "We help people file for bankruptcy relief under the Bankruptcy Code"-are factually accu rate and create no potential danger that potential cus tomers will be misled as to the functions that the adver tiser performs. As in Zauderer, petitioners' "constitu tionally protected interest in not providing [such] factual information in [their] advertising is minimal." 471 U.S. at 651.

a. Section 528(a)(4)'s disclosure requirements apply only to persons who are "debt relief agenc[ies]" within the meaning of Section 101(12A). As applied to such persons, the statement "We are a debt relief agency" is by definition an accurate description of the advertiser's legal status. As a matter of ordinary English usage, moreover, the term "debt relief agency" accurately de scribes the persons subject to the disclosure require ment. Under the BAPCPA, that term is limited to per sons who provide "bankruptcy assistance to an assisted person" or who act as "bankruptcy petition preparer[s]." 11 U.S.C. 101(12A); see 11 U.S.C. 101(4A) (definition of "bankruptcy assistance"). Persons who perform those functions are naturally understood to provide "debt re lief." And they are "agencies" in the accepted sense in which that word is used to describe service-oriented businesses-e.g., travel agencies, advertising agencies, employment agencies, modeling agencies, and public relations agencies.22

Petitioners urge (Br. 88) that consumer bankruptcy attorneys "are entitled to call themselves 'attorneys' in their advertising." As the court of appeals recognized, however, nothing in the BAPCPA prevents them from doing so. See Pet. App. 20a ("[N]othing in the Code pre vents [petitioners] from identifying themselves in their advertisements as both attorneys and debt relief agen cies."). In enacting Section 528, Congress has not "prevent[ed] attorneys from conveying information to the public; it has only required them to provide some what more information than they might otherwise be inclined to present." Zauderer, 471 U.S. at 650.

Relying on R.M.J., supra, petitioners argue (Br. 88) that Section 528 is nonetheless invalid because "attor neys should not be compelled to use any label * * * other than one of their own choosing that is accurate and not deceptive." R.M.J., however, involved a prohibition on attorneys' using any phrase other than those on an approved list to describe their legal practice. 455 U.S. at 194-196. Here, by contrast, petitioners are free to advertise their practice in any manner they please, pro vided they also comply with the basic disclosure require ments in Section 528.23

b. Petitioners do not dispute the accuracy of the second half of the statutory disclaimer, i.e., that the per son sponsoring the advertisement "help[s] people file for bankruptcy relief under the Bankruptcy Code." See Pet. Br. 87 (asserting that petitioners already mention bankruptcy in their advertising). Rather, they contend that the statement is required even in contexts in which it does not serve the core congressional purpose; they speculate, for example, that some law firms will be debt relief agencies by virtue of representing debtors, but will also wish to advertise to creditors that they perform services listed in Section 528(b)(2). But even as applied to that hypothetical and presumably narrow class, the required disclaimer is not misleading, much less inaccu rate.24 In these circumstances, it simply provides some extraneous information.

Petitioner's argument suggests, at most, that Section 528's purposes could have been achieved had Congress defined somewhat more narrowly the category of adver tisements for which the specified disclosures are re quired. But as the Court held in Zauderer, the standard of review in this context is not whether the statute is narrowly tailored, but only whether it is "reasonably related to the State's interest"-here (as in Zauderer) the interest in preventing deception of consumers. See 471 U.S. at 651 n.14 ("reject[ing] [the] contention that [the Court] should subject disclosure requirements to a strict 'least restrictive means' analysis," because disclo sure requirements are themselves less restrictive than other regulations); see also Went For It, 515 U.S. at 632 ("[T]he 'least restrictive means' test has no role in the commercial speech context.").

