The Debt Paradox: in Debt but Society Owes You a Debt-an Exoneree's Path to Holistic Relief Through the Bankruptcy System

• Publication year: 2020

The Debt Paradox: In Debt but Society Owes You a Debt-An Exoneree's Path to Holistic Relief Through the Bankruptcy System

Dru Selden

THE DEBT PARADOX: IN DEBT BUT SOCIETY OWES YOU A DEBT

An Exoneree's Path to Holistic Relief Through the Bankruptcy System

Abstract

What do the bankruptcy system and the criminal legal system have in common? Both aim to provide fresh starts to those who have moved through them. The bankruptcy system does so by rewarding honest but unfortunate debtors with discharge from debt. The criminal legal system attempts to provide afresh start through reentry programs to those exiting prison. Yet neither system successfully ensures a blank slate, which is in part due to the history of racial bias in both systems. A limited subset of debtors benefits from the bankruptcy system, while the criminal legal system makes reentry very difficult for convicted felons. The wrongfully convicted are also not provided the necessary tools to obtain a fresh start as they reenter society. With restricted access to reentry programs, further injury due to barriers they face upon reentry, and debt stemming from their wrongful conviction, exonerees require a more holistic approach to ensure that they have a fresh start. The bankruptcy system offers an opportunity to meaningfully improve reentry for the wrongfully convicted.

This Comment proposes that exonerees should be entitled to an expedited chapter 13 discharge of the debt stemming from their wrongful conviction. Further, this Comment argues that states should provide more holistic reentry programs that include access to bankruptcy attorney services. Discharging this debt would relieve exonerees and their families of some of the misfortune caused by wrongful conviction. By doing so, the bankruptcy system would promote its goal of providing a fresh start to the honest but unfortunate debtor.

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Introduction

The United States bankruptcy system has long recognized two central aims: (1) providing a fresh start to debtors who are unable to pay their debt; while (2) recognizing the interests of creditors by maximizing total return through an efficient process.¹ The goal of providing a fresh start can also be found in the criminal legal system through programs that strive to support individuals as they reenter society after being released from prison. Yet the mechanisms in place to help ensure these fresh starts—the discharge provisions of the Bankruptcy Code and reentry programs in the criminal legal system—have elicited extensive criticism.

The fresh starts offered by the bankruptcy system and the criminal legal system have been limited by each system's history of racial bias. In the bankruptcy system, this is evident in the racial disparity between groups that have benefited most from the Code.² The complexity of the bankruptcy system also presents a huge challenge for pro se debtors, leaving unanswered the question of how many debtors choose not to file for bankruptcy due to the inaccessibility of the courts.³

The criminal legal system has an overt history of systemic racism, which is clear at every stage of the criminal legal process.⁴ The United States incarcerates the highest population of any country in the word, which was fueled by the "war on drugs" and the "tough on crime" approach to criminal reform.⁵ The prison population doubled between 1980 and 1988, with communities of color being incarcerated at a staggeringly high rate.⁶ While these numbers have decreased by 34% since 2006, Black Americans are still disproportionately imprisoned.⁷ At the end of 2018, Black Americans represented 33% of the prison population,

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although Black Americans make up only 12% of the United States population.⁸ Black people are stopped more frequently on the street by police, have a higher likelihood of being subjected to the use of force, and are more likely to be arrested and to be arrested repeatedly in the same year.⁹ Further, as the population of incarcerated Black Americans has decreased, these individuals leave prison with inadequate assistance to reenter society, as they face barriers with health, housing, and employment that stem from their status as convicted felons.¹⁰ Thus, racial disparities within the criminal legal system are also pervasive in reentry systems.

