[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 17-10810

________________________

D.C. Docket No. 6:16-cv-00662-PGB-KRS

LOYD P. CADWELL, 

Individually and on behalf of All Others Similarly Situated, 

 Plaintiff - Appellant,

versus

KAUFMAN, ENGLETT & LYND, PLLC, 

 Defendant - Appellee.

________________________

Appeal from the United States District Court

for the Middle District of Florida

________________________

(March 30, 2018)

Before ED CARNES, Chief Judge, NEWSOM, and SILER,* Circuit Judges.

NEWSOM, Circuit Judge:

 * Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by 

designation. 

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2

This case arises under the Bankruptcy Abuse Prevention and Consumer 

Protection Act of 2005, which, among other things, amended federal law to impose 

new requirements and prohibitions on professionals who assist with the preparation 

of bankruptcy petitions. The provision specifically at issue here, 

11 U.S.C. § 526(a)(4), provides in relevant part that a “debt relief agency”—

including a law firm that provides bankruptcy-related services—“shall

not ... advise” a debtor “to incur more debt in contemplation of such person filing 

a case under this title or to pay an attorney or bankruptcy petition preparer a fee or 

charge for services performed as part of preparing for or representing a debtor in a 

case under this title.” In Milavetz, Gallop & Milavetz, P.A. v. United States, 559 

U.S. 229 (2010), the Supreme Court unanimously concluded that Section 

526(a)(4)’s first prohibition—on advice to incur additional debt “in contemplation 

of” a bankruptcy filing—requires proof that the advice was given for an invalid

purpose designed to manipulate the bankruptcy process. This case presents the 

question whether the statute’s second prohibition—on advice to incur debt to pay 

for a lawyer’s bankruptcy-related representation—likewise entails an invalidpurpose requirement. We hold that it does not and that, as relevant here, an 

attorney violates Section 526(a)(4) if he instructs a client to pay his bankruptcyrelated legal fees using a credit card.

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I

Loyd Cadwell consulted with the law firm of Kaufman, Englett & Lynd 

(“KEL”) about the possibility of filing a Chapter 7 bankruptcy petition.1

 

Following the initial meeting, Cadwell entered into an agreement that obligated 

him to pay $1700 in attorneys’ fees “for representation in [his] Chapter 7 

Bankruptcy case.” The agreement contained an addendum establishing a schedule 

that required immediate payment of a $250 retainer, a second $250 installment

shortly thereafter, and then, after that, four monthly installments of $300 apiece. 

According to Cadwell’s complaint, “KEL instructed [him] to pay the initial 

retainer and all subsequent payments by credit card.” As directed, Cadwell paid 

the initial retainer and the next three installments using two different credit cards.

After terminating his relationship with KEL, Cadwell filed this action under 

11 U.S.C. § 526(a)(4), which, as already explained, states that a law firm “shall 

not ... advise” a client “to incur more debt in contemplation of such person filing a 

case under this title or to pay an attorney” for bankruptcy-related legal services. 

KEL moved to dismiss Cadwell’s complaint, arguing (1) that he hadn’t stated a 

claim on which relief could be granted and (2) that even if he had, Section

526(a)(4) is unconstitutional because it improperly restricts KEL’s attorney-client 

 1 Because Cadwell’s appeal follows the district court’s dismissal of his complaint for failure to 

state a claim, we accept as true the facts alleged in the complaint and draw all reasonable 

inferences in Cadwell’s favor. See, e.g., Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003). 

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communications. The district court granted KEL’s motion. “[W]ithout more,” the 

court held, “the mere advice to use credit cards to pay for legal fees does not 

violate” Section 526(a)(4). Rather, based on its reading of the Supreme Court’s 

decision in Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 

(2010), the district court concluded that Section 526(a)(4) only “prohibits a debt 

relief agency from advising a debtor to incur additional debt for an invalid 

purpose.” Because Cadwell had “alleg[ed] no facts that would” support an 

inference “that KEL acted with an improper purpose or with an intent to 

manipulate the bankruptcy system,” the district court held that he had failed to 

state a viable claim under the statute. Having done so, the district court found it 

unnecessary to address KEL’s First Amendment challenge. 

On appeal, Cadwell contends that the district court erred in faulting him for 

failing to allege that KEL acted with an “invalid” (or “improper”) purpose. At 

least as it pertains to a lawyer’s advice to his client to incur debt to pay legal fees, 

Cadwell insists, Section 526(a)(4)’s text admits of no such requirement. KEL 

responds that the district court correctly interpreted the statute to impose an 

invalid-purpose element, but that even if Cadwell had stated a claim, the statute 

violates the First Amendment. Our review is de novo. See Batchelor-Robjohns v. 

