Pro Bono Spotlight

Debt Relief Paralegals

Reaching out to consumers in need of pro bono bankruptcy assistance.

By Lori Thompson

January/February 2008 Table of Contents

Oftentimes, when consumers are faced with overwhelming debt, they need assistance to resolve their legal issues so that they can move forward and improve their lives. The bankruptcy law that is designed to provide consumers with a fresh start often doesn’t function without trained bankruptcy counsel. By getting involved with a pro bono bankruptcy program, paralegals can assist legal service providers who don’t have staff to support a large number of bankruptcy filings. Additionally, getting involved allows paralegals to learn a new area of law or use their existing bankruptcy knowledge and experience, and it provides the opportunity for client contact and to fine-tune interviewing skills.

Behind the Bankruptcy Law

For paralegals not working in bankruptcy law or with consumers to resolve debt issues, the passage a couple of years ago of a major piece of legislation that reformed the bankruptcy system might have gone unnoticed. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law by President George W. Bush on April 20, 2005. “The … law imposes so many new documentary and administrative requirements on filers that lawyers often feel at risk just by taking on a case,” said Allyn M. O’Connor, assistant staff counsel with the Business Law Pro Bono Project of the American Bar Association Center for Pro Bono. “BAPCPA also imposes quite a few disclosure and other requirements on lawyers themselves. On this point, however, many courts have ruled that pro bono lawyers are not ‘debt relief agencies’ and as such are not subject to the disclosure and other requirements set forth in sections 526, 527 and 528 of the Bankruptcy Code. The Office of the United States Trustee finally conceded this point and has two answers in its Q & A section that confirm this.” A recent case from the Southern District of Texas details the testimony presented to the court by a number of parties expressing the increasing difficulty in finding volunteers to assist with consumer debtors (see In re Pro Bono Services, U.S. District Court, Southern District of Texas (2007)). In this case, the Honorable Jeff Bohm held that a volunteer lawyer who accepts a case on a pro bono basis would not be defined as a debt relief agency due to the case being handled without payment of a fee, and that providing pro bono services doesn’t constitute “other valuable consideration.” While all of this applies to pro bono bankruptcy attorneys, it’s important for paralegals who will be working in pro bono bankruptcy to be aware of as well. Understanding the bankruptcy law and requirements is a vital part of paralegals’ jobs and part of assisting their attorneys.

Under BAPCPA, prior to filing for bankruptcy, applicants must meet with a credit counselor from a government-approved program. For paralegals interested in forming a credit counseling agency or becoming an approved debtor education provider, information is available on the U.S. Department of Justice Web site, www.usdoj.gov. The DOJ’s U.S. Trustee Program is responsible for overseeing the administration of bankruptcy cases.

Stricter eligibility for filing a Chapter 7 bankruptcy also is a component of the 2005 law and consumers who wish to file for Chapter 7 must meet certain eligibility requirements under a means test.

Per BAPCPA, the signature of a debtor’s attorney constitutes a certification that the attorney has performed a reasonable investigation, determined that the signed documents are supported by the facts, that the Chapter 7 petition is not an abuse under §707(b), and that the attorney has no knowledge that the information detailed in the petition is incorrect.

Where Paralegals Can Help

Generally, bankruptcy pro bono programs are initiated by either a bar association or by the judiciary. One resource for finding pro bono bankruptcy opportunities is Penn State’s catalog of Pro Bono Bankruptcy Programs and Resources, which provides detailed information about bankruptcy programs in each state (see www.dsl.psu.edu/publications/probono/index.cfm). The catalog is produced by The Miller Center for Public Interest Advocacy at Penn State’s Dickinson School of Law and the resources found in the guide are obtained through surveys sent to legal professionals involved in bankruptcy, such as bankruptcy judges and law clerks; bankruptcy trustees; private law firms with bankruptcy practices; and legal services offices.

Probono.net, a nonprofit organization based in New York City, provides the Pro Bono Guide on its Web site. The guide can be searched by state, and there is an option to filter the list by area of law including opportunities in debt, credit and bankruptcy areas (see www.probono.net/oppsguide.cfm). The American Bar Association’s Web site also features a general pro bono directory searchable by state, but it doesn’t offer the option to filter by substantive area (see www.abanet.org/legalservices/probono/directory.html).

