Student Loans and Surmountable Access-To-Justice Barriers

Findings and conclusions from the 2012 American Bankruptcy Law Journal Study and Response to Professor Rafael I. Pardo’s latest piece, The Undue Hardship Thicket: On Access to Justice, Procedural Noncompliance, and Pollutive Litigation in Bankruptcy

Student Loans and Surmountable Access-To-Justice Barriers

Findings and conclusions from the 2012 American Bankruptcy Law Journal Study and Response to Professor Rafael I. Pardo’s latest piece, The Undue Hardship Thicket: On Access to Justice, Procedural Noncompliance, and Pollutive Litigation in Bankruptcy

Taking Bankruptcy Rights Seriously

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

Racialized Bankruptcy Federalism

Notwithstanding the robust national power conferred by the U.S. Constitution’s Bankruptcy Clause, the design and administration of federal bankruptcy law entails choices about the extent to which nonbankruptcy-law entitlements will remain undisplaced. When such entitlements sound in domestic nonfederal law (i.e., state or local law), displacing them triggers federalism concerns. Considerations regarding the relationship between the federal government and the nation’s smaller political subdivisions might warrant preserving nonfederal-law entitlements even though their displacement would be authorized pursuant to the bankruptcy power. But such considerations might also suggest replacing those entitlements with bankruptcyspecific ones. Some scholarship has theorized about the principles that should govern the balancing of bankruptcy federalism concerns, though without considering the implications of race. Other scholarship has critically examined how federal bankruptcy law, which is facially neutral, has nevertheless been designed and administered in ways that are racially biased, though without considering the implications of federalism

Setting the Record Straight: A Sur-Reply to Professors Lawless et al.

In this sur-reply, Professor Pardo seeks to clarify the misperceptions and mischaracterizations of his commentary by Professors Lawless et al. and to demonstrate that his arguments not only are grounded in a compelling theory of the operation of the bankruptcy system and an understanding of the First Report’s data, but also offer useful ideas for exploring available empirical data. The sur-reply will identify three of the main substantive points made in his original critique that Professors Lawless et al. misinterpret and/or mischaracterize and will clarify why these original points are valid

The Structural Exceptionalism of Bankruptcy Administration

The current system of administration of the Bankruptcy Code is highly anomalous. It stands as one of the few major federal civil statutory regimes administered almost exclusively through adjudication in the courts—not through a federal regulatory agency. This means that rather than fitting bankruptcy into a regulatory model, the U.S. Congress has chosen to give the courts primary interpretive authority in the field of bankruptcy, delegating to courts the power to engage in residual policymaking. Although scholars have noted some narrow aspects of the structural exceptionalism of bankruptcy administration, Congress’s decision to locate responsibility for bankruptcy policymaking almost exclusively with the federal judiciary, with little input from administrative agencies, has evaded scholarly attention. This Article aims to fill the gap by analyzing the congressional decision to locate residual policymaking power in the courts. After identifying the structural anomalies of the current court-centered model and some of the constitutional and policy-driven concerns that flow therefrom, this Article makes the case for moving bankruptcy toward an administrative model with a regulatory agency charged with setting bankruptcy policy. Such a shift away from bankruptcy exceptionalism could bring greater expertise, accountability, uniformity, accessibility, transparency, prospective clarity, and flexibility to policymaking in the bankruptcy arena. In addition, this shift could alleviate some of the constitutional issues that cast doubt on the legitimacy of our current system, such as Article III questions highlighted by the U.S. Supreme Court’s 2011 decision in Stern v. Marshall

Does Ideology Matter in Bankruptcy? Voting Behavior on the Courts of Appeals

This Article empirically examines whether courts of appeals judges cast ideological votes in the bankruptcy context. The empirical study is unique insofar as it is the first to examine the voting behavior of circuit court judges in bankruptcy cases. More importantly, it focuses on a particular type of dispute that arises in bankruptcy: debt-dischargeability determinations. The study implements this focused approach in order to reduce heterogeneity in result. We find, contrary to our hypotheses, no evidence that circuit court judges engage in ideological voting in bankruptcy cases. We also find, however, non-ideological factors—including the race of the judge and the disposition of the case by lower courts—that substantially influence the voting pattern of the judges in our study. The Article makes three broad contributions. First, it indicates that bankruptcy voting is comparatively non-ideological, at least at the level of the courts of appeals. Second, by identifying the influence of certain non-ideological factors on voting behavior, the Article suggests avenues for profitable future research. And third, the Article makes a methodological contribution through its fine-grained approach, which demonstrates the importance of focusing on particular legal issues in order to reduce heterogeneity in, and bolster the reliability of, findings from empirical legal studies