Moreover, Congress had valid reasons for making the disclosure requirement contingent on the content of the advertisement rather than on the advertiser's own characterization of the target audience. Advertisements frequently tout more than one service, see, e.g., 1998 Hearings Pt. III, at 95 (advertisement for bankruptcy, divorce, and personal injury representation), and the advertiser has only limited ability to choose or predict in advance who will see its communications. Congress rea sonably concluded that advertisements offering "assis tance with respect to * * * mortgage foreclosures [or] eviction proceedings," 11 U.S.C. 528(b)(2), may well im plicate the same interests as advertisements promoting debt relief, because consumers desperate to stave off foreclosure or eviction may be attracted by the auto matic stay of proceedings that a bankruptcy filing trig gers. See 1998 Hearings Pt. III, at 92 (FTC alert noting that ads may promote the ability to "'STOP credit ha rassment [or] foreclosures'" or to "'Keep Your Prop erty.'"). In any event, law firms and other entities that do not provide bankruptcy assistance services to as sisted persons for compensation are not "debt relief agenc[ies]" and therefore are not covered by Section 528; that threshold eligibility determination will rule out many of petitioners' hypothetical applications to credi tors' counsel.25

4. By its terms, Section 528 permits debt relief agencies to alter the wording of the required disclosures

Quibbles over the fit between the statutory dis claimer language and particular hypothetical situations are ultimately not relevant in this pre-enforcement chal lenge, which asserts that Section 528's disclaimer re quirements are unconstitutional as applied to all attor neys. And if the statutory disclosures inaccurately de scribe the services that a particular debt relief agency performs, Section 528 establishes a mechanism by which the inaccuracy can be avoided. Any "substantially simi lar statement" may be substituted for the language set out in the statute. 11 U.S.C. 528(a)(4) and (b)(2)(B). Thus, if a particular debt relief agency engages in the type of public advertising that triggers the disclosure requirements (see 11 U.S.C. 528(a)(3) and (b)(2)), but nevertheless avoids ever "help[ing] people file for bank ruptcy relief under the Bankruptcy Code," that debt relief agency presumably could tailor the disclaimer that it would include in its advertisements. The statutory option to customize the disclaimer further ameliorates any concern about the requirement's potential applica tions to hypothetical outlier cases.

C. Petitioners Cannot Avoid Section 528's Disclosure Re quirements By Asserting That Their Own Advertising Is Not Deceptive

Petitioners contend (Br. 87) that Section 528(a)(4) and (b)(2)(B) are unconstitutional as applied to their own advertising because that advertising is not decep tive and therefore does not raise the concerns that prompted Congress to act.26 That assertion has no sup port in the record. Petitioners brought this action as a pre-enforcement challenge to Section 528, and they did not submit any past or future advertisements into evi dence. Neither their petition for a writ of certiorari nor their brief in the court of appeals advanced the theory that they are entitled to an as-applied exemption from Section 528(a)(4) and (b)(2)(B) based on the non-decep tive content of their own prior advertising. See Pet. 22- 30; Pet. C.A. Br. 41-50.

In any event, the Court in Zauderer specifically re jected the contention that the disclosure requirement challenged in that case would be unconstitutional unless the particular "advertisement, absent the required dis closure, would be false or deceptive." 471 U.S. at 650. To combat the deceptive practices of attorneys who pro mote the benefits of bankruptcy relief without the neces sary explanation, Congress required all debt relief agen cies who engage in specified forms of public advertising to comply with the basic disclosure requirements of Sec tion 528(a)(4) and (b)(2)(B). That legislative judgment is both reasonable and consistent with the First Amend ment.27

The as-applied challenge that petitioners belatedly assert is especially ill-conceived because Section 528 allows regulated parties to substitute a "substantially similar statement" for the statement that the advertiser "help[s] people file for bankruptcy relief under the Bankruptcy Code." 11 U.S.C. 528(a)(4) and (b)(2)(B). See p. 68, supra. If the references to bankruptcy in peti tioners' advertisements are suitably prominent (unlike, for example, the use of a star footnote in the advertise ment appearing in the legislative history, see p. 62, su pra), then petitioners may be able to satisfy Section 528's requirements with only modest changes to their advertising, or even none at all. Petitioners' new as-ap plied challenge logically depends on the proposition that their own advertisements contain references to bank ruptcy that are clear enough to satisfy Congress's con cerns, but are not "substantially similar" to the state ment that petitioners "help people file for bankruptcy relief under the Bankruptcy Code." Petitioners have not suggested what such advertisements would look like, let alone shown that their own advertisements fall within this hypothetical category. And they assuredly have not shown how adopting the Section 528 formulation or "a substantially similar statement" would meaningfully curtail their ability to advertise their services. This Court therefore should uphold the statutory disclosure requirements.

