Bankruptcy Tutor
BY DAVID DAYEN APRIL 4, 2020
Max Gardner is one of America’s great bankruptcy attorneys. For years, he’s been running a “bankruptcy boot camp” for his fellow attorneys, in his wooded redoubt in the hills of North Carolina. Normally the event has a few dozen lawyers. He did his first webinar boot camp about a week ago: 776 attorneys signed up. “I really fear something worse than the Great Depression,” Gardner told me. “Every system is going to be overwhelmed.”
Bankruptcy has so far been spared this crush; new filings are kind of a lagging indicator, since it is a last resort for people at a low point. The cases aren’t likely to start piling up for a few months. But Rohan Pavuluri, CEO an co-founder of Upsolve, a large non-profit that assists bankruptcy filers, has already seen intense interest. Seven of the top ten referrals to Upsolve have the term “COVID” or “coronavirus” in them. There’s been ten times more interest in the group’s COVID-19 FAQ page than its homepage.
That page explains some of the realities of bankruptcy since the 2005 reform law (paging Joe Biden), particularly for those who can’t afford an attorney, the kind of people Upsolve assists. “If you cannot afford a lawyer, you cannot file electronically in the vast majority of districts, you have to mail or hand-deliver,” Pavuluri explains. Of course, most bankruptcy courts are closed, making hand-delivery impossible and mailed-in documents unlikely to reach anyone. Just printing the forms without access to a workplace could be prohibitively expensive and hard to do.
It’s not just pro se filers who are burdened. Gardner uses a pre-recorded YouTube video to explain the process to clients. But there are certain notices and disclosures that attorneys must make within a certain number of days; the pandemic makes this difficult. This is of course all by design; the bankruptcy bill made it nearly impossible for individuals to file for bankruptcy. The pandemic just raises the hurdles, particularly for those already in bankruptcy.
That includes people like Catarina Lopez. Her 341 meeting with creditors, a requirement for discharging debt, has been delayed a month. “It changed all my plans I had for the next year,” she told me. Lopez was planning to go back to school for a Master’s degree but owes money to the university where she got her bachelor’s. They won’t release her transcripts without being paid, and without the bankruptcy hearing advancing, that payment can’t be discharged. “Until then I have a financial bar on going to another school or getting a decent job,” she says. Lopez was planning to get married and move to Australia, where her partner is currently. Due to the pandemic, she’s stuck with her grandmother in Texas, waiting for the bankruptcy to resolve, “while my partner is on the other side of the world.”
The U.S. bankruptcy trustee could create standard rules that increase access in all bankruptcy courts, requiring options like videoconferencing. The Supreme Court could also enact an emergency rule. But that hasn’t happened yet. “One big issue, we require what we call wet signatures for every document,” says Gardner. “The debtor has to sign fifteen times. At the request of the bar, my court has waived that requirement. But it’s a big issue all over the country that has been done district by district. There’s no national policy or strategy.”
Another concern is that the $1,200 direct payments in the aid package passed last week will be treated as an asset in bankruptcy, and eligible for creditors to seize. “It’s not 100 percent clear to me that it’s exempt from the trustees trying to say it’s like you won a scratch-off card, and turn that money over to me,” says Gardner. Another part of the bill allows an extension of the bankruptcy timeline from 5 to 7 years, which would reduce people’s monthly payments. But that only applies to existing, not new cases. If you applied after the bill passed, when your financial life went into upheaval, you wouldn’t get the benefit.
Pavuluri, of Upsolve, explains that the system is discriminatory against those who need it the most. “It’s a huge injustice,” he says, “that people facing financial challenges can’t access specific laws that help them.”
source: https://prospect.org/unsanitized-how...suffer-in-the/
Max Gardner is one of America’s great bankruptcy attorneys. For years, he’s been running a “bankruptcy boot camp” for his fellow attorneys, in his wooded redoubt in the hills of North Carolina. Normally the event has a few dozen lawyers. He did his first webinar boot camp about a week ago: 776 attorneys signed up. “I really fear something worse than the Great Depression,” Gardner told me. “Every system is going to be overwhelmed.”
Bankruptcy has so far been spared this crush; new filings are kind of a lagging indicator, since it is a last resort for people at a low point. The cases aren’t likely to start piling up for a few months. But Rohan Pavuluri, CEO an co-founder of Upsolve, a large non-profit that assists bankruptcy filers, has already seen intense interest. Seven of the top ten referrals to Upsolve have the term “COVID” or “coronavirus” in them. There’s been ten times more interest in the group’s COVID-19 FAQ page than its homepage.
That page explains some of the realities of bankruptcy since the 2005 reform law (paging Joe Biden), particularly for those who can’t afford an attorney, the kind of people Upsolve assists. “If you cannot afford a lawyer, you cannot file electronically in the vast majority of districts, you have to mail or hand-deliver,” Pavuluri explains. Of course, most bankruptcy courts are closed, making hand-delivery impossible and mailed-in documents unlikely to reach anyone. Just printing the forms without access to a workplace could be prohibitively expensive and hard to do.
It’s not just pro se filers who are burdened. Gardner uses a pre-recorded YouTube video to explain the process to clients. But there are certain notices and disclosures that attorneys must make within a certain number of days; the pandemic makes this difficult. This is of course all by design; the bankruptcy bill made it nearly impossible for individuals to file for bankruptcy. The pandemic just raises the hurdles, particularly for those already in bankruptcy.
That includes people like Catarina Lopez. Her 341 meeting with creditors, a requirement for discharging debt, has been delayed a month. “It changed all my plans I had for the next year,” she told me. Lopez was planning to go back to school for a Master’s degree but owes money to the university where she got her bachelor’s. They won’t release her transcripts without being paid, and without the bankruptcy hearing advancing, that payment can’t be discharged. “Until then I have a financial bar on going to another school or getting a decent job,” she says. Lopez was planning to get married and move to Australia, where her partner is currently. Due to the pandemic, she’s stuck with her grandmother in Texas, waiting for the bankruptcy to resolve, “while my partner is on the other side of the world.”
The U.S. bankruptcy trustee could create standard rules that increase access in all bankruptcy courts, requiring options like videoconferencing. The Supreme Court could also enact an emergency rule. But that hasn’t happened yet. “One big issue, we require what we call wet signatures for every document,” says Gardner. “The debtor has to sign fifteen times. At the request of the bar, my court has waived that requirement. But it’s a big issue all over the country that has been done district by district. There’s no national policy or strategy.”
Another concern is that the $1,200 direct payments in the aid package passed last week will be treated as an asset in bankruptcy, and eligible for creditors to seize. “It’s not 100 percent clear to me that it’s exempt from the trustees trying to say it’s like you won a scratch-off card, and turn that money over to me,” says Gardner. Another part of the bill allows an extension of the bankruptcy timeline from 5 to 7 years, which would reduce people’s monthly payments. But that only applies to existing, not new cases. If you applied after the bill passed, when your financial life went into upheaval, you wouldn’t get the benefit.
Pavuluri, of Upsolve, explains that the system is discriminatory against those who need it the most. “It’s a huge injustice,” he says, “that people facing financial challenges can’t access specific laws that help them.”
source: https://prospect.org/unsanitized-how...suffer-in-the/
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