The Faculty of Federal Advocates is a great resource for information and services, and includes a Court Liaison Committee, Counsel/Co-Counsel Program, Bankruptcy Pro Bono Legal Service, Bankruptcy Liaison Committee and New Federal Trial Lawyers Committee. According to its Web site, “The Faculty of Federal Advocates Bankruptcy Pro Bono Program furnishes free legal services to Debtors in pending bankruptcy cases.” This service assists bankruptcy judges when pro se debtors attempt to represent themselves in adversary proceedings that involve discharging their debts. Pro se debtors face additional challenges in the bankruptcy arena if they don’t respond timely during the adversary proceeding. The debtor must meet the predetermined income guidelines. Less experienced attorneys who are interested in representing the debtors are teamed with experienced attorneys who mentor them through the process. Paralegals are welcome to join the attorney team. Additional information is available at www.faculty federaladvocates.org/programs.html.

In Minneapolis, attorney William Fisher and Debra Schumacher, a legal administrative assistant and paralegal, work together at the law firm of Gray Plant Mooty. Fisher is active with the Min­nesota Bar Association’s bankruptcy section and pro bono committee. Schumacher provides pro bono team coverage with another legal administrative assistant to Fisher and three other bankruptcy attorneys. She assists the clients in resolving issues with creditors, provides referrals to other sources, such as helpful Web sites, and listens to clients with a sympathetic ear, all under attorney supervision.

The Minnesota Bar Association’s bankruptcy section works with the Volunteer Lawyers Network where consumers are referred by various legal aid organizations. The VLN is a nonprofit organization that provides free civil legal services to low-income individuals. Many of the volunteer attorneys are debtor’s counsels who have the appropriate software and paralegals within their firm to assist clients in need. The Minnesota Bar Association bankruptcy section is seeking to establish its program statewide and so far works with three organizations in Minnesota: the Volunteer Lawyers Network, Southern Minnesota Regional Legal Services and Central Minnesota Legal Services. For more information on this Minnesota program, go to www.practicelaw.org/bankruptcy/home.php.

In Rochester, N.Y., Lynda VandenBerg worked, until recently, with the Volunteer Legal Services Project of Monroe County as a paralegal. VLSP provides free legal help to low-income residents in Monroe County, N.Y., and its services are provided by attorneys who donate their time and talent to make sure that low-income individuals have access to the justice system when they face serious legal problems. According to VandenBerg, VLSP doesn’t provide direct legal services to clients needing to file a bankruptcy action, but consumers who meet certain eligibility criteria are scheduled to meet one-on-one with a volunteer attorney to discuss their debt situation in more detail. The volunteer attorney makes the decision to recommend the client’s case to the bankruptcy panel, which includes a list of volunteer attorneys who have expressed interest in providing pro bono services in this area. VLSP doesn’t guarantee that an attorney will be provided, and the consumer must pay the court costs and filing fees. When VandenBerg was with VLSP, she and two other paralegals were responsible for reviewing questionnaires and determining the eligibility for referral to the meeting with the attorney. Once a case had been referred to the bankruptcy panel, VandenBerg was the contact for consumers to call for updates about their cases. Consumers also are referred, as applicable, to the Consumer Credit Counseling Services of Rochester. For more information about VLSP, go to www.vlsprochester.org/index.php.

In addition to local opportunities previously mentioned, another possible opportunity might exist with your local bankruptcy court. To learn how to begin a pro bono program in your bankruptcy court, visit www.abanet.org/legal services/probono/publications/bank ruptcy_starterkit.html.

Creating Your Own Opportunity

While researching information for this article, I contacted most of the legal service providers that offered consumer debt or bankruptcy assistance city-, county- or statewide. Many of the programs actively recruited or utilized attorneys, but didn’t do the same for paralegals. A few of the providers that did respond were interested in finding out how they could utilize paralegals, and others were under the impression that the pro bono attorneys were using their firm’s paralegal staff to assist them. What all of this means is that, while pro bono bankruptcy work for paralegals definitely exists, you might have to do some research in your area to offer your services, and in doing so you might unveil a whole new wealth of opportunities for other interested paralegals as well.