CONCLUSION

The judgment of the court of appeals should be re versed as to Section 526(a)(4) and in all other respects affirmed.

Respectfully submitted.

ELENA KAGAN
Solicitor General
TONY WEST
Assistant Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
WILLIAM M. JAY
Assistant to the Solicitor
General
MARK B. STERN
MARK R. FREEMAN
Attorneys

RAMONA D. ELLIOTT
General Counsel
P. MATTHEW SUTKO
Associate General Counsel
Executive Office for United
States Trustees

OCTOBER 2009

1 Unless otherwise noted, all references to "Pet. App." are to the appendix to the government's petition in No. 08-1225.

2 An "assisted person" is "any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than" an inflation-adjusted sum, currently $164,250. 11 U.S.C. 101(3); see 11 U.S.C. 104(a); 72 Fed. Reg. 7082 (2007).

3 The 2005 Act establishes five specific exceptions to the definition of "debt relief agency" for in-house preparers, tax-exempt nonprofits, creditors, banks, and copyright owners. 11 U.S.C. 101(12A)(A)-(E).

4 Section 528 also requires disclosure to an "assisted person" once a debt relief agency begins to provide that person with "bankruptcy assistance services." The debt relief agency must execute a written contract with the client that explains what services the debt relief agency will provide and what fees the client will have to pay. 11 U.S.C. 528(a)(1) and (2).

5 The court of appeals did not identify the precise constitutional standard under which petitioners' challenge should be evaluated. Peti tioners had argued that strict scrutiny should apply, while the govern ment had contended that Section 526(a)(4) is a reasonable regulation of attorneys' professional conduct that is to be reviewed more deferen tially under the standard announced in Gentile v. State Bar, 501 U.S. 1030, 1071-1076 (1991). The court acknowledged that the government had a "legitimate interest" in prohibiting advice that would assist deb tors in abusing the bankruptcy system. Pet. App. 12a. But the court held that, on its reading of Section 526(a)(4), the statute was insuffi ciently connected to that interest and therefore was unconstitutional under either strict scrutiny or the Gentile standard. Id. at 12a-13a.

6 One amicus brief suggests that the phrase "legal representation" refers to the "unauthorized practice of law" by non-attorneys such as bankruptcy petition preparers. NACBA Br. 34. That is an unnatural reading: a person becomes a "debt relief agency" by providing "legal representation" (or other "bankruptcy assistance") only if he is not already a debt relief agency by virtue of being a bankruptcy petition preparer. See 11 U.S.C. 101(12A). Thus, the reference to "legal representation" (or other "bankruptcy assistance") is relevant only to persons other than bankruptcy petition preparers, such as attorneys. See 11 U.S.C. 110(a)(1) (attorneys are not bankruptcy petition pre parers). Moreover, bankruptcy petition preparers are already pro hibited from offering "legal advice" or signing documents on behalf of any debtor; those prohibitions, and the bankruptcy court's authority to enforce them, are altogether separate from the "debt relief agency" provisions. See 11 U.S.C. 110(e)(2), (i), (j) and (k).

7 Petitioners note (Br. 19-20) that the exemption for "an officer, director, employee, or agent" does not exempt a partner; they assert that lawyers often practice in partnerships; and they argue that, if law firms were covered by the "debt relief agency" definition, Congress would necessarily have included "partners" in the list of exempted employees. But the absence of an exemption for partners does not suggest that partnerships are excluded from the term "any person," because principals (such as partners) differ from employees, agents, officers, and directors in relevant respects. A law firm (or other business entity) is itself a debt relief agency if its attorneys or other personnel provide the specified services to consumer debtors under the firm's name, and as a matter of partnership law that designation may well have consequences for the partners. It is therefore unsurprising that Congress did not exempt principals who have the title "partner." In any event, petitioners' premise is flawed: law firms are often organized as corporations or other non-partnership entities, and indeed, the petitioner firm is a corporation, not a partnership. J.A. 37a.

