There seems palpably in the air, one ominous additional burden
for the average heavily indebted American debtor and consumer in today’s
dire national economic conditions who may perhaps see his only recourse
for some relief, in filing bankruptcy: finding low-cost bankruptcy,
finding low-cost bankruptcy that you can afford. Meaning, in essence, a
non-lawyer pro se alternative.
The latest figures just released by
the Administrative Office of the U.S. Bankruptcy Courts on the February
2009 bankruptcy filings, made one vital reality crystal clear to almost
every one, namely, that the rate at which the increasingly overburdened
and restive American debtors (both individuals and businesses) are
filing for bankruptcy, is at its highest levels since the now-famous (or
infamous, many would say!) draconian changes of 2005 to the U.S.
bankruptcy law. But, even more significantly, that the new filing rate
is ominously beginning to return to the old “hated” high bankruptcy
filing levels that the nation had reached before that new law was passed
in 2005, supposedly meant to correct and drastically curtail or reverse
the then pre-existing high filing levels.
This latest trend in
American debtor bankruptcy filings strongly underscores a few
fundamental points, among others. First, the depth and gravity of the
financial straights and difficulties in which the average American
consumer and debtor is in today. Second, the reality that, no matter how
difficult a legal hurdle and impediment the institutional powers that
be (the Congress, the lawyers, or the financial institutions, the
courts, etc) may try to place on the path of the American debtors to try
discouraging or making it more difficult for them in seeking the
bankruptcy relief from their debt burdens, when it really comes time of
dire financial and economic crunch, Americans will somehow still find a
way, and will still persevere and persist even against all odds, in
demanding their constitutional rights to be heard in bankruptcy; and
thirdly, the critical necessity, for the average debtor, for finding
low-cost bankruptcy filing alternatives to lawyer.
Elizabeth
Warren, a Harvard Law School professor and author of several books on
bankruptcy, probably sums up the point best this way, alluding to the
persuasion of the Congress by various special interests to pass the 2005
law that restricted debtors from filing for bankruptcy: “The credit
industry [and other vested interests] did its best to drive up the cost
of filing [for bankruptcy]. But when families are in enough trouble,
they will fight their way through the paper ticket and higher attorneys’
fees to get help,” adding that “The word is now leaking out [once
again] that the bankruptcy courts are open for business.”
THE “UNOFFICIALLY BANKRUPT DEBTORS” – DEBTORS WHO CAN’T FILE BECAUSE THEY CAN’T AFFORD IT
But,
even most importantly than that, from the standpoint of the average
bankruptcy-seeker today, this raises one fundamental questions, however.
Namely, just how do the current growing army of increasingly despairing
American debtors who not only seek to file for personal or business
bankruptcy, but in a great deal of cases, truly NEED to file one, AFFORD
to file bankruptcy – in particular, the high lawyers’ legal cost of
filing for bankruptcy? How do these debtors get or find low-cost
bankruptcy? A bankruptcy that debtors can reasonably afford?
Some
1.1 million (1,064,000) American debtors filed for bankruptcy this past
2008 year – filings which, many analysts are quick to remind us, were
carried out by these debtors in spite of, and under tough conditions of,
a whole host of stringent, restrictive requirements and drastically
increased legal fees imposed by the 2005 law. But, even more
significant, from the stand point of the debtor or bankruptcy-seeker, is
another closely related FACT: that, worse still, according to experts,
THERE’S NEARLY AS MANY AMERICAN DEBTORS MORE who wanted to file for
bankruptcy and are eligible, but could not, because they simply couldn’t
AFFORD the lawyers’ legal fees. These are debtors who Justin Harelik, a
bankruptcy lawyer with Price Law in Los Angeles, call the “unofficially
bankrupt debtors” – debtors who are all but bankrupt but only lack the
lawyers’ hefty price to make their status official!
YEARLY NUMBER OF BANKRUPTCY FILINGS SINCE 1998
Source: creditslips.org
Year…….Bankruptcy……. Filings……… Source & Notes
1998…….1,442543……….AO data……(Office of U.S. Courts)
1999…….1,319,465………AO data
2000…….1,253.444………A.O data
2001…….1,492-129………AO data
2002…….1,577,561……..AO data
2003…….1,589,383………AO data
2004…….1,597,462………AO data
2005…….2,078,415………AO data……..includes spike in filings before 2005 bkr. law
2006…….590,544………..AACER data…(Automated Access to Court Records)
2007…….826,665………..AA.CER data
2008…….1,064,000………AACER data
EVEN THE LAWYERS AGREE, THEIR BIG FEES IS A PROBLEM WITH DEBTORS
In
deed, though many bankruptcy lawyers would rather that it be
sugar-coated, many other lawyers, themselves, objectively acknowledge
that the lawyers’ legal fees for bankruptcy is a principal frequent
issue and concern to debtors and clients in bankruptcy law practice.
“You
have to pay the Chapter 7 legal fees upfront in cash. You can be too
poor to go bankrupt,” is how Professor Robert M. Lawless of the
University of Illinois College of Law once put it.
