Facilitating the “Fresh Start”: Representing Pro Bono Bankruptcy Debtors Through the Volunteer Lawyers ProjectPosted: January 7, 2014
by Meg McKenzie Feist and Megan B. Felter
Our potential client is visibly nervous as we show her to the conference room where we will hold an initial meeting to discuss her financial situation. She looks alternately at us, the view out the window, the stack of invoices and bills she has brought with her, and her cell phone, which vibrates periodically to announce yet another creditor collection call. Following introductions, we ask simply, “What brought you here?” She is taken aback for a moment, obviously unused to the opportunity to offer her story without interruption. With some encouragement, however, she reveals the events and circumstances that brought her to our offices. Listening carefully, we realize that finances are but one aspect of the difficulties in her life, which include mental and physical disabilities and a history of having been physically abused. Unable to work, she relies on government benefits and feels powerless beneath the weight of her debts. By the end of the initial meeting, we have gathered the information necessary to determine whether we can represent her on a pro bono basis to consider debt relief, potentially through bankruptcy. As we walk her to the elevators and shake her hand goodbye, it is clear that she already feels a sense of relief. The rest is up to us.
The Volunteer Lawyers Project
Our experiences advising needy individuals on a pro bono basis with respect to their debt relief options under federal bankruptcy law have been deeply rewarding. In the greater Boston community, there exists a great need for lawyers to volunteer this service. Congress enacted bankruptcy laws to provide “honest but unfortunate” debtors with a “fresh start” from burdensome debts. For individuals who cannot afford a lawyer, however, this relief may be beyond reach. The Volunteer Lawyers Project (VLP) of the Boston Bar Association (BBA) facilitates access to justice by pre-screening and referring qualified individuals to a volunteer lawyer. The lawyer advises the individual in considering bankruptcy relief typically under Chapter 7, which is a court-supervised procedure by which a debtor receives a discharge of debts after his or her “non-exempt” property has been liquidated to pay creditors.
Individuals in Need
A volunteer lawyer can usually expect a pro bono case to have certain common features. First, most clients have very limited, often fixed, income. Some may be relegated to sporadic or part-time work after having lost a more stable job. Others may be forced to live on government benefits after becoming unable to work due to disability. Second, most clients have very limited assets. Typically, they do not own their homes and instead rent, sometimes with the assistance of a federal housing program. Although some clients own cars, many instead rely on public transportation. Indeed, in many cases, a client’s only assets may be clothing and household goods (e.g., bed, television, table, small appliances). These limited assets will likely be deemed “exempt” in the bankruptcy—that is, the client will be entitled to keep them instead of being forced to sell them to pay creditors. Finally, credit card debt is a common feature of most pro bono cases. Unsurprisingly, clients with limited income often use credit cards to make purchases when they do not have sufficient cash. Some clients may feel forced to use credit cards to pay for groceries at the end of the month or to cover unexpected expenses, such as car repairs. When a client misses a monthly payment, late charges and interest can quickly turn a modest balance into an unmanageable burden.
How Can Lawyers Help?
A volunteer lawyer may be able to assist a low-income debtor in finding a way out of overwhelming debt. At the initial meeting with the potential client, the lawyer must remember that the individual likely feels demoralized by his or her financial problems and anxious from creditors’ collection efforts. In many instances, the lawyer can help the situation initially simply by listening respectfully to the individual’s story.
The first step in any potential pro bono engagement is for the lawyer to check conflicts. Mindful of the high likelihood that a volunteer lawyer belongs to a law firm that in unrelated matters represents financial institutions who are creditors in the potential client’s bankruptcy case, the BBA in 2008 issued an ethics opinion analyzing conflicts in the unique context of bankruptcy. The opinion has served to encourage the participation of attorneys from large law firms in the VLP program and should be reviewed by attorneys seeking pro bono bankruptcy opportunities.
