When my first company teetered on bankruptcy, I was scared. I considered bankruptcy unrecoverable failure.

It's not. America has elected multiple people who filed for bankruptcy to the presidency.

It's a new beginning.

Why Bankruptcy Matters

If you want entrepreneurship, or business of any sort, you need risk, which means some will go bankrupt.

Two entrepreneurs--Jonathan Petts and Rohan Pavuluri--saw bankruptcy becoming unattainable for too many people.

They also saw a way to fix it and are making at accessible for all, which makes risk-taking more available.

I spoke to Jonathan about their nonprofit, Upsolve.

The Interview

Inc. readers expect to succeed. Why should they care about bankruptcy?

Jonathan Petts: Succeeding in small business requires taking risks. Our bankruptcy laws are designed to create a soft landing for small business owners when those risks don't turn out as planned.

In fact, 17% of personal bankruptcy filings in the U.S. include some small business debt. The fresh start provided by our bankruptcy laws is an important part of American capitalism.

We forget that before becoming president and ending slavery, Abraham Lincoln filed for personal bankruptcy due to his small business failure.

Doesn't bankruptcy work already? What was broken about it?

JP: It's too expensive for many Americans in need. It costs over a thousand dollars to hire lawyer, legal aid clinics can only handle a fraction of demand, and it's virtually impossible to file on your own.

So even though at least 19.2 million American households would benefit from filing for Chapter 7, by one scholar's estimate, last year roughly half a million did. Millions of Americans are simply priced out of the courts.

How does Upsolve help?

JP: We've built the first digital product to guide users with routine cases throughout the bankruptcy process for free. There's an online survey with cartoons and plain language from the Financial Distress Research Project at Harvard Law School.

Once a user fills out the answers, we populate the official forms that are filed with the court after pro bono attorney review.

On a personal level, when you took my entrepreneurship class, you hadn't come up with Upsolve and sounded lethargic about your career. Now you seem full of passion. What changed?

JP: I'm now working on a problem that I care deeply about. Bankruptcy changes lives--I've seen it happen. A fresh start under Chapter 7 gives people a new balance sheet and a new vision of what's possible for their future.

One of Upsolve's users who got a fresh start through the bankruptcy system now refers to herself as Keisha 2.0. That's powerful.

What created that change, to take initiative on something that seems so big? Can others replicate it for themselves?

JP: Definitely. I learned to pick a problem that you're passionate about and start talking to lots of people experiencing it. This yields ideas for a potential solution.

You're not going to get the solution right on the first try. Twitter, Flickr, and Paypal didn't either. The main thing is taking action and continuing to iterate. Then magical things can happen.

If Upsolve grows to what you dream it can, how would it change the world?

JP: Currently, 80% of low and moderate income Americans who need a nonprofit lawyer can't get one. There aren't enough free lawyers and there never will be. So Upsolve believes technology is the solution to closing the justice gap.

Once we've done it in bankruptcy, our model can be expanded to other areas like family law and housing law. In our view, the potential for increasing access to justice through technology is limitless and we want Upsolve to lead this movement.

One of you knows computers, the other law. Are you like a tech cofounder and business cofounder? How did you find each other and realize you'd make the team you are?

JP: I met my cofounder, Rohan Pavuluri, through a bankruptcy judge who realized we were both passionate about the same problem. We immediately connected.

Rohan has been the tech guy and I've focused on business development and legal for our nonprofit. Though with two cofounders, everyone does everything.

If a reader is or knows someone considering personal bankruptcy, what should they do?

JP: Go to Upsolve.org and take our screening survey. Or go to Lawhelp.org to find a legal aid clinic near you.

What's next?

JP: Now that we've built our beta software, we're laser-focused on raising funds to improve it and scale it across the country. We're on a mission to ensure that no one is too broke to file for bankruptcy.

Published on: Jan 6, 2017