United States, 788 F.3d 1280, 1284 (11th Cir. 2015).

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II

As its name suggests, the Bankruptcy Abuse Prevention and Consumer 

Protection Act of 2005 was enacted “to correct perceived abuses of the bankruptcy 

system.” Milavetz, 559 U.S. at 231–32. The Act added to the Bankruptcy Code a 

number of provisions directed at the conduct of bankruptcy professionals. Id. 

Among those provisions is 11 U.S.C. § 526(a), which “establishes several rules of 

professional conduct for persons qualifying as debt relief agencies,” including 

lawyers. Id. at 233. At issue here is subsection (a)(4), which provides as follows:

A debt relief agency shall not ... 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 a 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).

The parties here agree that KEL—as a law firm that provides bankruptcyrelated advice—qualifies as a “debt relief agency” within the meaning of Section 

526(a)(4). See Br. of Appellant at 3, 7; Br. of Appellee at 5; see also Milavetz, 559 

U.S. at 239. The parties also agree that for purposes of this appeal, Cadwell is an 

“assisted person or prospective assisted person” under the statute. See Br. of 

Appellant at 7; Br. of Appellee at 5. Finally, and importantly, the parties agree that 

the statute contains two distinct prohibitions—one about incurring debt in 

anticipation of bankruptcy filings generally, and the other about incurring debt to 

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pay for bankruptcy-related legal services more specifically. From there, the 

parties’ positions diverge.

A

The parties’ central disagreement is over the proper way to parse Section 

526(a)(4)’s two prohibitions. For example, where does each prohibition begin and 

end, and more to the point, does the phrase “in contemplation of”—which the 

Supreme Court in Milavetz construed to require proof that the advice to incur debt 

was given for an invalid purpose—apply to both prohibitions, or only the first? 

Unfortunately, the statute contains no punctuation that might help us determine

where to place the “hinge” that divides the two prohibitions—which, as it turns 

out, really matters. We are presented here with three different ways of reading

Section 526(a)(4)—one (sort of) suggested by the Supreme Court in Milavetz,

another proposed by KEL and adopted by the district court, and yet another

advocated by Cadwell. Each locates the hinge in a different place in the text, 

resulting in three very different meanings. We consider each in turn.

1

Reading No. 1: “A debt relief agency shall not ... advise an assisted 

person or prospective assisted person [1] to incur more debt in 

contemplation of such person filing a case under this title or [2] to pay 

an attorney or bankruptcy petition preparer a fee or charge for services 

performed as part of preparing for or representing a debtor in a case 

under this title.”

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One way to parse the statute was suggested (obliquely) by the Supreme 

Court’s opinion in Milavetz. There, at the outset of the pertinent portion of its 

analysis, the Court observed that Section 526(a)(4) “prohibits a debt relief agency 

from ‘advising an assisted person’ either ‘to incur more debt in contemplation of’ 

filing for bankruptcy ‘or to pay an attorney or bankruptcy petition preparer fee or 

charge for services’ performed in preparation for filing.” 559 U.S. at 239 

(emphasis added and alterations omitted). Under that reading, in which the 

hinge—the word “either” in the Court’s paraphrase—comes before the words “to 

incur more debt,” the statute would separately prohibit advice (1) “to incur more 

debt in contemplation of” filing for bankruptcy and (2) “to pay an attorney” for 

bankruptcy-related representation. 

That’s not an unnatural reading of the statute, at least as a grammatical 

matter. Under it, both prohibitions would begin (neatly) with infinitives—“to 

incur” and “to pay.” But the interpretation does have a pretty big wart—namely, 

that it would flatly prohibit all advice “to pay an attorney” for bankruptcy-related 

representation. That makes little sense, it seems to us, particularly in light of other 

provisions of the Bankruptcy Code that clearly contemplate that attorneys will get 

paid for bankruptcy-related services. See, e.g., 11 U.S.C. § 329 (requiring 

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attorneys to “file with the court a statement of the compensation paid or agreed to 

be paid” during the year preceding the petition).2

 

Perhaps not surprisingly, no one here has urged us to adopt this reading of 

Section 526(a)(4). And we don’t think that we are bound by Milavetz’s passing 

suggestion that the statute’s second prohibition might be understood to forbid

advice “to pay an attorney,” because the Court was concerned there only with the 

first prohibition. See 559 U.S. at 239 (“Only the first of these prohibitions is at 

issue.”). We thus reject any interpretation of Section 526(a)(4) pursuant to which 

the statute’s second prohibition erects a categorical bar on advice to pay 

bankruptcy attorneys.

