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Workshop on Bankruptcy
May 17–19, 2001
St. Louis, Missouri
Professor Karen Gross, New York Law School
May 2001
Introduction
Clearly, there is no shortage of possible activities for bankruptcy law professors who want to move outside the ivory tower. (I suppose I could employ a deconstructionist analysis here and question what is the ivory tower in the first instance and whether its walls do or should exist but I leave that analysis for another day.) That said, there is usually enough to do within the ivory tower (between teaching, scholarship, committee work), particularly early in an academic’s career. So, the problem is to decide (1) if and when one wants to do things outside the ivory tower; and (2) what activities are the most suitable at a particular juncture in one’s professional and personal life. There is no single answer to these questions.
Over the course of my academic career, I have done everything from serving as an expert witness and a court appointed representative in a large Chapter 11 case to teaching women in Vermont in the Getting Ready to Work Program. What is important for me is that each of these activities has enriched what I do inside the ivory tower in terms of both my scholarship and my teaching. Stated differently, my scholarship and teaching have been informed in significant ways by my “outside” work. For me, one of the goals has been to select projects that create synergies. My non-ivory tower work has also enabled me to develop new skill sets or sharpen existing but dormant lawyering skill sets that are not a part of an academic’s normal, day-to-day activities. Litigation skills, negotiating skills, transactional drafting, management experience and fund-raising experience have all been augmented by non-ivory tower projects. Indeed, it is useful for students to see that those who teach actually “can” do that which they are describing. (This was less of an issue when I started teaching as I was much closer to law practice.) There have also been some very tangible personal benefits that, for me, justify my activities: the rewards from giving back to others.
If all of these types of decisions require sensitivity to one’s institution and its norms, one’s professional goals and aspirations, and one’s personal interests and desires, what can I possibly add here that is useful? On the theory that examples help, let me give you a description of three separate but related projects with respect to which I have been involved recently. These activities all revolve around financial literacy. Since bankruptcy is emblematic of the underbelly of our market-based economy, it seems useful to help people avoid financial failure. In other words, recognizing the plight of those who need bankruptcy relief, I have been drawn to work that helps people either avoid bankruptcy in the first instance or manage the process better while in it. It is my hope that my description of these programs will spark some ideas in each of you that you may want to pursue but which you had not previously explored. If any one of these particular projects is of interest to you, I would more than happily provide details and materials.
Financial Literacy Training for Women in the Getting Ready to Work Program:
This training program (which I designed and taught while on sabbatical in the Winter of 2000 in Vermont) is structured as a six-hour course, meeting three times for two hours each. In Week One, participants learn about the types of available of credit (secured and unsecured; long term and short term) and the distinctions between credit cards, stored value cards and debit cards. Participants learn about the concept of interest, compounding interest and minimum payments. Participants read an actual loan document and calculate the aggregate amount borrowed and the amounts of principal and interest, respectively. Students then work together on some hypotheticals that allow them to comparison shop for the most beneficial loan and understand why some loan offers are better than others. In Week Two, participants learn about how to correct billing errors, including reading a standard billing error notice. Debt collection is discussed, and there are various mock dialogues showing how best to converse with debt collectors. Participants learn about common predatory lending practices including pay-day loans and rent-to-own. In Week Three, participants look at their own credit report and learn how to correct errors on and add a personal statement to it. They create their own credit score using a sample risk scoring system. Throughout the program, participants can ask questions and share personal stories.
One of the key features of this program is that it is empowering for the women who participate. It helps them learn about basic rights. It helps people feel that they control their financial life rather than it controlling them. It works to improve self-esteem. It demystifies our day-to-day world. While these virtues are of utility to a wide audience, the program is particularly useful for those entering (or re-entering) the workforce after a long absence. Before returning to work and generating one’s own income, there is a “teachable moment” that should not be squandered.
Financial Literacy Workshop for Parents and Their Children:
There is a general recognition that there is much to be gained on lots of levels from parents and children reading together. This workshop (which I also designed and taught during the Winter of 2000 while on sabbatical in Vermont) presents an opportunity for parents and children to read and think together about money, spending and credit. Through pre-identified, readily available and reasonably priced children’s literature that can be read to or by children, the meaning, use and value of money can be explored at home in a non-threatening way. This children’s literature can also serve as a vehicle for teaching concrete math and reading skills through fun, interesting and interactive exercises.
