Helping the Poor Who are too Poor to File for Bankruptcy
What do you do when you are drowning in debt, the collectors are at the door and your entire world is closing in on you? You turn to the Bankruptcy court. But, what if you are too poor to file? This was the problem that plagued Rohan Pavuluri.
Rohan Pavuluri has been named to the Forbes 2018 “30 Under 30” list. At the age of 21, Pavuluri falls into the “youngest” category. He is recognized for co-founding the nonprofit—Upsolve.org, a unique solution for the many Americans who are too broke to file for bankruptcy. Pavuluri and Upsolve.org bring good news for millions of Americans who desperately need to avail themselves of bankruptcy.
Bankruptcy—A New Start
The bankruptcy process was instituted to help people who have fallen on bad luck and have no way to meet their financial obligations. Bankruptcy gives a person a new start. The irony though is that it costs roughly $1,300 in lawyer and court fees to file for Chapter 7 bankruptcy. This places bankruptcy out of the reach of those who need it the most.
While a sophomore at Harvard, Pavuluri channeled his frustration with what he perceived to be a grossly unfair system into developing a software solution. The mission of Upsolve.org is to help poor people tap into bankruptcy—a way to clean the slate and start their financial lives over. Pavuluri succeeded in raising more than $70,000 in venture capital and university funding.
Filing Bankruptcy is an Expensive and Complicated Process
More than 500,000 Americans file for bankruptcy every year. It is similar to rebooting your computer or hitting the reset button on your smartphone. Bankruptcy brings you back to square one and, even though it remains on the credit report for seven years, a person can move forward and rebuild their financial history. However, the process is complicated and expensive.
Rohan Pavuluri was doing research on self-help materials made available to impoverished populations. The purpose was to ascertain how user-friendly were the forms and whether people could avoid retaining legal services to help them. The study inspired Pavuluri to look into the feasibility of digitizing the forms to make them more user-friendly.
Turning to Bankruptcy
Later, Pavuluri turned his attention to streamlining the bankruptcy process. He secured funding from Yale and Harvard, as well as a $10,000 award from i3 Innovation Challenge—a technology pitch contest held at Harvard. During his sophomore year summer break, Pavuluri took his idea to the streets, going to bankruptcy hearings and meeting with filers, legal aid staff, and lawyers to better understand the process. Around this time, he met Jonathan Petts who would become his co-founder. Petts was a graduate of the University of Pennsylvania with a law degree and well-versed in bankruptcy.
Upsolve’s clients are carrying between $20,000 and $40,000 in debt. They face severe financial sanctions, such as garnishment, homelessness and are completely cut off from any opportunity to participate in the economy. Even though there are legal aid clinics, there are not enough to help everyone.
Upsolve is still developing its software. Currently, the bankruptcy applications are digitized and people can fill out the forms themselves in a format that will be acceptable to the court. To date, 30 or more people have successfully utilized the Upsolve.org platform to discharge in excess of $1 million in debt. This is good news for the millions of America’s poor who need to file bankruptcy.