2

Reading No. 2: “A debt relief agency shall not ... advise an assisted 

person or prospective assisted person to incur more debt in 

contemplation of [1] such person filing a case under this title or [2] to 

pay an attorney or bankruptcy petition preparer a fee or charge for 

services performed as part of preparing for or representing a debtor in 

a case under this title.”

There is a second way to read Section 526(a)(4), proposed by KEL and 

adopted by the district court. In essence, KEL asserts that the statute prohibits a 

lawyer from advising his client to incur debt to pay for bankruptcy-related legal 

services only if that advice was given for an “invalid purpose.” The district court 

 2 See also Lamie v. United States Trustee, 540 U.S. 526, 537 (2004) (“It appears to be routine for 

debtors to pay reasonable fees for legal services before filing for bankruptcy ....”).

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agreed, reasoning that KEL’s invalid-purpose interpretation was compelled by 

Milavetz. We disagree.

The issue in Milavetz was whether the first prohibition in Section 

526(a)(4)—precluding advice to incur more debt “in contemplation of” a 

bankruptcy filing—unconstitutionally restricted a law firm’s attorney-client 

communications. In service of its speech-based argument, the firm there 

contended that Section 526(a)(4)’s first prohibition broadly forbade “not only 

affirmative advice but also any discussion of the advantages, disadvantages, or 

legality of incurring more debt.” 559 U.S. at 240. The Supreme Court rejected the 

firm’s expansive interpretation; instead, focusing on the phrase “in contemplation 

of,” the Court concluded that the first prohibition more narrowly prevents an 

attorney “only from advising a debtor to incur more debt because the debtor is 

filing for bankruptcy, rather than for a valid purpose.” Id. at 243. In so holding, 

the Court explained that the phrase “in contemplation of” is a term of art 

historically associated with abusive conduct—basically, advice to “load up” on 

debt with the expectation of obtaining its discharge in bankruptcy. Id. at 244. 

Thus, the Court held, the “controlling question” under Section 526(a)(4)’s first

prohibition is “whether the impelling reason for advising an assisted person to 

incur more debt was the prospect of filing for bankruptcy.” Id. at 243 (quotation 

marks and alterations omitted).

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We reject the view that Milavetz’s invalid-purpose gloss applies here. For 

starters, Milavetz certainly doesn’t “directly control[]” this case, as KEL asserts. 

Br. of Appellee at 11. As already explained, Milavetz addressed only Section 

526(a)(4)’s first prohibition; it said nothing about the second. 559 U.S. at 239 

(“Only the first of these prohibitions is at issue.”). Nor, we conclude, does 

Milavetz’s reasoning sensibly apply to the statute’s second prohibition. Again, the 

Milavetz Court’s conclusion that the statute’s first clause prohibits only advice to 

incur additional debt for an invalid purpose rested on the phrase “in contemplation 

of.” Thus, KEL’s Milavetz-based argument—pursuant to which the invalidpurpose gloss applies to the second prohibition, as well as the first—would require

that we place the hinge after the phrase “in contemplation of.” On that 

construction, the statute would prohibit advice “to incur more debt in 

contemplation of [1] such person filing a case under this title or [2] to pay an 

attorney” for bankruptcy-related legal representation. 

That interpretation founders for two reasons. Initially, and most obviously,

it makes syntactical hash of Section 526(a)(4)’s second prohibition: A lawyer shall 

not advise his client “to incur more debt in contemplation of ... to pay an

attorney”? Nonsense. See United States v. Hayes, 555 U.S. 415, 422 (2009) 

(rejecting a particular reading of a statute because it was, among other things, 

“awkward as a matter of syntax”). Moreover, reading the phrase “in contemplation 

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of” to apply to both prohibitions renders the second prohibition essentially 

meaningless. Under KEL’s interpretation, advice to incur additional debt would 

violate Section 526(a)(4) if either (1) the “impelling reason” for the advice is the 

expectation of bankruptcy discharge, i.e., an invalid purpose, see Milavetz, 559 

U.S. at 243, or (2) the impelling reason for the advice is exactly the same, and is 

thus invalid for the same reason, and the debt happens to be incurred to pay an 

attorney. Under that reading, the second prohibition becomes a mere subset of the 

first—it has no independent bite. We disfavor interpretations of statutes that 

render words or clauses superfluous. See, e.g., Bloate v. United States, 559 U.S. 