Consider two examples. One of my recommended books is an easy to read rhyming book called BENNY’S PENNIES. After reading this book, parents and children can develop lists of other money rhyming words; they can even create their own money rhyming stories. Just think about the word “dime” for a moment - dime, time, crime, slime ... After reading HOW MUCH IS A MILLION, an apt book in light of the hit t.v. series of a similar name, parents and children can study actual one dollar bills. For example, how many times does the word or number “one” appear on a dollar bill? (Answer: Sixteen). There are also wonderful resource guides for parents that can help them think about money with their children. (Diane Mayr’s THE EVERYTHING KIDS’ MONEY BOOK is an example.)
Financial Management Program for Consumer Debtors in the Bankruptcy System:
The approximately one million consumers who access our bankruptcy system annually enter and exit the system without gaining any increased understanding of the market-based economy in which they live (although the new legislation seeks to change that result, albeit in ways that are questionable in terms of results and practicality and funding...). Although debtors are ready targets for predatory lenders when they obtain their bankruptcy discharge, debtors are often not familiar with their rights. (The whys of that (including the quality of consumer debtor representation) are worth exploring.) Bankruptcy is a teachable moment; debtors are a type of captive audience that has had to acknowledge, in a very public way, their economic failure. Helping debtors get back on their feet, providing them with the tools to understand the world of credit, is an important step in ensuring the debtors do not re-access the bankruptcy system and can participate more fully and effectively in our market-based economy.
Through a not-for-profit organization which I helped to found and now help run (called the Coalition for Consumer Bankruptcy Debtor Education), we have developed a three hour, single session course for debtors, with accompanying written materials and a resource guide. That course will be pilot tested on 1,200 debtors starting in July 2001 in the Eastern District of New York following an intensive teacher training program. The course touches on some of the same issues addressed in the Getting Ready to Work program - understanding credit; calculating interest; credit reporting; credit scoring. In addition, it would address certain topics specifically tailored for debtors -- reaffirmation, dischargeability, post-discharge anti-discrimination, re-establishing credit and restoring oneself to a sounder financial position.
Conclusion
The foregoing programs have yielded amazing results on lots of levels. The post-filing debtor education initiative has led to a large interdisciplinary empirical study (together with Professor Susan Block-Lieb at Fordham Law School and Dr. Richard Wiener, Chair of the Psychology Department at Baruch College (CUNY)) assessing the impact of financial literacy education. We are looking at economic locus of control and behavioral and attitudinal shifts in addition to knowledge acquisition. Designing the study itself has been an extremely useful endeavor. Susan, Richard and I will be publishing our results in a series of papers.
These programs have also given me many opportunities to speak to non-legal communities and the media about financial literacy, money management and economic education. I have given programs at my own law school for students and staff on basic financial literacy. Students find the material helpful for themselves, and it provides material useful to their prospective clients. I developed a whole law school course on consumer finance and collection which, while not as successful as I had hoped (this material is hard and statutorily cumbersome), was extremely well-enrolled. (One of my current research projects is assessing the adequacy of disclosure as a paradigm for consumer protection, a subject that is the direct by-product of my work on these projects.)
I have learned a great deal about management and organizations through the creation of the not-for-profit entity and the programs I developed. It has enhanced my ability to think about Boards of Directors (composition; function), fund-raising (grants; sponsorships; individual) and personnel management. These are important skill sets that I am now employing far more regularly than I did within my ivory tower.
All of my financial literacy work has enabled me to think more broadly about our school’s relationship with the larger community and to continue to explore ways of diminishing the town/gown problem. These programs have allowed me to give back in important ways and to share my teaching with those outside the law school community which has been at once fulfilling and I hope socially useful. Indeed, I have found teaching women and children in need to be one way of enlarging the arena in which my work has an impact. As much as I enjoy educating lawyers, judges and law students, there is something very important about imparting knowledge to those not trained or training in the law.
So, where all of this leaves me is that my non-ivory tower experiences have been fulfilling in a wide range of ways and have reinforced why remaining in the tower is not always wise or professionally advantageous. And, at least for me in what may seem trite to others, it reminds me of why I chose to pursue a career in the law in the first instance.