11 U.S.C. Sections 526, 527, 528 — Debt Relief Agency Framework (BAPCPA)

First published 2026-05-22/Version 0.1.0/CC-BY-4.0/status: draft

Abstract

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) added a regulatory framework for consumer-bankruptcy service providers under 11 U.S.C. §§ 526, 527, and 528. The framework creates a defined category of "debt relief agency," imposes substantive restrictions on the agency's conduct, mandates extensive pre-engagement disclosures to "assisted persons," requires specific contract terms, and supplies statutory remedies (including voiding of agreements, actual damages, and attorney fees) for violations.

The Supreme Court resolved the threshold definitional question in Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010), holding that attorneys who provide bankruptcy assistance to consumer debtors fall within the "debt relief agency" definition. The decision rejected the constitutional challenges to §§ 526 and 528 that the bankruptcy bar had raised, with one narrow exception, and confirmed that the framework's substantive requirements apply with full force to consumer-bankruptcy attorneys.

Definitions: Debt Relief Agency and Assisted Person

The framework operates on two interlocking statutory definitions added by BAPCPA at 11 U.S.C. § 101.

Debt relief agency — § 101(12A)

Section 101(12A) defines a "debt relief agency" as "any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer under section 110." The definition excludes officers, directors, employees, or agents of a debt relief agency; nonprofit organizations exempt from federal income tax; creditors assisting in the restructuring of their own claims; depository institutions; and authors, publishers, distributors, or sellers of works subject to copyright protection.

Two operative elements: the person provides "bankruptcy assistance," and the recipient is an "assisted person." Both terms are separately defined.

Bankruptcy assistance — § 101(4A)

Section 101(4A) defines "bankruptcy assistance" as "any goods or services sold or otherwise provided to an assisted person with the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance at a creditors' meeting or appearing in a case or proceeding on behalf of another or providing legal representation with respect to a case or proceeding under this title."

The definition is sweeping. It captures the full range of services a consumer-bankruptcy attorney provides: pre-petition counseling, document preparation, schedule preparation, petition filing, attendance at the § 341 creditors' meeting, plan negotiation, and representation through discharge. The phrase "providing legal representation with respect to a case" makes the inclusion of attorney services explicit.

Assisted person — § 101(3)

Section 101(3) defines an "assisted person" as "any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $204,425." The dollar threshold is adjusted triennially under § 104. The "consumer debts" requirement ties the framework to individual consumer-bankruptcy practice; commercial-bankruptcy clients and high-asset individual clients fall outside the assisted-person definition.

The practical effect is that the framework reaches the typical Chapter 7 or Chapter 13 consumer debtor but does not reach Chapter 11 business-reorganization clients or high-asset individuals. The threshold has been updated periodically by the Judicial Conference; current adjusted figures appear at 11 U.S.C. § 104 and at the U.S. Trustee Program's published dollar-amount tables.

The Milavetz Decision and Application to Attorneys

Whether attorneys fall within the debt-relief-agency framework was contested in the immediate post-BAPCPA period. The Eighth Circuit held in Milavetz, Gallop & Milavetz, P.A. v. United States, 541 F.3d 785 (8th Cir. 2008), that attorneys are not debt relief agencies. The Supreme Court reversed.

In Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010), the Court held unanimously on the threshold definitional question that attorneys who provide bankruptcy assistance to assisted persons are debt relief agencies within the meaning of § 101(12A). The Court relied on the statutory text: the definition reaches "any person who provides any bankruptcy assistance," the exclusions enumerated in § 101(12A) do not include attorneys, and the § 101(4A) definition of bankruptcy assistance explicitly includes "providing legal representation." Justice Sotomayor wrote: "The statutory text plainly encompasses attorneys."

