Many Americans find great personal success after filing for bankruptcy, including Abraham Lincoln, Walt Disney and Milton Hershey, of Hershey’s fame.
But the benefits of Chapter 7 aren’t exactly accessible to low-income Americans in financial distress.
“It’s impossible to fill out these forms by yourself,” Jonathan Petts, co-founder of Upsolve explained. “There are 23 different forms you have to file for bankruptcy, and most use legalese terms. People can’t do it on their own, so they need a lawyer, which can cost up to $1,500.”
With such a steep price tag on lawyers’ time, Petts said many Americans can’t afford to file for bankruptcy, which could erase their outstanding credit card or medical debt.
That’s why he founded new legal tech startup Upsolve with Harvard student Rohan Pavuluri in 2016.
The company sprouted out of a project at Harvard Law School’s Access to Justice Lab, a program that encourages students to develop new ways of approaching societal injustices.
Described as the first “TurboTax for bankruptcy,” Upsolve’s digital platform automates personal bankruptcy from end to end, guiding users through complicated Chapter 7 forms so that they have a shot at a new beginning.
Since launching, the startup’s beta product has increased the net worth of users by over $1.25 million, Petts said.
Users enter their financial information on Upsolve’s platform to find out whether they qualify for bankruptcy. If so, they’re directed to use Upsolve’s product to complete the forms in the same way that TurboTax assembles tax forms.
Then they’re connected with a free legal aide who will look over the forms before they’re filed to make sure everything has been filled out properly.
“Elizabeth Warren did a study at law school and found that the majority of bankruptcy cases were from sudden medical emergencies,” Petts said. “Other leading causes were job loss and divorce — things that can happen to anyone. That’s why Chapter 7 is a lifeline for low-income Americans.”
So far, Upsolve has diagnosed over 500 users with whether bankruptcy is right for them, and they’ve seen 40 users successfully get a fresh start.
Over the course of 2017, Petts hopes to build more partnerships with legal aid organizations to scale the distribution of Upsolve’s reach. The startup currently works with Brooklyn Volunteers Lawyers Project, Philadelphia Legal Assistance and Bay Area Legal Aid.
Petts said the startup would also like to partner with fintech companies so that they can notify Upsolve when their users are in financial distress and funnel more people to the service.
Photos via Shutterstock
