Navigating People Through the Maze of Bankruptcy

The Bankruptcy Court Self Help Assistance Desk, run by Legal Aid Chicago, does just what you would expect it to do helps clients file for bankruptcy as they seek relief from suffocating piles of debt. But as with bankruptcy itself, the full reality is much more complicated and the help much more far-reaching than that.

The Desk aids unrepresented filers at every point in the bankruptcy process, which can be daunting and complex. In Room 622 of the Dirksen Building, pro bono attorneys and lawyers from Legal Aid Chicago answer general questions about bankruptcy, help visitors decide if bankruptcy is their best option, and help prepare forms for people without lawyers in the U.S. Bankruptcy Court for the Northern District of Illinois. The Desk eases the burden on the court by helping patrons evaluate their options before unnecessarily filing for bankruptcy. Each year, about 44,000 bankruptcy cases are filed in the Northern District of Illinois, the most in the country, so every bit of paperwork reduction helps the court run more efficiently. Launched in 2007 as a partnership with the U.S. Bankruptcy Court, Legal Aid Chicago and the CBF, the Desk is one of the many projects you make possible through the Investing in Justice Campaign.

Dan Lindsey, who oversees the Desk and is the director of Legal Aid Chicago’s consumer practice group, says most people who visit the Desk fall into three categories. The first group has not yet filed for bankruptcy, but is planning to, and comes in seeking help as they begin the process. Often, after meeting with attorneys and discussing their situation, these clients realize they don’t actually need to file bankruptcy. Many of these clients hold no assets, and any income they have is collection proof. Income from Social Security benefits, for example, cannot be garnished to repay creditors.

For others, declaring bankruptcy is not a practical solution to their problems. Many clients come to the Desk after their car has been towed due to unpaid parking tickets, and they’ve heard they can file bankruptcy to get their car back. The laws have evolved such in recent years that that’s harder to do now, says Lindsey. Though the Desk is usually unable to help these clients get their cars back, the advice they receive helps them better understand the legal process and makes them better aware of their options.

[note note_color=”#003a63″ text_color=”#ffffff” radius=”1″]Interested in volunteering at the Bankruptcy Help Desk? Learn more from Legal Aid Chicago. Volunteers must have at least one year of experience practicing bankruptcy law, an active law license, and be willing to commit to a minimum of six 3-4 hours shifts per year and complete training.

For more information or to sign up, contact Legal Aid Chicago [/note]

The second group usually comes to the Desk already sure that they can and need to file for bankruptcy, and needs help filling out the complex series of forms necessary to do so. Medical debt is the number one source of personal bankruptcy filings in the U.S. This includes people who have insurance but lack sufficient savings or income to tackle healthcare expenses, particularly unanticipated ones. While Chapter 7 bankruptcies can be simpler, usually because debtors in chapter 7 have no assets or income, the forms required for Chapter 13 demand exacting detail on a debtors’ income, expenses, and creditors, and are difficult to fill out correctly. It’s almost impossible for somebody to complete this on their own, Lindsey says of the forms for a Chapter 13 bankruptcy.

The third group is people who have already filed for bankruptcy and have reached a roadblock in the process. Many of these clients need to go before the court to request an extension on the stay protecting them from their creditors. Others are referred to the Desk after their trustee meeting for help with corrections to paperwork, or, occasionally, to convert their bankruptcy from a Chapter 13 to a Chapter 7 bankruptcy.

According to Lindsey, about two-thirds to three-quarters of the Desk’s patrons plan to file Chapter 7 bankruptcies.

The Desk doesn’t only help debtors however. Mary, a woman who was beaten to within an inch of her life by a former partner, is one such creditor who came to the Desk for help.

Following his conviction on domestic violence charges and a related civil settlement for $100,000, Mary’s former partner declared bankruptcy in an attempt to avoid paying the restitution he owed her. However, the debt he owed Mary falls into the non-dischargeable category of debts arising from malicious and wrongful conduct causing physical harm. With the help of attorneys from Legal Aid Chicago and the Bankruptcy Help Desk, Mary won a judgment in her favor from the court. Though her former partner has appealed, Mary is strongly positioned to recover the damages awarded her after her partner’s conviction because of the hard work of attorneys at the Desk.

The Desk has settled into a new all-volunteer model over the past year, and ran a recruitment campaign last fall to recruit new volunteer attorneys. While the all-volunteer model works well, and helps prevent burnout, Lindsey says there is still a greater need for help.

There’s a lot more people out there who could use help and don’t get it, just because the resources are limited.