Founder of start-up helping poor erase debt for free: Legal fees block ‘civil right’

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Rohan Pavuluri was a sophomore at Harvard University, with plans to attend law school, when he came across “a nagging problem in America that got me really, really angry.”

“It’s when I was exposed to the reality that if you can’t afford a lawyer in this country, you don’t have access to the same legal rights as everyone else,” says the 24-year-old North Sider, founder of Upsolve, a start-up helping the poor eliminate debt for free.

“This applied to so many areas of poverty law — if you’re evicted from your home, if you need a restraining order from an abusive spouse, if you are sued for debt, if you need to file for bankruptcy. In each of these cases, you have no right to a free lawyer,” Pavuluri noted.

“As a result, there are millions of low-income and working-class families in America that cannot access the legal rights they’re guaranteed,” he said. “We’ve designed an entire legal system on the assumption everybody can afford a lawyer — which makes no sense in areas of law where if you can afford one, you wouldn’t have legal problems in the first place.”

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With a dual interest in technology and law, Pavuluri homed in on the poverty law area he thought ripe for reform. Individual bankruptcy, nationwide, costs an average of $1,200 to file, and over 90 percent of such filings are linked to unemployment/job loss, medical crises and divorce, “problems that could happen to anyone, especially at a time when over 50 percent of this country is living paycheck to paycheck,” Pavuluri said.

Upon graduating Harvard with a degree in statistics, Pavuluri skipped law school to instead build what’s become the nation’s largest nonprofit helping the poor eliminate debt for free.

Launched in 2018, the web app, very much like Turbo Tax, walks an individual through the many complicated forms needed to file a Chapter 7 bankruptcy on their own.

To date, Upsolve has helped clear over $225 million in debt for nearly 4,000 low-income families nationwide, including, since March, more and more Americans who are citing financial hardship because of COVID-19 as reasons behind bankruptcy filings.

“I’d become very interested in finding a way to use technology to help people solve their own problems, because most technology companies are focused on helping rich companies get richer and the comfortable become even more comfortable,” said Pavuluri, who in 2018 made Forbes Magazine’s 30 Under 30 list of innovators in the area of law and policy.

“I didn’t find a whole lot of nonprofits out there building technology to help low-income and working-class people improve the quality of their lives,” he said. “And in many ways, these are communities that have been left out of the technological progress of the last 30 years.”

Federal bankruptcy laws offer individuals a Chapter 7, which erases debts, or a Chapter 13, which reorganizes debt into more manageable payments over an extended period.

However, Chapter 13 bankruptcies can result in a cycle of new crises and payment defaults by an individual, followed by reinstatement of steep accrued interests, court-yanking of bankruptcy protections and multiple Chapter 13 filings — particularly for low-income persons of color — as revealed in a blockbuster 2017 investigation by ProPublica.

“Chapter 13 has a really high failure rate, which means people who were hoping for relief aren’t able to get it,” Pavuluri said. “People are pushed into Chapter 13 because it permits attorney fees to be paid after filing, vs. Chapter 7, where fees are required upfront.”

The award-winning social enterprise, which has 10 employees and offices in Chicago and New York, is backed by such entities as the federally funded Legal Services Corp., The Lawyers Trust Fund of Illinois, Grand Victoria Foundation and Susan Crown Exchange.

“Just like corporate bankruptcy, the personal version is a tool that allows low-income and working-class families to also recover from unexpected financial shocks. It is a tool that allows them to be able to re-enter our economy,” Pavuluri said.

“And what a cruel irony in America, that it costs somebody who is trapped in tens of thousands of dollars in debt $1,200 to tell the court that they have no money.”

The quickly growing nonprofit last year was winner of Fast Company’s 2019 World Changing Ideas Awards, in the social justice category. The competition draws 2,000 submissions in 17 categories. This year, it made Fast Company’s “10 Most Innovative Not-for-Profit Organizations of 2020.”

“To me, this was a civil rights injustice that people weren’t really talking about. We must face the reality that we will never have enough free lawyers for everyone who wants or needs one,” the millennial said.

“So that’s the mission of Upsolve, to promote a new civil right in America — that everyone should have the right to safely solve their own legal problem. We feel like judges and legislators across this country need to redesign our courts in areas of poverty law around the assumption that people can’t afford lawyers, and we think this should be a bipartisan issue,” he said. “We believe that we can inspire institutional change within America’s legal system.”

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