The Court also rejected the constitutional challenges to two specific provisions:

  • Section 526(a)(4). The Court held that § 526(a)(4), which prohibits a debt relief agency from advising an assisted person to incur additional debt in contemplation of filing, does not violate the First Amendment when properly construed. The Court read the provision as prohibiting only advice to incur additional debt "to abuse the bankruptcy system," not legitimate advice to incur debt for valid purposes (such as a residential mortgage that the debtor will need post-bankruptcy).
  • Section 528. The Court held that § 528's advertising-disclosure requirements (the "We are a debt relief agency" disclosure) are constitutional as compelled commercial speech under the Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), standard.

After Milavetz, the framework's application to consumer-bankruptcy attorneys is settled. State-bar exemption from federal regulation, attorney-client privilege, and analogous arguments do not displace the BAPCPA framework's requirements as applied to attorneys handling consumer-bankruptcy matters.

Section 526 — Prohibited Conduct and Restrictions

Section 526(a) imposes four categorical restrictions on debt relief agencies. A debt relief agency shall not:

  • § 526(a)(1). Fail to perform any service that such agency informed an assisted person it would provide in connection with a case or proceeding under this title.
  • § 526(a)(2). Make any statement, or counsel or advise any assisted person to make a statement, in a document filed in a case or proceeding under this title, that is untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading.
  • § 526(a)(3). Misrepresent to any assisted person, directly or indirectly, affirmatively or by material omission, with respect to (A) the services 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.
  • § 526(a)(4). Advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title.

Subsection (a)(1)'s "fail to perform any service" restriction creates statutory accountability for promised-but-not-delivered work. The provision is independent of any state-law breach-of-contract claim and supplies federal-court enforcement.

Subsection (a)(2)'s "reasonable care" standard is a negligence-based statutory duty regarding the accuracy of filed documents. It runs parallel to the attorney's Rule 9011 obligations but is operationally distinct: it is triggered by what the attorney "should have known" upon reasonable inquiry, even where no Rule 9011 motion is pursued.

Subsection (a)(3)'s "material omission" prong is broad. A debt relief agency may not, by silence or selective disclosure, leave an assisted person with a materially incorrect understanding of the services to be provided or of the consequences of filing.

Subsection (a)(4)'s prohibition on advising additional debt, as narrowed by Milavetz, reaches only advice to incur additional debt for purposes inconsistent with the legitimate use of the bankruptcy system. Routine pre-petition advice regarding necessary credit (such as a home-purchase mortgage on terms the debtor can sustain post-discharge) is not within the prohibition's scope.

Section 527 — Required Disclosures

Section 527 imposes a series of disclosure obligations on a debt relief agency, all triggered by the agency's first engagement with an assisted person.

§ 527(a)(1) — The "Notice Required by § 342(b)" of the Bankruptcy Code

The agency must provide, not later than three business days after the first date on which the agency offers to provide bankruptcy assistance, the written notice required by § 342(b). The § 342(b) notice describes the chapters available, the consequences of filing, the alternatives to filing, and the existence of credit counseling services.

§ 527(b) — The Information-Accuracy Statement

The agency must provide, to the same effective deadline, a written notice in a form prescribed by § 527(b) advising the assisted person that:

  • All information that the assisted person provides in connection with the case must be complete, accurate, and truthful;
  • All assets and liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset must be stated where requested after reasonable inquiry to establish such value;
  • Current monthly income, the amounts specified in § 707(b)(2), and projected disposable income must be stated after reasonable inquiry; and
  • Information provided during the case may be audited under federal law, with the consequences for failing to provide accurate information including dismissal, denial of discharge, fines, and imprisonment.

§ 527(c) — The Services Statement

The agency must provide, to the same deadline, a written notice in reasonably understandable form stating that, among other things, valuation of assets must be done; that the petition, schedules, and statement of financial affairs must be completed and filed; that the meeting of creditors must be attended; and that the timing of the case is subject to specific statutory deadlines.

§ 527(d) — Retention of Records

The agency must retain a copy of each notice provided under § 527 for a period of two years from the date the notice was given.

Section 528 — Required Contract Terms and Advertising

Section 528 imposes two categories of obligation: a written contract requirement and advertising-disclosure requirements.

