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الخميس، 15 نوفمبر 2018

Filing for Bankruptcy Could Cost You Nothing With Help From This Nonprofit


Bankruptcy can provide a fresh start for people who are overwhelmed by their debt.

But deciding to throw up that white flag is one thing. The actual process of completing the bankruptcy can be a huge barrier for people who are already feeling down and out.

That’s why a Brooklyn-based nonprofit wants to make it easier and cheaper for people to file for Chapter 7 bankruptcy — while working to chip away at the stigma against bankruptcy, too.

Upsolve was developed by Rohan Pavuluri and Jonathan Petts, who opened a brick-and-mortar legal aid clinic in 2016 before realizing that a software product could help far more people than they could accommodate in their office. At the time, Pavuluri was still a student at Harvard.

So far, several hundred people have filed their bankruptcy forms via Upsolve. The website has helped forgive more than $10 million in debt.

And the organization hopes it’s just the beginning.

How Upsolve Makes It Easier to File for Bankruptcy

Those considering bankruptcy can visit the Upsolve website and answer 10 questions to find out if they’re a good fit for Chapter 7 bankruptcy — the kind Upsolve facilitates.

Pavuluri explained that people seeking Chapter 7 bankruptcy, commonly referred to as liquidation bankruptcy, are often not just down on their luck. They’ve usually faced long-term economic disadvantages.

He said all of Upsolve’s users are also under the median income; if you have a higher income or hold considerable assets, Chapter 7 bankruptcy is likely not a good fit.

Next, the website asks another series of questions, inviting users to upload photos of their pay stubs and other necessary documents to populate bankruptcy-filing forms. An Upsolve staff member reviews these forms before the user files them with their local bankruptcy court. Then, the user comes back to the Upsolve site for credit and savings education.

Credit counseling is legally required for individuals filing for bankruptcy. But Pavuluri said that component of the process (although provided by certified organizations) lasts just an hour or two.

And Pavuluri said that just isn’t enough.

“We don't just help people get back on their feet, but [we] make sure that they stay there and thrive postbankruptcy,” he said. “So our real mission isn't just to help people file for bankruptcy, it's to financially empower people and rehabilitate them when they're in severe financial distress.”

The cost? Zero dollars for each and every user, instead of the $1,000 — or more — an attorney may charge to assist a client filing for bankruptcy.

But after users started returning to Upsolve to ask how they could contribute, the team began suggesting a $25 donation for those who have been satisfied with their experience.

“It's a good way for us to be accountable to our users,” Pavuluri explained. The nonprofit has supplemented fundraising sources with this very tangible (but optional!) feedback from users.

Should Filing for Bankruptcy Be Any Easier?

More than 472,000 people filed Chapter 7 bankruptcy in 2017, according to government data. That number has been dropping since hitting its peak of more than 1 million per year in the period immediately following the recession.

But a recent study analyzing data from the Consumer Bankruptcy Project found that the number of bankruptcy filers age 65 and older has increased almost 500% since 1991. And Pavuluri said that an estimated 5 million to 10 million people in total could benefit from the fresh start bankruptcy provides.

“We think it should be easy for people who are in financial distress and need to be able to access their lifeline to be able to get a fresh start,” Pavuluri said.

He said the access to that fresh start could help people struggling with debt to become more involved participants in the economy.

“Bankruptcy improves people's credit,” he said, “because [they] now all of a sudden have higher credit scores post bankruptcy, and bankruptcy rehabilitates. So they can all of a sudden now be active members of the economy where they can get access to credit they didn't previously have access to.”

But Leslie Tayne, a debt-relief attorney based in New York, said bankruptcy filers won’t see those benefits immediately. “Your credit score will certainly go down” upon the filing and reporting of bankruptcy, Tayne said. “However, how much it drops will depend on where the score started.”

Chapter 7 bankruptcy remains on your credit report for 10 years, although your score can bounce back over time. “How much and how quickly the score rises will depend on the individual and specifics to that person’s credit,” Tayne said.

But Pavuluri stands behind his primary fight: to reduce barriers to bankruptcy filing.

One of the major challenges for Upsolve is the persistent stigma of admitting financial failure through bankruptcy, some of which was developed by lenders who remind borrowers that it’s immoral to dip out on your debt, Pavuluri said.

“People are embarrassed to file, and they should not be,” Pavuluri said. “Bankruptcy is one of the lifelines… available, and people should be happy to take advantage of it in the absence of adequate government support.”

Lisa Rowan is a senior writer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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