Another
observer, Jenny C. McCune, a contributing editor at Bankrate.com, notes
that rather astoundingly, we’ve now come to the point where a debtor may
have to “finance bankruptcy filing,” adds: “It may sound like a
Catch-22…you have no money so you’re filing for bankruptcy, but you
need [legal fee] money so you can file for bankruptcy.”
Jonathan Ginsburg, bankruptcy attorney, Atlanta, Ga.,
explains that in phone conversations he often has with callers facing
severe financial crises who are pondering possible bankruptcy, after
their initial question which is often general in nature, “The next
question I get has to do with fees: ‘If I have no money, how am I
supposed to pay for a lawyer?'”
LAWYERS TRADITIONAL ARGUMENT FOR THEIR HIGH FEES
Bankruptcy
lawyers, schooled in the art of argumentation and the defense of even
the clearly indefensible, particularly when it centers on the protection
of a lucrative means of making a living, would often plunge into what,
in essence, are really deep philosophical arguments in justification of
the high fees they charge – it is really still a “bargain” for debtors,
considering the much larger sums they stand to discharge in bankruptcy;
if a debtor is “really” hard pressed enough by his debt burden and is
“serious” about freeing himself of it, he’ll somehow find a way; a
debtor, if he is really “serious,” can always find the lawyer’s fees
somewhere by, say, withholding the payments he would have had to make to
other creditors and then using it to pay the lawyer to free him of the
bigger debt burden, etc., etc. It is a complex web of arguments that
would have to wait for another day to address. But, for our current
immediate purposes in this article, the relevant issue is crystal clear.
The point, clearly, is that for the average American debtor today,
already reeling from the high debt burden which is the prime object he’s
out attempting to address through bankruptcy filing, the average
lawyer’s fee for bankruptcy (some $2,000 or more for the simplest
Chapter 7 bankruptcy, and $4,500+ for its Chapter 13 counterpart) is
high, in deed even exorbitant, and frequently is just plain beyond his
means – in short, simply UNAFFORDABLE.
LAWYERS’ FEES HAVE “PRICED OUT” A LOT OF DEBTORS
Seems
that the bankruptcy lawyers, through greed and monopolistic instinct,
are gradually pricing themselves out of the personal bankruptcy filing
business, that the only realistic alternative now left to be tried,
seems to be a non-lawyer low-cost bankruptcy option.
“Surveys have
shown that many attorneys have doubled their fees to cope with new
requirements imposed by the BAPCPA of 2005. Many thousands of debtors
have therefore been priced out of lawyer representation in their
bankruptcies,” asserts Stephen Elias, a California attorney and
bankruptcy specialist and author of several books on the subject.
“Because of rules governing the practice of law, the only legal
alternative to attorney representation is self representation…
bankruptcy petition preparers can assist with your paperwork.”
The
point then is crystal clear. The fundamental task at hand this very
minute in the field of bankruptcy, is devising a credible system that is
low-cost for filing bankruptcy, which is simple, straightforward, and
readily accessible, and is, above all, AFFORDABLE to most debtors who
legitimately seek or need bankruptcy and are qualified and eligible to
file under the eligibility rules. It is, after all, no “gift” or some
kind of “favor” being meted out by “the law,” or some kind of
mercy-peddling do-gooders of the legal establishment. But, a direct
sacred right and gift of the American Constitution.
It is a task
which confronts us all, particularly the bankruptcy constituency and the
bankruptcy industry powers-that-be who control the current bankruptcy
system – the financial and credit industry, the courts, the Congress,
but including private entrepreneurs and ideas persons who can come up
with new or fresh ideas about how to fix the current broken personal
bankruptcy system, and yes, the current bankruptcy lawyers and bar, and
others.
But, of more immediacy and urgency in the mean time,
however, while we await such a new system to be designed by the
responsible parties, qualified American entrepreneurs, institutions and
entities who are able, should be free to come up with practical and
effective ways and methods – alternatives to the current wholly
deficient and inadequate lawyer-controlled bankruptcy system – that
actually enable legitimate bankruptcy seekers to exercise their
legitimate constitutional right to seek the bankruptcy relief option
when and if necessary – simply and AFFORDABLY.
IN SUM
The
point is that, America, in both its public as well as private sectors,
must fast prepare for, and devise and implement, a drastically different
but effective bankruptcy filing system that provides the current
million plus per year and the upcoming additional millions of bankruptcy
filers who will be coming into the bankruptcy filing pipeline per year,
a genuinely affordable means for them to file for bankruptcy – the 1.4
million American filers (or more) that are expected to seek the
bankruptcy relief in 2009 calendar year alone, and beyond.
NEED FOLLOW-UP INFORMATION?
For
more on finding some low-cost but non-lawyer alternatives that you may
use to do your bankruptcy, other than the traditional lawyer-dominated
filing system which is generally prohibitively expensive? An alternative
that will drastically cut down your cost of bankruptcy? Please visit
this site: http://WWW.Afford-Bankruptcy.Com/proSeBankruptcyTrend.html