The Affordability Paradox: How Consumer Bankruptcy’s Greatest Weakness May Account for Its Surprising Success

Abstract

When the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made consumer bankruptcy more expensive for all debtors, it inadvertently reignited a debate about how to make the system more affordable for its neediest beneficiaries. Even before BAPCPA, consumer bankruptcy suffered from the irony that those who needed it the most were often too poor to take advantage of its relief.

The seemingly obvious solution to this problem is to eliminate the major cost that consumer bankruptcy filers bear, that of paying their own lawyers. But in our rush to undo the harm caused by BAPCPA’s worsening of the affordability problem, we risk moving consumer bankruptcy too far in the opposite direction and undermining the benefits that a judicial system with paid consumer lawyers has provided. The cost increases driven by BAPCPA were not a bankruptcy-only event, but rather were part of a broader movement in which policymakers generally sought to make safety net programs less accessible. Consumer bankruptcy’s lawyer and judge-based framework may have protected it from the worst effects of this trend.

Keywords: bankruptcy, consumer, pro se