§ 138.3     Creditors’ Attorneys’ Fees: New Recovery Rights after BAPCPA
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 138.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

BAPCPA added several new provisions for the recovery of attorneys’ fees in bankruptcy cases, most of which do not apply in Chapter 13 cases.1 BAPCPA added one provision that narrowly defines a new right to recover attorneys’ fees that could be applicable in Chapter 13 cases.

[2]

In new §§ 526, 527 and 528, BAPCPA imposed many new duties on debtors’ attorneys who provide services to assisted persons2 and become Debt Relief Agencies (DRAs).3 When a DRA fails to comply with the duties and restrictions in new §§ 526, 527 and 528, the DRA may be liable to an assisted person for damages, including reasonable attorneys’ fees under new § 526(c).4 There is no mention in § 526(c) of enforcement of the DRA provisions by an ordinary creditor.

[3]

But new § 526(c)(3) grants to the chief law enforcement officer of a state or to any official or agency designated by a state, authority to bring an action to enjoin a violation of § 526, 527 or 528 and to seek on behalf of residents of the state actual damages, including costs and reasonable attorneys’ fees.5 Section 526(c)(3)(C) is a new statutory right to recover reasonable attorneys’ fees when a DRA has violated the new DRA rules.

[4]

The statutory authority of a state official in § 526(c)(3) is prefaced by “in addition to such other remedies as are provided under state law.”6 This phrase could be interpreted that the specific grant of standing to a state official to remedy a violation of the DRA rules does not preclude actions under state law by other parties in interest. The possibility that a creditor or other party in interest can bring an action under state law against a DRA for violating new § 526, 527 or 528 is not precluded by the statute.


 

1  See, e.g., 11 U.S.C. § 707(b)(4).

 

2  See 11 U.S.C. § 101(3), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1  WARNING! You Are a Debt Relief Agency.

 

3  See 11 U.S.C. § 101(12A), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1  WARNING! You Are a Debt Relief Agency.

 

4  See 11 U.S.C. § 526(c), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1  WARNING! You Are a Debt Relief Agency.

 

5  See 11 U.S.C. § 526(c)(3), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1  WARNING! You Are a Debt Relief Agency.

 

6  11 U.S.C. § 526(c)(3).