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There appears palpably in the air, one ominous extra burden for the average heavily indebted American debtor and consumer in today's dire national financial conditions who may perhaps maybe see his only recourse for some relief, in filing bankruptcy: locating low-price bankruptcy, obtaining low-price bankruptcy that you can afford. Meaning, in essence, a non-lawyer pro se option.
The latest figures just released by the Administrative Office of the U.S. Bankruptcy Courts on the February 2009 bankruptcy filings, created one important reality crystal clear to nearly just about every 1, namely, that the rate at which the increasingly overburdened and restive American debtors (both people and businesses) are filing for bankruptcy, is at its highest levels since the now-renowned (or infamous, many would say!) draconian changes of 2005 to the U.S. bankruptcy law. But, even significantly more substantially, that the new filing rate is ominously beginning to return to the old "hated" high bankruptcy filing levels that the nation had reached ahead of that new law was passed in 2005, supposedly meant to appropriate and drastically curtail or reverse the then pre-existing high filing levels.
This newest trend in American debtor bankruptcy filings strongly underscores a few basic points, among others. Initial, the depth and gravity of the economic straights and difficulties in which the average American consumer and debtor is in at this time. Second, the reality that, no matter how challenging a legal hurdle and impediment the institutional powers that be (the Congress, the lawyers, or the monetary institutions, the courts, and so on) might possibly try to location on the path of the American debtors to attempt discouraging or producing it additional tough for them in searching for the bankruptcy relief from their debt burdens, when it definitely comes time of dire economic and economic crunch, Americans will somehow nonetheless come across 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 vital necessity, for the typical debtor, for locating low-price bankruptcy filing alternatives to lawyer.
Elizabeth Warren, a Harvard Law School professor and author of many books on bankruptcy, probably sums up the point finest this way, alluding to the persuasion of the Congress by varied special interests to pass the 2005 law that restricted debtors from filing for bankruptcy: "The credit business [and other vested interests] did its ideal to drive up the expense of filing [for bankruptcy]. But when families are in enough trouble, they will fight their way via the paper ticket and greater attorneys' fees to get support," adding that "The word is now leaking out [as soon as once more] that the bankruptcy courts are open for home business."
THE "UNOFFICIALLY BANKRUPT DEBTORS" - DEBTORS WHO Can't FILE Given that THEY Cannot AFFORD IT
But, even most importantly than that, from the standpoint of the average bankruptcy-seeker these days, this raises one basic questions, however. Namely, just how do the current growing army of increasingly despairing American debtors who not only seek to file for private or company bankruptcy, but in a excellent deal of instances, genuinely Will need to file one, AFFORD to file bankruptcy - in certain, the high lawyers' legal price of filing for bankruptcy? How do these debtors get or get 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, various analysts are speedy to remind us, were carried out by these debtors in spite of, and below tough conditions of, a entire host of stringent, restrictive needs and drastically increased legal fees imposed by the 2005 law. But, even a lot more considerable, from the stand point of the debtor or bankruptcy-seeker, is one other closely associated Truth: that, worse nonetheless, according to specialists, There is Practically AS Quite a few AMERICAN DEBTORS Much more who wanted to file for bankruptcy and are eligible, but could not, considering they merely couldn't AFFORD the lawyers' legal fees. These are debtors who Justin Harelik, a bankruptcy lawyer with Cost 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 Given that 1998
Source: creditslips.org
Year.......Bankruptcy....... Filings......... Source & Notes
1998.......1,442543..........AO data......(Office of U.S. Courts)
1999.......1,319,465.........AO information
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........contains spike in filings just before 2005 bkr. law
2006.......590,544...........AACER information...(Automated Access to Court Records)
2007.......826,665...........AA.CER data
2008.......1,064,000.........AACER information
EVEN THE LAWYERS AGREE, THEIR Massive FEES IS A Trouble WITH DEBTORS
In deed, although a number of bankruptcy lawyers would rather that it be sugar-coated, lots of other lawyers, themselves, objectively acknowledge that the lawyers' legal fees for bankruptcy is a principal frequent problem 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 when 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 might have to "finance bankruptcy filing," adds: "It could sound like a Catch-22...you have no funds so you are filing for bankruptcy, but you need [legal fee] revenue so you can file for bankruptcy."