196, 209 (2010). We therefore reject KEL’s contention that the phrase “in 

contemplation of”—and thus, Milavetz’s invalid-purpose test—applies to Section 

526(a)(4)’s second prohibition.

3

Reading No. 3: “A debt relief agency shall not ... advise an assisted 

person or prospective assisted person to incur more debt [1] in 

contemplation of such person filing a case under this title or [2] to pay 

an attorney or bankruptcy petition preparer a fee or charge for services 

performed as part of preparing for or representing a debtor in a case 

under this title.”

That leaves us with a third possible—and in our view, the correct—

interpretation of Section 526(a)(4). Under this reading, the hinge comes after the 

phrase “to incur more debt,” such that the statute prohibits advice “to incur more 

debt” either (1) “in contemplation of” a bankruptcy filing or (2) “to pay an 

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attorney” for bankruptcy-related legal services. Unlike the first two 

interpretations, this one doesn’t produce goofy results, defy the usual rules of

syntax, or render a phrase meaningless.

Properly interpreted, then, Section 526(a)(4)’s second prohibition forbids 

lawyers from advising their clients “to incur more debt ... to pay an attorney ... a 

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). Importantly, this second 

prohibition—unlike the first, which is modified by the “in contemplation of” 

phrase of art that drove the result in Milavetz—entails no invalid-purpose 

requirement. And that, we think, makes perfect sense, because the two 

prohibitions address different subjects. The first is framed in general terms—it 

forbids advice “to incur more debt in contemplation of” a bankruptcy filing. That 

prohibition, read for all it might be worth, could cover both abusive advice (e.g.,

advice to “load up” on debt just to get it discharged) and salutary advice that would 

likely inure to the benefit of both debtor and creditor (say, to refinance a mortgage 

to a better interest rate). As the Supreme Court recognized in Milavetz, the “in 

contemplation of” clause acts as a divining rod of sorts to separate the abusive 

advice from the salutary. 559 U.S. at 239–43, 248 n.6.

The second prohibition, by contrast, is aimed at one specific kind of 

misconduct—in essence, a bankruptcy lawyer saying to his client, “You should 

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take on additional debt to pay me!” That sort of advice is inherently abusive in at 

least two respects. First, it puts the attorney’s financial interest—getting paid in 

full—ahead of the debtor-client’s. If a creditor discovers the timing and reason for 

the fee-related debt, it could challenge the debt’s dischargeability, thereby

compromising the debtor’s fresh start. See Milavetz, 559 U.S. at 245. Second, it 

puts the lawyer’s own interests ahead of the creditors’ in that, while ensuring the 

lawyer’s full payment, it leaves a diminished estate on which creditors can draw. 

See id. Section 526(a)(4)’s second prohibition, then, has no need for any further 

invalid-purpose gloss, because the advice it targets is, in effect, suspect per se. 

* * *

We therefore hold that the district court erred in concluding that Cadwell 

was required to allege that KEL’s advice was given for some additional, invalid

purpose. Rather, the statute required only that he allege that he was 

“advise[d] ... to incur more debt ... to pay an attorney” for bankruptcy-related 

legal services.

B

Having determined Section 526(a)(4)’s proper interpretation, we now turn to 

the question whether Cadwell’s allegations state a claim under the statute’s second 

prohibition. It seems clear to us that they do.

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Cadwell alleged in his complaint that “KEL instructed [him] to pay the 

initial retainer and all subsequent payments by credit card.” Good enough. First, 

Cadwell’s assertion that KEL “instructed” him to make the payment satisfies the 

statute’s “advise” requirement. See Milavetz, 559 U.S. at 246 (explaining that 

Section 526(a)(4)’s limit on “advis[ing]” a person to incur more debt “requires 

professionals ... to avoid instructing or encouraging assisted persons to take on 

more debt in that circumstance”) (emphasis added). Second, Cadwell alleged that 

he was instructed to make a payment by credit card, an action that necessarily 

required him to “incur more debt.” See, e.g., Webster’s Second New International 

Dictionary 1261 (1959) (defining “incur” to mean “[t]o meet or fall in with, as 

something inconvenient or harmful; to become liable or subject to; to bring down 

upon oneself; as to incur debt ....”). Finally, there is no dispute for purposes of 

this appeal that the credit card charges were for KEL’s representation of Cadwell 

in a bankruptcy-related legal proceeding.

