Consumer Practice and Access to Justice

November 2021 brought with it a first-of-its-kind, incredibly successful event with ABI’s Consumer Practice Extravaganza Nov. 3-12 (CPEX21). Attendees learned about all aspects of consumer bankruptcy practice from intake to post-filing, and from basic chapter 7 cases to cryptocurrency. One common theme may have gone unnoticed, however: access to justice.

Courts have long held that all persons have a constitutional right to file for bankruptcy.[1] This right is not circumscribed if the prospective debtor is short on funds (indeed, aren’t all debtors?). Many prospective debtors find themselves without the more than $1,000 needed to pay for an attorney to assist them with a chapter 7 filing, so they either wait for their tax return or file the petition themselves. Waiting can result in further financial difficulties, including garnished wages or repossession, and additional emotional distress in an already difficult time. Filing without an attorney can result in a diminished chance of success, either by failure to discharge individual debts because the filer forgot to list them, or failure to achieve a discharge altogether because the filer didn’t complete the requirements.

The U.S. Bankruptcy Court for the Central District of California compiles a comprehensive report of pro se filings and successes and has shown that in that district, which oversees between 5 and 10% of the national consumer filings, filings by self-represented litigants are dismissed for incomplete filings at a rate of 36%, and filers receive discharges only in about 64% of cases. While self-represented litigants may have assistance through electronic self-representation or with a bankruptcy petition-preparer, either of which will increase the debtor’s chance of success, it is no comparison to the assistance an attorney can provide.

We heard throughout CPEX21 about various way s to increase the access to justice for those prospective debtors who cannot immediately afford attorneys. During the A.I. and the Future of Your Practice session, we heard about ways that A.I. can streamline the bankruptcy process, in particular petition preparation. That session spoke in particular about Upsolve and how it is helping many pro se debtors with “simple” chapter 7 cases better understand and complete the petition. During the Great Debates, we heard about the bifurcation of attorneys’ fees in chapter 7, where both sides agreed that there must be some sort of reform to provide better access to attorney assistance, and that fee bifurcation might be one of those reforms. Many panels also discussed pro bono work, from successful outcomes to opportunities to areas where it is needed most.

We can all benefit from increased access to the justice provided by bankruptcy and the fresh start. When debtors receive assistance from attorneys, either through up-front assistance prior to the debtor filing pro se or through full representation, even creditors may find that the outcome is better, as there is less chance for confusion on either end. When the process is more streamlined, through A.I. or otherwise, the bankruptcy process becomes less time-consuming for attorneys, more accessible for debtors, and easier for everyone all around. And when attorneys invest their time in pro bono work in developing areas, such as student loans, they can develop favorable case law and make it easier (and less expensive) for themselves and their future clients down the road.

Each bankruptcy practitioner — both consumer and commercial — should examine how they can increase access to justice. This can be accomplished in many ways. Attorneys can encourage fee bifurcation reform, lend expertise and mentorship to future practitioners, volunteer for local pro bono clinics, or take on pro bono work. Local bar associations and legal aid organizations often have a range of options for the level of commitment each practitioner has. Additionally, the increase in remote practice since the beginning of the pandemic has increased options for pro bono work, including telephonic triage clinics, which help prospective debtors understand whether their best option even is bankruptcy.

We are undoubtedly in a period during which bankruptcy filings are at their lowest levels in recent memory, but we are likely, and hopefully, coming to the end of that period. Foreclosures are about to begin again in earnest, student loan repayments will begin in early 2022, and many people will have to face the medical debt they accrued due to complications of the pandemic. The time to consider access to justice is now.