Bankruptcy Courts’ Pro Se Pathfinder Module to Put Automated Chapter 7 Filing at Debtors’ Fingertips by End of 2012

If I had a nickel for every time a pro se bankruptcy client has asked me, “Is there somewhere I can go to fill out my bankruptcy forms online?”…  Well, I would have a heck of a lot of nickels.

That is why I am so excited about some news I heard recently, about a project through the bankruptcy courts that is going to blaze a path for low-income debtors to file their own Chapter 7 bankruptcies through an automated, step-by-step online module called Pro Se Pathfinder.  The module also comes just before the bankruptcy courts expect to release a new and improved version of their forms, which will include simple, straightforward instructions to make them more user-friendly for pro se debtors.

How huge is this?  Pretty huge.

I had the pleasure recently of speaking at length about this project with Dana McWay, who is the Clerk of Court for the Bankruptcy Court, Eastern District of Missouri, and the co-chair of the federal courts’ Forms Modernization Project, which is responsible for the Pro Se Pathfinder module.

According to Dana, the Pro Se Pathfinder module is a “Turbo Tax”-type module that will walk pro se debtors through each step of filling out their initial Chapter 7 forms – the bankruptcy petition, schedules, application for fee waiver or to pay in installments, and other initial forms needed to open the case.

The way the module works is that it asks the debtor a series of questions, and uses the data entered by the debtor to automatically populate each form.  The debtor can then look over the completed forms and make any necessary revisions.  When the debtor is satisfied with what they see, they hit “Submit.”  The forms are then “submitted” to the bankruptcy court, and the system gives the debtor a unique identifier for their submission.

The forms will not yet be filed at this point, though.  The clerk still has to get a real signature page from the debtor, along with payment of the filing fee if the debtor did not apply for a waiver.  The clerks cannot accept an electronic signature or electronic payment from the pro se debtor.  So the submitted forms are held in the bankruptcy court’s “cloud,” so to speak, until these items are done.

For the signature page, the debtor can print out a signature page, sign it, and bring it in to the court along with their filing fee.  The clerk uses the unique identifier previously issued to the debtor, to match up their payment to their submitted data, and then it gets pulled down from the cloud and goes right into CM-ECF.

The Pro Se Pathfinder module is currently being piloted in New Jersey, New Mexico, and California Central bankruptcy courts.  New Jersey’s module is up and running on their website, and Dana encouraged me to go test it out.  You can test it out yourself by registering as a user, and then fill in information as a pretend debtor – however, do not hit “submit!”  Or you may have a justifiably annoyed clerk contacting you when you never show up to pay your filing fee in New Jersey.

Dana shared that the pilot phase will happen through the summer, and they expect to provide the final module to bankruptcy courts by the end of 2012.  Each court will have the option of putting it on a public access computer at the court, and/or online on the court’s website, and it is likely that most courts will end up doing both.  (I haven’t been able to confirm yet what Montana’s plan is.) Dana expressed that there is a high level of interest from bankruptcy courts for the module, and she expects that most if not all will end up implementing it after the pilot period is over.  Bankruptcy courts will also have the option to use Pro Se Pathfinder for Chapter 13 filings, as well as “hook” their own local forms into the module.

I asked Dana specifically about the level of instruction provided on the modules, to see the extent of overlap with the kind of pro se bankruptcy resources we have developed as part of my fellowship with MLSA, and are continuing to develop in conjunction with legal aid organizations in other states.  It sounds like there will be about the same amount of instruction that is on the forms now, but in much more straightforward terms.  For example, she said that instead of asking debtors to list their unsecured liabilities, it will instead ask something like, “what do you owe.”

The module itself is in Plain Language at a 6^th grade level, to give you some idea of how much simpler the wording will be compared to the current forms.  While Pro Se Pathfinder will walk debtors through the forms, Dana felt that they will still probably have questions about certain terms or concepts, which is where legal aid resources will continue to come in handy.

The module is free to use, and it is not even limited to pro se filers.  Dana said attorneys can use it to help clients file Chapter 7, or to do limited scope representation – i.e., prepare the forms for pro se debtors but not represent them in bankruptcy court once they file.

So far, Pro Se Pathfinder does not yet cover any later filings the debtor might need to do, once their case is underway.  However, it sounds like the module may eventually be expanded to cover these scenarios.

Also, as I mentioned above, the bankruptcy courts are also going to be releasing new and improved court forms next spring.  The forms will use more Plain Language and less legalese.   This means they will be longer, but easier for non-attorneys to understand.  They are also just plain prettier, in my opinion.

You can view the forms here (skip to page 189), and submit comments by emailing scott_myers@ao.uscourts.gov.

The impact of the Pro Se Pathfinder module and newly revised forms is going to be huge for low-income debtors and pro se filers.  These changes will effectively open the courthouse doors for debtors who cannot afford a bankruptcy attorney.

However, and of no small concern to the bankruptcy bar, these resources also pose a Do-It-Yourself option for debtors who possibly could have afforded an attorney.  Chapter 7 bankruptcies constitute the bulk of the filings done by attorneys, so I have to wonder how this will affect business.  My impression is that lots of attorneys have been jumping on to the “bankruptcy bandwagon,” as this has been a booming area over the past few years.  However, bankruptcy filings are now back on the downswing nationwide – Chapter 7 filings dropped 14% over the past 12 months.

I don’t know how fierce the competition has actually become in Montana, but I have heard grumblings through the grapevine that too many new attorneys are getting into the business and undercutting the “old-timers.”  I am left wondering if we are going to end up with way too many bankruptcy attorneys, and not enough bankruptcies, fueling a race to the bottom in terms of fees.  I guess that will be a boon to clients, in any event.  It will certainly force us to do our work even more efficiently, if we hope to serve bankruptcy clients while earning a fair fee.

Either way, the change is coming, and it will be interesting to see how it plays out for debtors and lawyers in the Montana bankruptcy business.  Even with Pro Se Pathfinder, debtors will still benefit from additional information and help understanding the terms and concepts they will need in order to successfully complete their forms, whether on paper or through Pro Se Pathfinder.  Also, I suspect that debtors with anything but the simplest of bankruptcy estates will probably still need legal advice and representation.

I’d love to hear thoughts from attorneys and non-attorneys alike on these developments.  Attorneys – Is Pro Se Pathfinder going to affect your business?  Is it a helping hand for low-income debtors, or a bite out of your clientele?  Or neither?

Everyone else – do you see this resource being helpful to you or someone you know?  Would you use a Do-It-Yourself option to save on legal fees?  Or would you still be worried about making a mistake without the help of a lawyer?

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Jessie Lundberg is a consumer law attorney in Missoula, Montana, currently serving as an Equal Justice Works AmeriCorps Legal Fellow with Montana Legal Services Association.  In November of 2012, she is launching Lundberg Law Office, specializing in consumer protection litigation and bankruptcy.  Read her full bio here.

All opinions stated herein are personal and do not constitute the position of any organization or employer.