8 Additional evidence in the statute confirms that creditors are not "assisted persons." Section 527, for example, requires debt relief agen cies to provide "assisted persons" with information relevant only to debtors, see 11 U.S.C. 527(b), and expressly cross-references provisions applicable only to debtors, see, e.g., 11 U.S.C. 527(a)(1) (instructing debt relief agencies to provide assisted persons with the "notice required under section 342(b)(1)," a provision that applies only to "individual[s]" who "commence[] * * * a case under this title"). Likewise, the written-contract provisions of Section 528 provide that a contract must be signed within five days "after the first date on which such agency provides any bankruptcy assistance services to an assisted person, but prior to such assisted person's petition under this title being filed." 11 U.S.C. 528(a)(1) (emphasis added). The legislative history confirms that common-sense understanding. See House Report 17 (explaining that Congress enacted the debt-relief-agency provisions of BAPCPA to "strengthen[] professionalism standards for attorneys and others who assist consumer debtors with their bankruptcy cases").

9 Petitioners assert (Br. 60-61) that this Court gave a different reading to the phrase "in contemplation of bankruptcy" in Conrad, Rubin & Lesser v. Pender, 289 U.S. 472 (1933), but in fact, that case, too, involved a statute intended to combat abuse of the bankruptcy system, and the Court interpreted the statute in accord with that purpose. Congress had granted bankruptcy courts the authority to reexamine transfers of property made to a debtor's attorney "in contemplation of the filing of a petition," and to direct that any "excess" payment be returned to the estate for the benefit of creditors-a means of combating the same sort of preferential conveyances as in the cases discussed above. 11 U.S.C. 96(d) (1928). The debtor's attorney ob jected to turning over an excessive eve-of-bankruptcy payment, and the only question before the Court was whether, "as [a] matter of law," the payment was precluded from being "in contemplation of bankruptcy" because the debtor was pursuing other options in addition to bank ruptcy. 289 U.S. at 478-479. The Court saw no such limitation and confirmed the factual finding that the debtor had been contemplating bankruptcy when it had made the excessive payment to its attorneys. See ibid. Thus, even if the Court could be said to have construed the statutory term comprehensively, rather than merely to have rejected artificial limitations on it, its holding is consistent with the discussion above, because the Court sustained recouping the payment as abusive. Moreover, in that case the Court did not construe the statute in light of the doctrine of constitutional avoidance or hold that its construction was the only reasonable one.

10 If the presumption does not apply, or if it is rebutted, the petition may still be dismissed for abuse: in those circumstances, the 2005 Act directed that bankruptcy courts consider "whether the debtor filed the petition in bad faith" and whether "the totality of the circumstances * * * of the debtor's financial situation demonstrates abuse." 11 U.S.C. 707(b)(3).

11 Similarly, Section 526(c) establishes a malpractice remedy against any debt relief agency whose "intentional or negligent failure to file any required document" causes the client to suffer dismissal or conversion of her bankruptcy case. 11 U.S.C. 526(c)(2)(B).

12 Amici NACBA et al. observe (Br. 22) that Section 526(c)(3) permits not only recovery of actual damages, but also disgorgement of fees, when a client can establish that a debt relief agency has "intentionally or negligently failed to comply with any provision of [Section 526]." But even though actual damages are not required in every case, Section 526's emphasis on private enforcement of the statute, by the clients themselves, serves to confirm that Congress expected that violations would harm clients.

13 The court of appeals did not explain its apparent assumption that refinancing an existing debt-that is, exchanging one loan for another with the same principal balance but a different interest rate or repayment period-would constitute incurring "more debt" within the meaning of Section 526(a)(4).