Unsurprisingly, a system with such bias has led to a staggering number of wrongful convictions.¹¹ Exonerees, however, are often denied access to traditional reentry programs. The bankruptcy system provides an opportunity to assist exonerees as they reenter society. Many argue that exonerees should be compensated for the injuries they have suffered due to their wrongful conviction; "[t]he state whose actions have put individuals in prison for crimes they did not commit owes a debt to those who through no fault of their own have lost years and opportunity. The debt should be recognized and paid."¹² Yet who bears the burden of repaying the debt that society owes to the wrongfully convicted? This remains an open question. Some jurisdictions provide compensation to exonerees, but this system is unreliable and often inadequate.¹³ Even when the exonerees have been compensated, the compensation schemes do not take into account all of the challenges they face when reentering society.¹⁴

For example, although mechanisms exist to compensate exonerees for the pain, trauma, and lost earning potential they suffered by being imprisoned for crimes they did not commit, exonerees and their families, on their own, must

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handle the debt that resulted from their wrongful conviction. Sources of such debt include court fees and fines, attorney fees, restitution payments, child support, taxes, increased debt and default created by the inability to make payments and pay bills while in prison, and barriers to obtaining employment after release from prison. Addressing this debt would provide a more holistic approach to reentry for exonerees.

Perhaps the most powerful mechanism within the code is the discharge from debt, which provides freedom from personal liability of previous debts. The bankruptcy system could help supplement this holistic approach by providing an expedited discharge of the debt that stemmed from an exoneree's wrongful conviction. The hardship discharge of chapter 13 of the Code is explicitly reserved for the "honest but unfortunate debtor" and must be filed in good faith.¹⁵ The hardship discharge gives relief to a debtor when: (1) the debtor is unable to complete plan payments "due to circumstances for which the debtor should not justly be held accountable"; (2) the value of the property distributed under the plan must not be less than the value distributed under a hypothetical chapter 7 liquidation; and (3) modification of the plan is "not practicable."¹⁶ The debtor who receives the hardship discharge can reenter the economy without the former burden of debt.

The wrongfully convicted should satisfy these requirements. First, exonerees are victims of circumstances that are beyond their control and are the epitome of "honest but unfortunate" people, as they have served time and lost years of freedom due to a failure of the criminal legal system.¹⁷ Wrongful conviction is tragic; "[a]mong the most shocking of . . . injuries and most glaring of injustices are erroneous criminal convictions of innocent people."¹⁸ Second, because it is unlikely that an exoneree's bankruptcy estate will contain property of high value, creditors would be unlikely to receive more value under the liquidation provisions of chapter 7. Third, due to the many challenges that the wrongfully

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convicted face, modifying the plan would not be practicable. Thus, an exoneree should meet the requirements of the hardship discharge.

Allowing expedited hardship discharges to exonerees under chapter 13 would align with the long-purported mission of the bankruptcy system: to provide a fresh start to the "honest but unfortunate debtor." Moreover, if reentry programs provided access to bankruptcy attorneys, some of the financial burdens of the wrongfully convicted could be alleviated. By helping exonerees reintegrate into the economy, the bankruptcy system could supplement holistic approaches to reentry. In doing so, society could begin to relieve the enormous debt that is owed to the victims of wrongful conviction.

Part I of this Comment examines wrongful conviction and the need for a more robust approach to the financial component of reentry. It does so by providing a background on the history of wrongful conviction in the United States, exploring how reentry systems currently function, and discussing how an exoneree and his family members might accumulate debt while in prison and upon release. Part II scrutinizes the existing financial mechanisms that are available to compensate the wrongfully convicted in other areas of law. Part III then turns to the bankruptcy system. After first providing a primer on how the bankruptcy system functions, it delves into the requirements of the chapter 13 hardship discharge. Finally, Part IV proposes how to incorporate relief for exonerees into the bankruptcy system. It examines the benefits of discharging the debts of exonerees, considering both the benefit to the exoneree and the bankruptcy system. Part IV also responds to the implications and potential criticisms of granting exonerees hardship discharges.

I. Wrongful Conviction

This Section explores the history of wrongful conviction, examining both the past studies of wrongful conviction and the potential causes of wrongful conviction. Next, it considers the current landscape of reentry programs, the exclusion of exonerees from these programs, and the limited number of reentry programs that are available to exonerees. It concludes by considering the debt exonerees accumulate as a result of their wrongful conviction.

A. Background Facts on Wrongful Conviction

To fully understand the complexity and necessity of providing meaningful...