A nonprofit startup that offers a free, self-service software tool that helps people file for Chapter 7 bankruptcy has relieved more than $300 million in debt for low-income families who have used it. The nonprofit, Upsolve named one of the best inventions of 2020 by Time magazine, has reached more than two million low-income households in the U.S. through its free educational resources, community, and financial technology.
Now poised for rapid growth, the startup traces its beginnings to a classroom at the Harvard John A. Paulson School of Engineering and Applied Sciences.
Co-founder Rohan Pavuluri, A.B. ’18, a statistics concentrator (who was recently named to the Time100 Next list of individuals who are shaping the future of their fields) began working on Upsolve in Startup R&D (ES 95r), taught by Paul Bottino, Executive Director of Innovation Education at SEAS.
“Harvard University is one of the best incubators in the world, especially if you are trying to tackle the world’s most pressing problems,” said Pavuluri. “I think a little bit of every facet of the University played a role in Upsolve.”
Pavuluri was creating self-help packets for people to solve their own legal problems, and started working on a packet related to bankruptcy. Pavuluri learned that, to file for bankruptcy, an individual must pay an average of $1,500 for a bankruptcy lawyer.
“When you need to file for bankruptcy because you have an illness or a job loss and you need to get back on your feet, there’s no way you can afford $1,500 for a lawyer. So there is this civil rights injustice that wasn’t part of our national consciousness in a way that I thought it needed to be,” he said. “And that just made me really, really angry.”
That anger inspired Pavuluri to act. He had enrolled in ES95r, but the original startup idea he had brought to the class wasn’t working out. The course gives students the opportunity to work on any startup idea during class time, with mentorship from seasoned entrepreneurs. Pavuluri began exploring how technology could help address the civil rights issue of bankruptcy at scale.
The guidance of Bottino and the support from an entire community of student founders gave Pavuluri the skills and the boost he needed to get started.
“There’s no way Upsolve would exist if it wasn’t for ES95r,” he said. “You have this engineering school with all the different parts of engineering, but you walk a few blocks and you’re at the law school, and you can apply those engineering skills to legal problems. That proximity to so many different fields and so much exploration, I don’t think that exists anywhere else in the world like it does at Harvard.”
While he was learning about entrepreneurship in ES95r, Pavuluri was also taking “Innovations in Government,” a Harvard Kennedy School course where he learned to rapidly prototype a basic solution to a complex social problem to determine if it is feasible.
Upsolve passed that litmus test.
As he built momentum, Pavuluri received additional votes of confidence, and critical seed funding, through University startup competitions the i3 Innovation Challenge (sponsored by the Technology and Entrepreneurship Center at SEAS) and the President’s Innovation Challenge (sponsored by the Harvard Innovation Labs). He also received grants from the Law and Kennedy schools—in total, more than $200,000 in seed funding to make his idea a reality.
The startup began in 2017 as a bare-bones, online form that, in its first two years, helped a few dozen people in New York file for bankruptcy. But as Pavuluri used the skills he learned at Harvard and the funding provided by the University to scale up, things began taking off.
Upsolve grew into an entire educational platform, online community, and set of sleek, self-service software tools that help people determine whether filing for Chapter 7 bankruptcy is the right move for them. If so, the tools walk them through the process in a streamlined and simplified way.
“Chapter 7 bankruptcy allows you to rebuild your credit and re-enter the economy. So it is this really powerful tool that helps folks get back on their feet,” he said. “Unfortunately, a lot of people don’t know about it, and the people who do know about it are scared. Our goal is to make this tool more accessible for people who are deeply in need.”
Making bankruptcy more accessible could mean changing the culture in the U.S. legal system. For corporations, bankruptcy is typically viewed simply as a legal tool to navigate unfortunate market circumstances, yet when individuals file for bankruptcy, society often considers it a moral failing; this is a misconception that continues to serve the wealthy and powerful, Pavuluri said.
“The thesis behind Upsolve is that modern-day legal fees in so many areas of poverty law are like poll taxes. Poll taxes used to stop you from accessing your basic civil rights with voting,” he said. “Today, that idea still exists. If you can’t afford legal fees, you can’t afford your rights. And that needs to change.”
Pavuluri expects the need for bankruptcy to expand dramatically as the economy recovers and Americans who have lost jobs due to COVID-19 begin to rebuild their finances. Of those who are currently filing using Upsolve, more than a third are doing so because of a financial shock related to COVID-19.
While Upsolve is well-positioned to help millions more file for bankruptcy, Pavuluri isn’t content to stop there. He plans to continue growing the startup to help low-income families facing a host of financial problems, taking on a legal establishment that he believes is often stacked against those most in need of help.
“It is so fun to be able to work on a serious issue that I care about and that I consider my calling, and at the same time, to be able to build and be creative every day,” he said. “To apply creative solutions to important issues of inequity in our economy and legal system and be able to have this impact at scale has been so fulfilling, enjoyable, and meaningful to me.”