14 The statute unambiguously requires affirmative encouragement to incur more debt, although that encouragement might be communicated in a variety of ways (both direct and indirect).

15 Petitioners argue (Br. 31-35) that the Court should construe the term "debt relief agency" to avoid the same constitutional overbreadth objection. As discussed at pp. 26-27, supra, however, petitioners' proposed construction is foreclosed by the statutory definition of the term "debt relief agency," and it would seriously undermine numerous regulations of debt relief agencies that are unquestionably constitu tional. By contrast, the phrase "in contemplation of [bankruptcy]" is not defined and can reasonably be read to avoid constitutional prob lems, particularly in light of the interpretation that phrase has his torically been given in the bankruptcy context.

16 Indeed, amici NACBA et al. acknowledge (Br. 19) the substantial commonality between the required certification and the conduct that Section 526(a)(4) prohibits on the government's reading. Contrary to amici's contentions, however, the government's reading does not make Section 526(a)(4) superfluous: the certification provides some protec tion against abusive filings, whereas Section 526(a)(4) specifically prohibits a certain type of unethical advice that may or may not lead to an abusive filing. Section 526(a)(4) also prescribes different, more client-protective remedies. Compare 11 U.S.C. 526(c)(2), with 11 U.S.C. 707(b)(4)(B).

17 Culver illustrates the application of Rule 1.2(d) to the kind of advice that Section 526(a)(4) prohibits. In Culver, the client expressed concern about taking on more debt. Attorney Culver not only "advised her to obtain more credit cards and take cash advances on the cards to pay his fees," but also "explained that she would not have to repay that money because he would represent her to have the debts discharged in bankruptcy." 889 A.2d at 429 (emphasis added). He even gave her an application for a credit card. Id. at 444. The state court unanimously concluded that because the client could not repay the debt and "the bankruptcy discussions were in the context of present intent to avoid repaying the debt," Culver had committed a fraudulent act in violation of Rule 1.2(d). Ibid.

18 The same First Amendment standard logically applies to the work of bankruptcy petition preparers, who owe equivalent professional obligations to the tribunal that will adjudicate the petitions they prepare. See 11 U.S.C. 110(h)-(k) (providing for discipline of bank ruptcy petition preparers).

19 Petitioners (Br. 77, 79, 83) and amici NACBA et al. (Br. 27-28) are similarly wrong in relying on Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781 (1988). The Court in Riley struck down a disclosure requirement outside the context of commercial advertising, while reiterating that "[p]urely commercial speech is more susceptible to compelled disclosure requirements." Id. at 796 & n.9 (citing Zauderer, supra).

20 In any event, Section 528 would survive First Amendment scrutiny even under the Central Hudson standard. See Pet. App. 19a n.11 (citing Olsen v. Gonzales, 350 B.R. 906, 920 (D. Or. 2006), appeal pending, No. 07-35616 (9th Cir. filed July 24, 2007)). Section 528 "targets a concrete, nonspeculative harm." Went For It, 515 U.S. at 629. Indeed, as the court of appeals recognized, the statute is "directed precisely at the problem targeted by Congress: ensuring that persons who advertise bankruptcy-related services to the general public make clear that their services do in fact involve filing for bankruptcy." Pet. App. 19a. The requirement of a two-line disclosure does not "burden substantially more speech than necessary to further the government's legitimate interests." United States v. Edge Broad. Co., 509 U.S. 418, 430 (1993). Indeed, as already noted, the statute restricts no speech at all, but merely requires the disclosure of factually correct information. See Olsen, 350 B.R. at 921. As this Court observed in Zauderer, petitioners' "constitutionally protected interest in not providing [such] factual information in [their] advertising is minimal." 471 U.S. at 651.

21 An updated version of the 1997 FTC alert was issued in 2008 and remains in effect today. See Division of Consumer & Bus. Educ., FTC, FTC Consumer Alert: Advertisements Promising Debt Relief May Be Offering Bankruptcy (May 2008) <http://www.ftc.gov/bcp/edu/pubs/ consumer/alerts/alt015.shtm>.

