The Do-it-Yourself Mirage: Complexity in the Bankruptcy System

Abstract

Over a million families declare bankruptcy each year, making bankruptcy one of the most commonly used legal processes in the United States. At the same time, consumers who seek bankruptcy relief are, by definition, financially constrained and thus struggle to afford the costs associated with the process. The difficulty of operating a high-volume legal system used primarily by people who have difficulty paying for lawyers pervades most areas of law that serve individuals, but the bankruptcy system has always faced an additional problem of its own: Complexity. The complexity of the bankruptcy system reached a new peak with the 2005 amendments, which added more than a dozen ways for debtors to run afoul of technical requirements and have their cases dismissed. These changes have put particular pressure on one crucial decision all consumer bankruptcy filers must make: whether to hire a lawyer. This chapter uses empirical data from the 2007 Consumer Bankruptcy Project to examine the circumstances under which debtors forgo the help of a lawyer and file bankruptcy pro se.

Keywords: bankruptcy, consumer credit, pro se issues