By Susan L. Myers, Consumer Rights Project Legal Aid Center of Southern Nevada

Since its launch in 2007, the Bankruptcy Facilitator Program has become an important resource for the Bankruptcy Court Judges, Bankruptcy Trustees, persons appearing before the Court without representation, and even private bankruptcy attorneys dealing with unrepresented persons.  Nevada ranked among the top seven states in bankruptcy filings per capita from 2007 through 2011, having the dubious distinction of leading the nation for the three years from 2009 through 2011.[1]  In addition to Nevada having the highest per capita bankruptcy filing rate in 2011, the caseload of Nevada’s Bankruptcy Judges was second in the nation. Even before the current economic crisis, pro se debtors presented a problem for the Bankruptcy Court. They often do not understand the procedures or legal issues in their bankruptcy case, hurting their legal interests and clogging the Court with questions the Judges and staff are unable to answer for them.  Against this backdrop, the Nevada Bankruptcy Judges and Court staff, private bankruptcy attorneys, Chapter 7 and 13 Trustees, and legal services staff formed a committee, which became known as the Bankruptcy Pro Bono Committee, to examine the problem and devise solutions.  After trying different formats, including attempting to cover court calendars with volunteer attorneys, the current model of the Bankruptcy Facilitator Program was developed, and the Legal Aid Center of Southern Nevada received funding from the Attorney Admission Fund to hire an attorney as part-time bankruptcy facilitator beginning in Spring 2007. The Program assists unrepresented individuals by providing information and forms to facilitate a more efficient process, as well as placement with pro bono attorneys when appropriate.  The financial downturn in Nevada led to a tidal wave of foreclosures and bankruptcy filings, and more pro se debtors in need of help.  In order to better meet the needs of those individuals and of the Bankruptcy Court, the Bankruptcy Facilitator has evolved into a full-time position in Southern Nevada (Las Vegas).

The Bankruptcy Facilitator is a unique program in that it does not require space in the courthouse or a court employee’s time to administer it.  The Bankruptcy Facilitator provides support by attending the Court’s reaffirmation hearings, Chapters 7 and 13 relief from stay calendars and providing information to unrepresented debtors at those hearings.  The Facilitator also identifies debtors at those hearings who need more assistance than can be provided in a five minute consultation, and gives them a “blue slip” referring them to the Legal Aid Center for a more complete consultation with the Facilitator.  At reaffirmations, the Facilitator speaks to the assembled debtors about the effect of a reaffirmation and what to expect when the judge enters the courtroom. If more complicated issues arise, the Bankruptcy Judge will continue the reaffirmation agreement until the next calendar and ask the Facilitator to talk with the debtor after the hearing.  The relief from stay calendar presents varied issues.  Some debtors don’t intend to object, but they received a notice and dutifully appear at court.  Others simply want to know how long they have left in the house.  The Facilitator may provide them with information regarding the foreclosure process timeline or refer them to Legal Aid Center’s foreclosure program for further assistance.

Sometimes pro se debtors require assistance beyond the brief information that the Facilitator is able to provide in court, or they appear at hearings or meetings of creditors where the Facilitator is not available. In these instances, the Facilitator, Bankruptcy Judges, bankruptcy trustees, and U.S. Trustee’s office can refer the debtors (and creditors, such as ex-spouses and fraud victims) to Legal Aid Center for legal assistance via a “blue slip” so that they can come to Legal Aid Center and meet with the Facilitator. Typical issues for which debtors are referred include: being served with an adversary complaint; a pending motion to dismiss; the need to amend bankruptcy schedules and forms; possible automatic stay violations; dischargeability matters; and foreclosure matters. Often, the issue can be resolved with the assistance of the Facilitator in the office. The Facilitator can provide information regarding the debtor’s options in his or her circumstance, and can provide forms for the debtor to complete and file with the court when needed. In some cases, the debtor requires representation to resolve their matter. If the debtor is income eligible, the debtor can be paired with a volunteer bankruptcy attorney on the Pro Bono Litigation Panel.   Although bankruptcy case filings were down in 2012, the need for assistance via the blue slip program continued to increase.  In 2012, the Legal Aid Center assisted 152 parties through the blue slip program; placing 32 with pro bono attorneys and providing assistance (answering questions, providing forms) in-house to 120.   This represented an increase over 2011, when 108 parties were assisted through the blue slip program.  It should be noted that the blue slip program does not include placement by the Legal Aid Center’s Pro Bono Project of income-eligible debtors with volunteer attorneys to file Chapter 7 bankruptcies, with which the Facilitator also assists in assessing clients for placement.

Additionally, the Facilitator is focusing on the issue of problem bankruptcy petition preparers to protect debtors from unconscionable fees and improper advice.  The Bankruptcy Court recently began keeping statistics regarding the number of Chapter 13 cases filed pro se. In 2011, 834 of the 4,279 Chapter 13 cases filed in Las Vegas were filed pro se, or approximately 19%. The Clerk of the Bankruptcy Court has confirmed that Nevada’s pro se Chapter 13 filings are above the national average of 10%. The statistics bore out what Legal Aid Center had been noticing, that is, an increase in unrepresented Chapter 13 debtors needing assistance.  It may seem odd that greater percentage of the more complicated Chapter 13 filings are done pro se  (as compared to about 9% of Chapter 7 cases), but such Chapter 13 filings have increased due to filers seeking to save a house from foreclosure, often with the assistance of non-attorney bankruptcy petition preparers (“BPP”).  Legal Aid Center has assisted a number of debtors who filed Chapter 13 cases on the advice of a BPP, when they had no hope of confirming a plan, or did not need the Chapter 13 because they could have instead had a loan modification.  These clients are often placed with a Chapter 7 attorney to convert or file a new, appropriate, Chapter 7.

I have been the Bankruptcy Facilitator in Las Vegas since July 2011, coming from a large firm in which I represented creditors in primarily business bankruptcies. The position has been at times frustrating (such as when trying to clean up the mess caused by a bad BPP) but rewarding.  I have received hugs in court from people who are grateful somebody took a few minutes to answer their questions; I can guarantee that I never receive a hug from any of my corporate clients!