22 Amici NACBA et al. contend (Br. 26), based on a declaration submitted in other litigation by an NACBA member, that potential clients have expressed concern that a "debt relief agency" might be thought a government agency. As the record in that case shows, the author of that declaration bears considerable responsibility for the problem he encountered, as he advertised on his website that he has been "designated as a Federal Debt Relief Agency by an Act of Congress and the President of the United States." C.A. App. at 62, Connecticut Bar Ass'n v. United States, No. 08-4797-cv (2d Cir. argued Sept. 24, 2009).

23 Petitioners have not asserted that the requirement to include the short disclaimer in their advertising is burdensome for reasons other than the content of the disclaimer. Cf. Ibanez v. Florida Dep't of Bus. & Prof'l Regulation, 512 U.S. 136, 146-147 & n.11 (1994) (disclaimer required to accompany the term "specialist" was so unduly detailed that no one would use it on a business card or letterhead, thus effectively prohibiting the use of the term "specialist" in those contexts).

24 The record does not reflect that petitioners themselves advertise any legal services beyond representing debtors in bankruptcy. See J.A. 38a-39a.

25 As explained above, a creditor is not an "assisted person," and representing creditors does not make an attorney a "debt relief agency." See pp. 22-24, supra. The assertion by amici NACBA et al. (Br. 28-30) that the disclaimer is "affirmatively false" rests on the misreading of "assisted person" as including creditors.

26 Petitioners assert that they "do not state in their advertisements that they can 'wipe out' unpaid bills, make debts 'disappear,' or 'stop credit harassment, foreclosures, or repossessions' without mentioning that these things are accomplished through bankruptcy," and that their advertisements "specifically mention 'bankruptcy' multiple times." Br. 87 (emphasis added).

27 This Court also granted certiorari on the question whether Section 528 violates the Due Process Clause. 08-1119 Pet. ii. Petitioners have not separately argued that issue and have accordingly abandoned it.

 

 

STATUTORY APPENDIX

 

11 U.S.C. 101 provides in pertinent part:

 

Definitions

 

In this title the following definitions shall apply:

* * * * *

(3) The term "assisted person" means any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $150,000.

(4) The term "attorney" means attorney, profes sional law association, corporation, or partnership, au thorized under applicable law to practice law.

(4A) The term "bankruptcy assistance" means any goods or services sold or otherwise provided to an as sisted person with the express or implied purpose of providing information, advice, counsel, document prepa ration, 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.

* * * * *

(12) The term "debt" means liability on a claim.

(12A) The term "debt relief agency" means any per son who provides any bankruptcy assistance to an as sisted 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 in clude-

 

(A) any person who is an officer, director, em ployee, or agent of a person who provides such assis tance or of the bankruptcy petition preparer;

(B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Reve nue Code of 1986;

(C) a creditor of such assisted person, to the ex tent that the creditor is assisting such assisted per son 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 Fed eral 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.

* * * * *

 

2. 11 U.S.C. 110 provides in pertinent part:

Penalty for persons who negligently or fraudulently

prepare bankruptcy petitions

(a) In this section-

(1) "bankruptcy petition preparer" means a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attor ney, who prepares for compensation a document for fil ing; and

(2) "document for filing" means a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States dis trict court in connection with a case under this title.

* * * * *

(e)(1) A bankruptcy petition preparer shall not exe cute any document on behalf of a debtor.

(2)(A) A bankruptcy petition preparer may not offer a potential bankruptcy debtor any legal advice, includ ing any legal advice described in subparagraph (B).

(B) The legal advice referred to in subparagraph (A) includes advising the debtor-

(i) whether-

(I) to file a petition under this title; or

(II) commencing a case under chapter 7, 11, 12, or 13 is appropriate;

(ii) whether the debtor's debts will be dis charged in a case under this title;

(iii) whether the debtor will be able to retain the debtor's home, car, or other property after commenc ing a case under this title;

(iv) concerning-

(I) the tax consequences of a case brought under this title; or

(II) the dischargeability of tax claims;

(v) whether the debtor may or should promise to repay debts to a creditor or enter into a reaffirma tion agreement with a creditor to reaffirm a debt;

(vi) concerning how to characterize the nature of the debtor's interests in property or the debtor's debts; or

(vii) concerning bankruptcy procedures and rights.