Once retained, the lawyer helps the client determine whether bankruptcy is appropriate and, if so, what type of relief is needed. At the outset, the lawyer must explain the benefits and burdens of bankruptcy. While the central goal of bankruptcy is to obtain a discharge of debts, bankruptcy also provides the benefit of the “automatic stay,” which is a federal injunction against all collection activity that takes effect when the petition is filed. The stay provides a debtor with a much needed “breathing spell” while dealing with his or her financial affairs. On the other hand, once a client obtains a Chapter 7 discharge, he or she is prohibited from obtaining additional Chapter 7 relief for the next eight years. Additionally, the bankruptcy filing can remain on a client’s credit report for up to ten years. Finally, some debts (e.g., taxes and student loans) are difficult to discharge in bankruptcy.
The lawyer must also counsel the client in selecting the appropriate type of bankruptcy relief. Under Chapter 7 of the Bankruptcy Code, a debtor’s “non-exempt” property is liquidated to pay creditors. In contrast, under Chapter 13 of the Bankruptcy Code, a debtor has the opportunity to protect his or her “non-exempt” property from the reach of creditors by paying defaulted debts over time through a repayment plan funded by the debtor’s excess income. Typically, a low-income debtor will opt for relief under Chapter 7 because the debtor does not have any “non-exempt” property to protect or because he or she does not have any excess income to fund a repayment plan.
Finally, the lawyer should be sensitive to the client’s non-legal concerns. For an individual debtor, the moral implications or social impact of walking away from debts may weigh as heavily in his or her decision as anything else. While there are no easy answers to these concerns, the lawyer should not underestimate their importance and should engage with the client in addressing them.
Following the decision to file bankruptcy, the lawyer helps the client complete and file the petition, which details the client’s assets, liabilities, income, expenses, and other financial information, and accompanies the client to the Section 341 meeting of creditors, at which creditors and the bankruptcy trustee are given the opportunity to ask the client questions before the bankruptcy court enters any discharge order. The lifespan of a typical Chapter 7 pro bono case is three to four months from initial interview to discharge.
An Enriching Experience
In our experience, helping low-income debtors obtain a “fresh start” in their financial lives through debt relief is its own reward. While we are happy to serve the community in this manner, we have also found that pro bono representation enriches our own experiences and careers. Particularly for developing attorneys, pro bono representation provides an opportunity to increase substantive legal knowledge, to sharpen client counseling skills, and to gain exposure in the local legal community. We are grateful for the VLP’s resources and support, which have afforded us these opportunities.
The BBA provides training for lawyers who would like to represent pro bono clients in Chapter 7 bankruptcy cases. For more information on opportunities with the VLP, please visit www.vlpnet.org.
Meg McKenzie Feist and Megan B. Felter are associates in the Finance & Restructuring Group at Choate, Hall & Stewart LLP in Boston.
By James D. Smeallie
In March of this year, the Boston Bar Foundation (BBF) released a groundbreaking study assessing the practical impact of legal representation in eviction cases. The data indicated that without representation by counsel, many vulnerable tenants forfeit important rights, often lose possession of homes they could have retained, and sometimes forego substantial financial benefits. Conducted under the auspices of a Boston Bar Association (BBA) Task Force on Expanding Civil Right to Counsel, the study involved two different pilot projects, one in the Quincy District Court, and one in the Northeast Housing Court.
Meanwhile, a study conducted by the Task Force to Expand Access to Civil Legal Services in New York found that “the unmet need for civil legal assistance in New York State is profoundly impacting vulnerable New Yorkers and costing taxpayers millions of dollars by increasing homelessness, failing to prevent domestic violence, and increasing poverty.”
This is not a new problem. In 1999, the BBA’s Real Estate Section partnered with the Volunteer Lawyers Project of the Boston Bar Association (VLP), Greater Boston Legal Services (GBLS), the WilmerHale Legal Services Center, and the Boston Housing Court (BHC) to establish a Lawyer for the Day program. The goal was to prevent evictions resulting in homelessness. At the request of the BHC, the program has two different legal information tables, one for unrepresented tenants, and another for unrepresented landlords. The Herbert W. Vaughan Fund of the BBF helps support the operations of this program.
