“I Can’t Afford Bankruptcy” Solutions to allow Consumers to access the Bankruptcy courts Kenyon Briggs

Three Take-Aways (1) Most People are One Minute Away From Financial Trouble (2) The Consumers Who Need Bankruptcy the Most Cannot Afford It (3) The Solutions Can be Implemented Tomorrow

What is Bankruptcy? Chapter 7 vs. Chapter 13 Court Supervised Process Means Test & Repayment Plan “Discharge” is the Goal Non-Dischargeable Debts Attorney Costs

Bankruptcy by the Numbers (1 of 3) Chapter 7 Attorney Cost $1,300-$2,000 (MO) National Average: $1,229 Usually ½ Up Front, ½ Before Filing Lamie v. U.S. Trustee – “drafting error” Three to Six Months 95% of Ch7 Debtors Receive Discharge 8.2% of Ch 7 Debtors File Pro Se 71.8% of Ch 7 pro se debtors do not receive discharge 2007 Sample: 1.9% of C7 cases dismissed with attorney help; 17.6% of C7 cases dismissed when filed pro se Foohey, et all, "No Money Down" Bankruptcy, 90 Southern Cal. L. Rev. 1055, 1057-58 (2017);

Bankruptcy by the Numbers (2 of 3) Chapter 13 Attorney Cost $2,800-$3,600 (MO) National Average: $3,217 Can Be Spread Over Life of Plan “No Money Down” – 55% Fail Usually 60 Monthly Payments 36.5% of Ch13 Debtors Receive Discharge 6.4% of Ch13 Debtors File Pro Se 99.2% of pro se debtors do not receive discharge Foohey, et all, "No Money Down" Bankruptcy, 90 Southern Cal. L. Rev. 1055, 1057-58 (2017);

Bankruptcy by the Numbers (3 of 3) 819,000 Bankruptcy Filings in 2015 10% drop from 2014 2005 Study: 46% of filings related to existence of medical bills 52% of filers were women, 20% of filers had a bachelor’s degree or higher 36% of filers only had a high school diploma. 2011 Study 60% of bankruptcy filers made less than $30,000 annually 9% of filers made more than $60,000 annually. Foohey, et all, "No Money Down" Bankruptcy, 90 Southern Cal. L. Rev. 1055, 1057-58 (2017); DEBT.ORG, Bankruptcy Statistics (last visited April 3, 2019), https://www.debt.org/bankruptcy/statistics/.

Consumers by the Numbers (1 of 2) More than half of minimum wage workers must work more than one job to pay their bills; 78% of all workers live paycheck to paycheck; 28% make between $50,000-$99,999 10% make more than $100,000. Zach Friedman, 78% of Workers Live Paycheck to Paycheck, Forbes (Jan. 11, 2019), https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government- shutdown/#6d2ae3a54f10.

Consumers by the Numbers (2 of 2) Only 56% of full-time workers save $100 or less per month; More than 25% of workers do not set aside any saving per month; 60% of Americans could not conjure up $1,000 to pay for an unexpected expense Zach Friedman, 78% of Workers Live Paycheck to Paycheck, Forbes (Jan. 11, 2019), https://www.forbes.com/sites/zackfriedman/2019/01/11/live- paycheck-to-paycheck-government-shutdown/#6d2ae3a54f10; Annie Nova, A $1,000 Emergency would push many Americans into debt, CNBC (Jan. 23, 2019), https://www.cnbc.com/2019/01/23/most-americans-dont-have-the-savings-to-cover-a-1000-emergency.html.

5 Tips For Everyone (1 of 3) (1) Know Difference Between Ch7 and Ch13 Cost $1,300 vs $3,000 (approx. 2.5 times as much) Time Until Discharge 6mo vs 5 years / Impact of a Repayment Plan in Ch13 What Assets Do You Keep Ch7 = Only Exempt Assets / Ch13 = Everything

(2) Don’t Try to Trick The Court 5 Tips For Everyone (2 of 3) (2) Don’t Try to Trick The Court (3) Bankruptcy Does Not Fix Being Poor

5 Tips For Everyone (3 of 3) (4) Debtors in Bankruptcy Are Expected to Tighten the Belt (5) Use a Lawyer! 78% of Pro Se Ch7 Debtors 99.2% of Pro Se Ch13 Debtors

Policy Change Allow Ch7 Debtors to Have More Flexible Payment Options (1) Make All Attorney Fees Non-Dischargeable Section 523 “Exceptions to Discharge (2) Allow Ch7 Attorney Fees to Be Paid Monthly I.e., “No Money Down” Amend Bankruptcy Code Post Lamie (3) Give Ch7 Attorney Fees “Priority” Status Section 507 “Priorities”

(1) Make All Attorney Fees Non-Dischargeable -- Section 523 “Exceptions to Discharge” 523(a) “A discharge under section 727, . . . Or 1328(b) of this title does not discharge an individual debtor from any debt – (1) for a tax or a customs duty . . . (2) for money, property, . . . Obtained by false pretenses, . . . Or actual fraud (5) for a domestic support obligation (8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor, for an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit.”

(2) Allow Ch7 Attorney Fees to Be Paid Monthly via Priority Status – Sections 330(a) and 507(a)(2) I.e., “No Money Down” Amend Bankruptcy Code Post Lamie