* * * * *

3. 11 U.S.C. 526 provides:

Restrictions on debt relief agencies

(a) 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 mis leading, 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 pro spective assisted person, directly or indirectly, affir matively 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 as sisted 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.

(b) Any waiver by any assisted person of any protec tion or right provided under this section shall not be enforceable against the debtor by any Federal or State court or any other person, but may be enforced against a debt relief agency.

(c)(1) Any contract for bankruptcy assistance be tween 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.

(2) Any debt relief agency shall be liable to an as sisted 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 sec tion 528 with respect to a case or proceeding under this title for such assisted person;

(B) provided bankruptcy assistance to an as sisted person in a case or proceeding under this title that is dismissed or converted to a case under an other 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.

(3) In addition to such other remedies as are pro vided under State law, whenever the chief law enforce ment officer of a State, or an official or agency desig nated 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 resi dents to recover the actual damages of assisted per sons arising from such violation, including any liabil ity 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 deter mined by the court.

(4) The district courts of the United States for dis tricts located in the State shall have concurrent jurisdic tion of any action under subparagraph (A) or (B) of paragraph (3).

(5) 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.

(d) No provision of this section, section 527, or sec tion 528 shall-

(1) annul, alter, affect, or exempt any person subject to such sections from complying with any law of any State except to the extent that such law is in consistent with those sections, and then only to the extent of the inconsistency; or

(2) be deemed to limit or curtail the authority or ability-

(A) of a State or subdivision or instrument ality thereof, to determine and enforce qualifica tions for the practice of law under the laws of that State; or

(B) of a Federal court to determine and en force the qualifications for the practice of law before that court.

 

 

 

 

4. 11 U.S.C. 528 provides:

Requirements for debt relief agencies

(a) A debt relief agency shall-

(1) not later than 5 business days after the first date on which such agency provides any bankruptcy assistance services to an assisted person, but prior to such assisted person's petition under this title being filed, execute a written contract with such assisted person that explains clearly and conspicuously-

(A) the services such agency will provide to such assisted person; and

(B) the fees or charges for such services, and the terms of payment;

(2) provide the assisted person with a copy of the fully executed and completed contract;

(3) clearly and conspicuously disclose in any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public (whether in general media, seminars or spe cific mailings, telephonic or electronic messages, or otherwise) that the services or benefits are with re spect to bankruptcy relief under this title; and

(4) clearly and conspicuously use the following statement in such advertisement: "We are a debt relief agency. We help people file for bankruptcy re lief under the Bankruptcy Code." or a substantially similar statement.

(b)(1) An advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public includes-

(A) descriptions of bankruptcy assistance in con nection with a chapter 13 plan whether or not chap ter 13 is specifically mentioned in such advertise ment; and

(B) statements such as "federally supervised repayment plan" or "Federal debt restructuring help" or other similar statements that could lead a reasonable consumer to believe that debt counseling was being offered when in fact the services were di rected to providing bankruptcy assistance with a chapter 13 plan or other form of bankruptcy relief under this title.

(2) An advertisement, directed to the general public, indicating that the debt relief agency provides assis tance with respect to credit defaults, mortgage foreclo sures, eviction proceedings, excessive debt, debt collec tion pressure, or inability to pay any consumer debt shall-

(A) disclose clearly and conspicuously in such advertisement that the assistance may involve bank ruptcy relief under this title; and

(B) include the following statement: "We are a debt relief agency. We help people file for bank ruptcy relief under the Bankruptcy Code." or a sub stantially similar statement.