Jonathan Ginsburg, bankruptcy attorney, Atlanta, Ga., explains that in telephone conversations he generally has with callers facing severe financial crises who are pondering probable bankruptcy, following their initial question which is commonly common in nature, "The subsequent question I get has to do with fees: 'If I have no income, how am I supposed to pay for a lawyer?'"
LAWYERS Standard ARGUMENT FOR THEIR HIGH FEES
Bankruptcy lawyers, schooled in the art of argumentation and the defense of even the clearly indefensible, especially when it centers on the protection of a lucrative implies of producing a living, would often plunge into what, in essence, are genuinely deep philosophical arguments in justification of the high fees they charge - it is certainly nonetheless a "bargain" for debtors, considering the a lot larger sums they stand to discharge in bankruptcy if a debtor is "definitely" challenging pressed sufficient by his debt burden and is "serious" about freeing himself of it, he'll somehow discover a way a debtor, if he is actually "serious," can usually acquire 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 no cost him of the bigger debt burden, and so on., etc. It is a complicated net of arguments that would have to wait for one more day to address. But, for our existing instant purposes in this post, the relevant concern 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 by way of bankruptcy filing, the typical lawyer's fee for bankruptcy (some $two,000 or far more for the simplest Chapter 7 bankruptcy, and $4,500+ for its Chapter 13 counterpart) is high, in deed even exorbitant, and regularly is just plain beyond his indicates - in brief, basically UNAFFORDABLE.
LAWYERS' FEES HAVE "PRICED OUT" A LOT OF DEBTORS
Appears that the bankruptcy lawyers, by means of greed and monopolistic instinct, are gradually pricing themselves out of the private bankruptcy filing business enterprise, that the only realistic option now left to be attempted, appears to be a non-lawyer low-expense bankruptcy selection.
"Surveys have shown that a large number of attorneys have doubled their fees to cope with new needs imposed by the BAPCPA of 2005. A lot of thousands of debtors have for this reason been priced out of lawyer representation in their bankruptcies," asserts Stephen Elias, a California attorney and bankruptcy specialist and author of a variety of books on the subject. "Since of rules governing the practice of law, the only legal alternative to attorney representation is self representation... bankruptcy petition preparers can help with your paperwork."
The point then is crystal clear. The fundamental job at hand this quite minute in the field of bankruptcy, is devising a credible method that is low-expense for filing bankruptcy, which is straight forward, straightforward, and readily accessible, and is, above all, Reasonably priced to most debtors who legitimately seek or require bankruptcy and are qualified and eligible to file below the eligibility rules. It is, soon after all, no "gift" or some kind of "favor" becoming meted out by "the law," or some kind of mercy-peddling do-gooders of the legal establishment. But, a direct sacred ideal and gift of the American Constitution.
It is a process which confronts us all, particularly the bankruptcy constituency and the bankruptcy market powers-that-be who control the existing bankruptcy program - the monetary and credit business, the courts, the Congress, but which includes private entrepreneurs and ideas persons who can come up with new or fresh tips about how to fix the present broken individual bankruptcy technique, and yes, the current bankruptcy lawyers and bar, and others.
But, of significantly more immediacy and urgency in the mean time, however, although 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 of charge to come up with practical and effective ways and approaches - alternatives to the present 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 important - just and AFFORDABLY.
IN SUM
The point is that, America, in each its public as nicely as private sectors, must rapidly prepare for, and devise and implement, a drastically various but productive bankruptcy filing program that gives 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 indicates for them to file for bankruptcy - the 1.4 million American filers (or significantly more) that are expected to seek the bankruptcy relief in 2009 calendar year alone, and beyond.
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