As millions of Americans receive their delayed $1,200 checks from the U.S. Department of the Treasury, another looming story becomes more probable. Millions of working-class families are likely falling into debt as they struggle to pay for basic necessities. Untold numbers of people are going to need bankruptcy protection, and sooner than we think.
Personal bankruptcy is a lifeline for millions of working-class families who face financial shocks after layoffs, medical emergencies and family breakups. In the recession after the 2008 financial crisis, millions of people who lost their jobs and health insurance fell into debt because they couldn’t afford their basic expenses and medical bills.
Bankruptcy filings more than doubled, a sign of how the lifeline played a critical part in getting people back on their feet and restarting our economy.
Based on last week’s record unemployment figures, history looks due for a repeat. Millions of working Americans will likely declare bankruptcy to recover from the economic devastation of COVID-19. Some have already started. This month’s trickle will soon be a flood.
But there’s a Catch-22 in the system across many places in our country that, unless fixed, will trip up many working people. If you can afford to hire a lawyer, the lawyer can electronically file your paperwork for you. But if you can’t afford a lawyer — and, remember, you’re filing for bankruptcy here — in many districts you must physically print out 23 different forms and hand-deliver or mail them to the court.
When over half of America remains under stay-at-home orders, bankruptcy courts that don’t allow everyone to electronically file their forms deny equal protection under the law to the most vulnerable people in our society — the people facing so much financial hardship that they cannot afford a lawyer.
This is only one example of how some bankruptcy courts preferentially treat people who can afford lawyers over people who are too poor to pay for help, even though bankruptcy is enshrined under law as an important right in our society. In the age of COVID-19, lacking access to electronic filing is no longer an inconvenient administrative barrier. It’s an injustice. It means bankruptcy is paradoxically only available to those who can afford it.
These aren’t just concepts. They are real problems people face.
After filling out her bankruptcy paperwork, Sarah, a single mother from California, told me how she needed to pay for a babysitter to take care of her school-aged kids. Her local library was closed, which made it hard to find an affordable place to print her documents. Paying for the babysitter, printing, gas and parking cut into her family's already thin food budget.
Individual bankruptcy judges across the country control filing procedures in their districts and can allow online filing during this crisis. Forward-thinking judges in Florida, Georgia, Virginia, Colorado, Oregon and other states have temporarily permitted online filing through local court orders, and they deserve applause. Sadly, these measures are far from ubiquitous.
The U.S. Supreme Court also could increase access by amending the Federal Rules of Bankruptcy Procedure, but it has yet to take action.
Court policies that preferentially treat one group of people, who can pay $1,200 for a bankruptcy attorney, over another group, who cannot afford the fee, undermine our democracy. They undermine our nation’s commitment to equal protection under the law. The COVID-19 crisis makes clear that we must change them.
Unlike other civil rights injustices, the administrative barriers that low-income people face in bankruptcy offer no single actor to call out, no good-guy, bad-guy narrative that can galvanize grassroots support. Yet, now more than ever, there’s no question that forcing people who can’t afford lawyers out of their homes and into court buildings or post offices compromises equal justice for all, as well as public health. It denies Americans life, liberty and property, while putting low-income families in physical harm.
Judges across all areas of law, including bankruptcy, have a once-in-a-lifetime opportunity to reimagine how our system of justice is designed.
Finding the best technologies for online filing and dispute resolution and figuring out how to reduce cognitive load for poor people during a pandemic may not seem like the kind of weighty judgments on which courts should focus their attention, but today, these are the important challenges that each judicial official must address to uphold their oath to equal justice under law.
Judges have a unique mandate to promote justice in this crisis by making our courts more accessible, our forms more comprehensible, and our laws more equal. I hope they use it.
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