§ 528(a)(1)-(2) — Written Contract Requirement

A debt relief agency shall, not later than five business days after the first date on which the agency provides any bankruptcy assistance to an assisted person, but prior to the petition being filed:

  • Execute a written contract with the assisted person that explains clearly and conspicuously the services the agency will provide and the fees or charges for the services and the terms of payment;
  • Provide the assisted person with a fully executed copy of the contract.

The contract must be clear, conspicuous, written, and executed before the petition is filed. A late contract, an oral retainer arrangement, or a fee agreement that lacks the required clarity violates the section.

§ 528(a)(3)-(4), (b) — Advertising Disclosure

An advertisement of bankruptcy-assistance services or of the benefits of bankruptcy must clearly and conspicuously use one of the following statements: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code." or a substantially similar statement. The disclosure applies to advertising in the print media, on radio and television, on the internet, and in other public media.

The Supreme Court in Milavetz upheld the § 528 disclosure requirement against First Amendment challenge as a reasonable compelled-commercial-speech regulation under Zauderer. The disclosure is not satisfied by oblique references or by burying the required statement; "clearly and conspicuously" is a substantive standard.

Section 526(c) — Remedies

Section 526(c) supplies the enforcement mechanism. The remedies are graduated.

§ 526(c)(1) — Voiding of Agreements

Any contract for bankruptcy assistance between a debt relief agency and an assisted person that does not comply with the material requirements of §§ 526, 527, or 528 shall be void and may not be enforced by any federal or state court or by any other person, other than the assisted person.

The voiding remedy is automatic upon material non-compliance. The agency cannot enforce the contract for any fees, costs, or other consideration. The assisted person retains the right to enforce the contract (for example, to compel performance of promised services).

§ 526(c)(2) — Actual Damages and Fees

A debt relief agency shall be liable to an assisted person in the amount of any fees or charges paid by the assisted person, actual damages, and reasonable attorneys' fees and costs, for the following:

  • (A) Negligently or intentionally failing to comply with any provision of §§ 526, 527, or 528 with respect to a case or proceeding;
  • (B) Providing bankruptcy assistance to an assisted person in a manner that the agency intentionally or negligently disregarded the material requirements of this title or the Federal Rules of Bankruptcy Procedure; or
  • (C) Intentionally or negligently misrepresenting the services that the agency will provide or the benefits and risks that may result.

The negligence-or-intent standard is significant: bare non-compliance with the disclosure-and-contract requirements supports liability without proof of intent. Actual damages, return of fees paid, and reasonable attorney fees and costs are all available remedies.

§ 526(c)(3) — Enforcement by State and Federal Officials

The state attorney general (or other appropriate state officer) may bring an action under § 526(c)(3) to enforce the framework. The United States Trustee and the district director of the U.S. Trustee Program may also bring enforcement actions. Federal enforcement is rare but available and provides a non-private-party route.

§ 526(c)(5) — Cumulative Remedies

The remedies under § 526(c) are cumulative; they do not displace remedies available under other applicable law. State unfair-trade-practices statutes, state professional-responsibility rules, and federal disciplinary procedures all remain available alongside the BAPCPA remedies.

Section 526(d) — State Regulation Savings Clause

Section 526(d) preserves state-law regulation of debt relief agencies, including state regulation of attorneys. The savings clause provides that the framework does not preempt state law that establishes "any of the same protections as those provided" by the BAPCPA framework or that provides "greater protections to consumers." State attorney-discipline systems, state consumer-protection statutes, and state regulation of debt-management services therefore continue to operate alongside §§ 526-528.

The savings clause has practical importance for state-bar regulation. A consumer-bankruptcy attorney remains subject to state Rules of Professional Conduct (including duties of competence, communication, and supervision) on top of the BAPCPA framework. A single course of conduct may simultaneously violate § 526(a), the state's Rule 1.4 (communication), and the state's consumer-protection statute, generating overlapping remedies.