 

 

 

 

 

 

 

 

5. 11 U.S.C. 707 provides in pertinent part:

 

Dismissal of a case or conversion to a case under

chapter 11 or 13

 

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(b)(1) After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an individ ual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor's consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter. In making a determina tion whether to dismiss a case under this section, the court may not take into consideration whether a debtor has made, or continues to make, charitable contributions (that meet the definition of "charitable contribution" under section 548(d)(3)) to any qualified religious or charitable entity or organization (as that term is defined in section 548(d)(4)).

(2)(A)(i) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the court shall presume abuse exists if the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser of-

(I) 25 percent of the debtor's nonpriority unse cured claims in the case, or $6,000, whichever is greater; or

(II) $10,000.

(ii)(I) The debtor's monthly expenses shall be the debtor's applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor's actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides, as in effect on the date of the order for relief, for the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent. Such expenses shall include reasonably necessary health insurance, disability insur ance, and health savings account expenses for the debtor, the spouse of the debtor, or the dependents of the debtor. Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not in clude any payments for debts. In addition, the debtor's monthly expenses shall include the debtor's reasonably necessary expenses incurred to maintain the safety of the debtor and the family of the debtor from family vio lence as identified under section 309 of the Family Vio lence Prevention and Services Act, or other applicable Federal law. The expenses included in the debtor's monthly expenses described in the preceding sentence shall be kept confidential by the court. In addition, if it is demonstrated that it is reasonable and necessary, the debtor's monthly expenses may also include an addi tional allowance for food and clothing of up to 5 percent of the food and clothing categories as specified by the National Standards issued by the Internal Revenue Ser vice.

(II) In addition, the debtor's monthly expenses may include, if applicable, the continuation of actual expenses paid by the debtor that are reasonable and necessary for care and support of an elderly, chroni cally ill, or disabled household member or member of the debtor's immediate family (including parents, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a de pendent) and who is unable to pay for such reason able and necessary expenses.

(III) In addition, for a debtor eligible for chap ter 13, the debtor's monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 percent of the pro jected plan payments, as determined under sched ules issued by the Executive Office for United States Trustees.

(IV) In addition, the debtor's monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,500 per year per child, to attend a private or public ele mentary or secondary school if the debtor provides documentation of such expenses and a detailed expla nation of why such expenses are reasonable and nec essary, and why such expenses are not already ac counted for in the National Standards, Local Stan dards, or Other Necessary Expenses referred to in subclause (I).

(V) In addition, the debtor's monthly expenses may include an allowance for housing and utilities, in excess of the allowance specified by the Local Stan dards for housing and utilities issued by the Internal Revenue Service, based on the actual expenses for home energy costs if the debtor provides documenta tion of such actual expenses and demonstrates that such actual expenses are reasonable and necessary.

(iii) The debtor's average monthly payments on account of secured debts shall be calculated as the sum of-

(I) the total of all amounts scheduled as con tractually due to secured creditors in each month of the 60 months following the date of the petition; and

(II) any additional payments to secured credi tors necessary for the debtor, in filing a plan under chapter 13 of this title, to maintain possession of the debtor's primary residence, motor vehicle, or other property necessary for the support of the debtor and the debtor's dependents, that serves as collateral for secured debts;

divided by 60.

(iv) The debtor's expenses for payment of all priority claims (including priority child support and alimony claims) shall be calculated as the total amount of debts entitled to priority, divided by 60.

(B)(i) In any proceeding brought under this subsec tion, the presumption of abuse may only be rebutted by demonstrating special circumstances, such as a serious medical condition or a call or order to active duty in the Armed Forces, to the extent such special circumstances that justify additional expenses or adjustments of cur rent monthly income for which there is no reasonable alternative.

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(3) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter in a case in which the presumption in sub paragraph (A)(i) of such paragraph does not arise or is rebutted, the court shall consider-

(A) whether the debtor filed the petition in bad faith; or

(B) the totality of the circumstances (including whether the debtor seeks to reject a personal ser vices contract and the financial need for such rejec tion as sought by the debtor) of the debtor's financial situation demonstrates abuse.

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