During the 13 year history of the Lawyer for the Day program at the BHC, 1,200 volunteers have donated their time to assist more than 14,732 individuals. In just the past year alone, 443 volunteers helped 991 tenants and 181 landlords.
About 95 per cent of tenants at the BHC are unrepresented. According to Chris Saccardi, a solo practitioner from Somerville and a frequent volunteer, tenants, the bulk of whom are low-income and frequently minorities, are usually opposed by a landlord represented by counsel. The issue before the court is typically whether the tenant can stay in his or her home. Were it not for the Lawyer for the Day program, the imbalance in power would be profound.
Chris reports that it is not uncommon to see families with young children, families with elderly parents sharing their home, as well as elderly people living alone — all of whom are facing eviction. But he also sees tenants who have slipped below middle class status because of job loss or illness.
For tenants living in subsidized housing or Boston Housing Authority developments, the stakes can be especially high. Take for example a grandmother raising grandchildren. Should one of those kids get in trouble, the entire family can face eviction. Should they be evicted “for cause,” the impact can be devastating — with the family being required to split up, move in with relatives, or live on the street. Collateral consequences may follow.
GBLS is well-known for having housing attorneys second to none. Yet the demand for their services by poor people overwhelms the supply.
The BHC, which hears anywhere between 200 and 225 evictions weekly, considers the Lawyer for the Day program a godsend. Thanks to Lawyer for the Day volunteers, some 80 per cent of the cases can be resolved successfully through mediation provided by BHC staff — without a judge having to get involved.
“The program has been successful beyond our wildest dreams,” says Robert Lewis, Chief Clerk Magistrate of the BMC.
A word about unrepresented landlords. . . they are frequently immigrants with limited English proficiency who depend on the rent to pay mortgages on owner occupied two or three family homes. Missed rental payments can put them at risk of foreclosure. Indeed, there are situations where landlord owners of small multi-family homes can be in a tighter financial situation than their tenants.
Often times this population of landlords need to be advised about what steps they must take to bring their property to the minimum state sanitary code, and assisted in determining the difference between a tenant complaint and what the law requires them to do.
This month, the Lawyer for the Day program will expand its services to low income landlords, starting with one Monday a month dedicated specifically to those cases. As Joanna Allison of the VLP points out, the mistakes that unrepresented landlords make on a procedural basis make it impossible for them to prevail in their cases — resulting in wasted filing fees for people who can least afford them and inefficiency for a busy court.
The Lawyer for the Day program is a model for legal services organizations to leverage the contributions of committed volunteers to preserve housing for a very vulnerable population and to conserve precious judicial resources. If we consider the fact that the cost of placing a family in a shelter is on average three times higher than the average government subsidy for families in Massachusetts, the program is also saving taxpayers money.
The program also illustrates the concept that lawyers can do well by doing good. Mary K.Y. Lee, a lawyer whose paid work involves both immigration and landlord/tenant matters, is another dedicated volunteer. She says that were it not for her volunteering for Lawyer for the Day at the BHA, she might not have gotten litigation experience so early in her career, and credits the program with helping her become “a better person and a better lawyer.”
We should all applaud all those involved for making the Lawyer for the Day program a continued success. That being said, we still confront the painful reality of overburdened courts and underrepresented litigants.
As the Task Force to Expand Access to Civil Legal Services in New York concluded, “private lawyers cannot fill the gap in services as the sheer numbers of needy and unrepresented litigants overwhelm the capacity of volunteer lawyers.” In response to that Task Force’s recommendations, the New York Legislature dramatically increased legal aid funding to provide for counsel in eviction and other cases involving basic human needs.
So while I say “keep up the good work” to all our volunteers, I look forward to the BBA expanding beyond its civil right to counsel study and pursuing new paths to assuring counsel to all those involved in cases involving basic human needs such as housing. Stay tuned.