Practical Application to Consumer-Bankruptcy Practice

The framework's operational footprint on consumer-bankruptcy practice is substantial:

  • Intake procedures. The firm must provide the § 527 disclosures and the § 342(b) notice within three business days of offering bankruptcy assistance. A standardized intake packet with the required disclosures is the typical compliance mechanism.
  • Engagement letter. The § 528 contract must be executed within five business days of providing any bankruptcy assistance and before the petition is filed. A clear, conspicuous written engagement letter listing services and fees is required; an unwritten or post-petition arrangement violates the section.
  • Advertising review. All firm advertising must include the § 528 disclosure. Website pages, social-media posts, print and radio advertising, and similar media are all subject to the disclosure requirement.
  • Records retention. Copies of the § 527 notices must be retained for two years.
  • Substantive accuracy obligations. The § 526(a)(2) "reasonable care" standard for the accuracy of filed documents runs alongside Rule 9011 and the attorney's general duty of competence under MRPC 1.1.
  • Pre-petition counseling discipline. The § 526(a)(4) restriction on debt-incurrence advice, as construed by Milavetz, requires attention to the substance of pre-petition counseling regarding any additional debt the client is considering.

Non-compliance is consequential. A single material violation can void the entire contract under § 526(c)(1), and negligence is sufficient to trigger actual-damages and fee-shifting liability under § 526(c)(2). The framework is not a soft-disclosure regime; it is enforceable through both private and governmental action.

Primary References

  • 11 U.S.C. § 101(3) (assisted person)
  • 11 U.S.C. § 101(4A) (bankruptcy assistance)
  • 11 U.S.C. § 101(12A) (debt relief agency)
  • 11 U.S.C. § 104 (adjustment of dollar amounts)
  • 11 U.S.C. § 342(b) (notice required for individual consumer-debtor cases)
  • 11 U.S.C. § 526 (restrictions on debt relief agencies)
  • 11 U.S.C. § 527 (disclosures)
  • 11 U.S.C. § 528 (requirements for debt relief agencies)
  • Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23
  • Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010)
  • Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) (compelled commercial speech standard)
  • Connecticut Bar Ass'n v. United States, 620 F.3d 81 (2d Cir. 2010) (post-Milavetz application)
  • In re Reyes, 361 B.R. 276 (Bankr. S.D. Fla. 2007) (representative § 526(c) remedy analysis)
  • EOUST Guidance for U.S. Trustees on §§ 526-528 enforcement

Provenance

  • First codified: 2026-05-22
  • Source: Title 11 of the United States Code as amended by BAPCPA, the legislative record of Pub. L. 109-8, the Supreme Court's decision in Milavetz, EOUST published guidance, and representative bankruptcy court § 526(c) opinions
  • Originating author: Open Bankruptcy Project research team
  • Citation handle: openbankruptcyproject.org/methodology/section-526-debt-relief-agency/

Cite as

BibTeX

@misc{Section526DebtReliefAgency2026,
 author = {Open Bankruptcy Project},
 title = {11 U.S.C. Sections 526, 527, 528 -- Debt Relief Agency Framework (BAPCPA)},
 year = {2026},
 month = {may},
 publisher = {Open Bankruptcy Project},
 howpublished = {\url{https://openbankruptcyproject.org/methodology/section-526-debt-relief-agency/}},
 note = {Version 0.1.0, CC BY 4.0}
}

APA

Open Bankruptcy Project. (2026). 11 U.S.C. Sections 526, 527, 528 — Debt Relief Agency Framework (BAPCPA) (Version 0.1.0). https://openbankruptcyproject.org/methodology/section-526-debt-relief-agency/

Bluebook

Open Bankruptcy Project, 11 U.S.C. Sections 526, 527, 528 — Debt Relief Agency Framework (BAPCPA) (May 22, 2026), https://openbankruptcyproject.org/methodology/section-526-debt-relief-agency/.