Can a Lawyer Give Advice to a Client to Incur Prepetition Debt?

Tip of the hat to Mr. Dennis McGoldrick who pointed me to Justice Sotomayor’s footnote 6 in during a wonderful class session.

Dennis McGoldrick

Thus, advice to refinance a mortgage or purchase a reliable car prior to filing because doing so will reduce the debtor’s interest rates or improve his ability to repay is not prohibited, as the promise of enhanced financial prospects, rather than the anticipated filing, is the impelling cause.  Advice to incur additional debt to buy groceries, pay medical bills, or make other purchases “reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor,” §523(a)(2)(C)(ii)(II), is similarly permissible.  Milavetz, Gallop & Milavetz, P. A. v. United States, 559 U.S. 229 (2010)

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