Legal Definitions - debt relief agency

A debt relief agency is any individual, company, or organization that offers advice, information, counseling, or other helpful services to someone who is thinking about or actively filing for bankruptcy, in exchange for payment.

It's important to note that, under U.S. bankruptcy law, even lawyers and law firms can be considered debt relief agencies if they provide legal representation or other services related to a bankruptcy case or proceeding. These agencies are subject to specific rules outlined in the Bankruptcy Code. For instance, they are prohibited from advising someone to take on more debt, misrepresenting the potential benefits or risks of a person's financial situation, or making false or misleading statements in any document related to the bankruptcy case.

Here are some examples:

• Example 1: Non-Attorney Service
  ClearPath Debt Solutions is a company that charges a flat fee to individuals struggling with overwhelming debt. Their services include evaluating a client's financial situation, explaining the different types of bankruptcy (like Chapter 7 or Chapter 13), and assisting them in preparing and organizing the necessary paperwork to file for bankruptcy. They do not provide legal representation in court.

  How this illustrates the term: ClearPath Debt Solutions is a debt relief agency because it is a company providing assistive services (evaluation, information, paperwork preparation) to people contemplating bankruptcy, and it does so in return for payment.

• Example 2: Attorney Service
  Attorney Elena Rodriguez specializes in bankruptcy law. She charges her clients a retainer and hourly fees to provide legal advice, represent them in bankruptcy court, negotiate with creditors on their behalf, and guide them through every step of the bankruptcy process, from the initial consultation to the final discharge of debts.

  How this illustrates the term: Even though Elena Rodriguez is a licensed attorney, her law practice falls under the definition of a debt relief agency. She offers legal representation, advice, and other assistive services specifically related to bankruptcy cases to individuals, and she receives payment for these services.

• Example 3: Online Advisory Platform
  Financial Fresh Start Online is a subscription-based digital platform that offers personalized financial assessments and educational resources for individuals facing severe debt. For a premium subscription, the platform connects users with financial counselors who provide detailed guidance on bankruptcy eligibility, help them understand the implications of filing, and assist with preparing a budget and financial statements required for a bankruptcy petition.

  How this illustrates the term: Financial Fresh Start Online acts as a debt relief agency. It is an organization providing information, advice, and assistive services (guidance on eligibility, help with financial statements) to individuals considering bankruptcy, and it charges a fee (premium subscription) for these services.