3

 

We therefore have no trouble concluding (as even KEL’s attorney ultimately 

conceded at oral argument4

) that Cadwell’s allegations state a claim under the 

 3 Because a violation of Section 526(a)(4) is complete when a lawyer gives the advice to incur a 

debt to pay for bankruptcy-related representation, it doesn’t matter that Cadwell might have 

completed a “Payment Authorization” form indicating that he intended to pay (at least in part) by 

debit card. In any event, ambiguities in the complaint are construed in Cadwell’s favor, see, e.g., 

Hill, 321 F.3d at 1335, and exhibits attached to the complaint demonstrate that Cadwell did in 

fact make four of his payments via credit card. 

4 See Tr. of Oral Argument at 15:45 (Q: “Do you agree that if the statute is properly read to say 

that the debt relief agency shall not advise an assisted person to incur more debt to pay his 

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statute as we have interpreted it.5 

III

KEL finally contends that even if Cadwell has stated a claim under Section 

526(a)(4), that provision is unconstitutional because it improperly restricts KEL’s 

attorney-client communications. KEL’s primary argument in that connection is 

that “[p]rohibiting advice to clients to pay a fee” violates the First Amendment. 

Br. of Appellee at 24. But as already explained, Cadwell hasn’t asserted—and we 

don’t hold—that the statute flatly prevents a lawyer from advising a client to pay 

legal fees. We therefore reject any First Amendment argument based on that 

overbroad reading of the statute.

KEL separately—and more narrowly—contends that “a statutory prohibition 

on KEL from providing sound legal advice as to how a client may obtain 

representation from an attorney, pay costs, and navigate the complex world of 

bankruptcy law is unconstitutional.” Br. of Appellee at 24. The Supreme Court 

considered and dismissed a similar argument in Milavetz. Specifically, the Court 

 

lawyer, [then] the allegation in paragraph 10 is sufficient under Twombly and Iqbal?” * * * A: 

“Yes, it is ....”).

5 Cadwell’s complaint also purports to assert a claim on behalf of a class. As to the class, 

Cadwell alleged that “KEL collected Chapter 7 retainer fees from the prospective debtor(s) 

through the charging of a credit/charge card which served to cause the prospective debtor(s) to 

incur more debt prior to the potential filing of the Chapter 7.” The district court didn’t address 

whether the class allegations stated a claim under the statute, and the parties haven’t addressed 

those allegations on appeal. We therefore won’t address them either.

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“reject[ed] ... [the] suggestion that § 526(a)(4) broadly prohibits debt relief 

agencies from discussing covered subjects instead of merely proscribing 

affirmative advice to undertake a particular action.” 559 U.S. at 246 (emphasis 

added and alterations omitted). Rather, the Court explained, the statute “by its 

terms prevents debt relief agencies only from ‘advising’ assisted persons ‘to incur’ 

more debt,” meaning that attorneys “remain free to talk fully and candidly about

the incurrence of debt in contemplation of filing a bankruptcy case.” Id. Just so

here. Section 526(a)(4) doesn’t prevent firms like KEL from discussing with 

debtors potential options and their legal consequences. It merely prohibits them 

from giving their clients “affirmative advice” to incur more debt in order to pay for 

bankruptcy-related representation.

6

IV

We therefore hold (1) that a debt-relief agency (including a law firm) 

violates 11 U.S.C. § 526(a)(4) if it advises a client to incur additional debt to pay 

for bankruptcy-related legal representation, without respect to whether the advice 

was given for some independently “invalid purpose”; (2) that Cadwell’s allegation 

 6 Because KEL didn’t offer in its brief any other arguments as to why Section 526(a)(4)—as 

properly interpreted—might violate the First Amendment, we needn’t further consider whether 

the statute, as correctly interpreted, withstands First Amendment scrutiny. Cf. Milavetz, 559 U.S. 

at 248 (“Because our reading of the statute supplies a sufficient ground for reversing the Court of 

Appeals’ decision, and because [the firm] challenges the constitutionality of the statute, as 

narrowed, only on vagueness grounds, we need not further consider whether the statute so 

construed withstands First Amendment scrutiny.”).

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that KEL instructed him to pay his bankruptcy-related legal bills by credit card 

states a viable claim under Section 526(a)(4); and (3) that none of the 

constitutional arguments that KEL has presented to us warrants invalidating the 

statute on First Amendment grounds.

REVERSED AND REMANDED. 

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