Central District of California - 2012 Pro Se Annual Report

Chapter 7 Success

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These two programs, Debtor ID and BPP tracking have allowed the Court to understand the pro se cases better. The first conclusion is that the success of non-attorney assisted debtors after filing varies in chapter 7 based on whether the non-attorney (BPP) discloses his or her involvement. While it is difficult to determine whether an undisclosed BPP assisted a filing, there are indicators that the better BPPs disclose as required by 11 U.S.C. § 110, and the undisclosed BPP cases fail at a much greater rate. How much of this is due to intentional abuse of the system as opposed to poor quality assistance is hard to quantify. The Debtor ID numbers are approximate, but they give fairly accurate estimates of what happens in a case where the assistance was not disclosed, or, if disclosed, the BPP was not familiar with all the limitations of §110.

Only 4.6 percent of attorney represented chapter 7 cases were dismissed in 2012. In comparison, 12.3 percent of the chapter 7 disclosed BPP cases were dismissed. Debtors using disclosed BPPs also obtained chapter 7 discharges 71 percent of the time. The Debtor ID chapter 7 cases, however, were dismissed approximately 46 percent of the time. This may indicate that, as far as not having the cases dismissed, a debtor fares better with a disclosed BPP than without. The testimony at the Debtor ID hearings, combined with these figures, also indicates that the undisclosed BPP cases are where the majority of the fraud and abuse can be found. Disclosed or undisclosed BPP cases both compare unfavorably to the debtors assisted by the self-help desk in Los Angeles where only five percent of the cases were dismissed.

Although the chapter 7 disclosed BPP discharge rate is a surprising 71 percent, the rate of discharge or dismissal does not necessarily reflect how “well” these debtors did in bankruptcy. For example, it is difficult to know whether any of these debtors needed legal advice or could have benefited from either a reaffirmation agreement or redemption in their bankruptcy cases. Whether these debtors could keep a car to get to work after the case is complete is something good bankruptcy counsel would likely analyze, but a BPP would not, and legally may not. There is no way to determine whether these debtors filed the correct chapter. Perhaps chapter 13 was more appropriate for saving a home or for lien avoidance, but whether or not a home could have been saved will remain an unknown. Also, creditors or intangible assets are sometimes not listed in the schedules in these cases.

Even where the BPP compensation is disclosed, the total amount paid is not always accurate. The instances of debtors paying BPPs as much as they would have paid an attorney are frequent. One particularly prolific BPP in the San Fernando Valley Division was discovered last year charging $1,200 per debtor, but disclosing only a $200 payment on the forms. The debtors were found to have been confused about what they were paying for and intimidated into lying about what they paid when anyone made inquiry. In the Debtor ID Program, numerous debtors appeared to say that they had been paying up to $1,500 per month for “foreclosure assistance” even though the only tangible result they had was a dismissed bankruptcy disclosing a $200 payment to a BPP.

  1. Debtor ID Program
  2. Bankruptcy Petition Preparer (BPP) Tracking
  3. Chapter 7 Success
  4. Chapter 13 Failure
  5. Burden on Court Staff
  6. Fraud and Abuse
  7. Language Barriers
  8. Professional Involvement in “Pro Se” Fraud Cases