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Washington Law Review

Rafael I. Pardo

Abstract

Perhaps more so than any other area of law affecting individuals of low-to-moderate means, bankruptcy poignantly presents an affordability paradox: the system’s purpose is to relieve individuals from financial distress, yet it simultaneously demands a significant commitment of resources to obtain such relief. To date, no one has undertaken a comprehensive study of the complexities and costs of the litigation burden that Congress has imposed on self-represented debtors who seek a fresh start in bankruptcy. In order to explore the problems inherent in a system that sometimes necessitates litigation as the path for vindicating a debtor’s statutory right to a discharge, this Article focuses on the particular example of debtors who seek to discharge their educational debt (e.g., student loans) through bankruptcy. Such debt may be discharged only if the debtor can establish through a full-blown lawsuit, essentially governed by the Federal Rules of Civil Procedure, that repaying the debt would impose an undue hardship on the debtor. Using an original dataset of educational-debt dischargeability determinations, this Article reveals that, even when controlling for a variety of factors, including a debtor’s financial characteristics and applicable legal standards, the typical self-represented debtor in such proceedings has only a 28.5% chance of litigation success, which pales in comparison to the 56.2% success rate of a similarly situated debtor who is represented. This finding casts serious doubt on the litigation framework that has been implemented to resolve disputes over a debtor’s discharge rights. After exploring various approaches to reforming the framework, this Article concludes that our reform efforts will signify how committed we are as a society to deliver bankruptcy law’s promise of a fresh start to financially distressed individuals—to wit, whether we are willing to take bankruptcy rights seriously.

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