Blogger Kevin Drum wrote a very interesting article in Mother Jones yesterday about the findings of a study on the effect of health care reform in Massachusetts on bankruptcy and personal debt. Unsurprisingly, the study’s findings lead the authors to conclude that “the reform significantly improved credit scores, reduced the total amount past due, reduced the fraction of debt past due, and reduced the probability of personal bankruptcy.” Massachusetts has benefitted from their health care reform laws much longer than Obamacare, so hopefully, the reduced bankruptcies and personal debt in Massachusetts forecasts similar results nationwide.
A couple of years ago, out of sheer curiosity as to what my clients go through when they take the post-bankruptcy financial management course, I took this 2-hour course myself, and reported back on my experience in this article. I didn’t mention it in the article, but back then, and up until November 30, 2013, after completing the course, the procedure to file the certificate of completion with the bankruptcy court involved a few steps. First, the debtor had to fill out and sign the Official Form 23, which verifies that the debtor completed the course. Next, the debtor must file the certificate of completion *and* the completed Official Form 23 with the bankruptcy court.
As of December 1, 2013, this procedure has been streamlined and simplified. As explained in the bankruptcy court’s notice about the revised procedure, which you can read here, if the financial management course provider has been approved for the new procedure, the debtor no longer has to file anything with the court after completing the course. Instead, the course provider electronically files the certificate of completion with the court immediately after the debtor finishes the course. Easy, right?
The key, of course, is that the course provider is approved for this simplified procedure. The financial management course provider that I recommend to my clients, Always Lowest Price Bankruptcy Education LLC, offers the course for $7.95, and is, hands-down, the cheapest provider of this course that I know about. But they don’t yet appear to be on board with this new court procedure, as, no doubt, it would cost them time and energy to take this additional step – and they likely do everything they can to reduce their costs in order to offer the cheapest course around. And really, I don’t mind this, as it takes me just a couple of minutes to fill out and file the Form 23, and I’d rather see my clients pay less for the course anyhow!
The clerks at the bankruptcy courts must be so lonely and bored these days! Filings of all bankruptcy chapters have been down since 2010. Here are the statistics on bankruptcy filings issued by the U.S. Courts.
Further, as explained this this article in nerdwallet.com about recent consumer debt statistics, “overall credit card debt is down, and the average indebted household is less underwater relative to the average overall than before.”
I’m certain that there’s a correlation between the two, but until some smarty-pants researcher conducts a study on this issue, I can only speculate.
Beginning November 15, 2013, the means test numbers have been revised. For Californians, if your annual income falls below the following numbers, then you automatically qualify for chapter 7 bankruptcy:
Family of 1: $47,798 ($3989 per month)
Family of 2: $62,009 ($5167 per month)
Family of 3: $66,618 ($5552 per month)
Family of 4: $75,111 ($6259 per month)
For each additional family member, add $8100 per year ($675 per month).
As I explain here, if your income falls above these numbers, then it’s possible that you’ll still qualify for chapter 7, after deducting certain monthly expenses.
If you don’t live in California, then you can find the updated means test numbers for your state here.
If you’d like to see a comparison between the means test figures that were effective between May 1, 2013 and November 14, 2013, you can check those out here. As you can see, most of the deductible monthly expense figures automatically allotted have not changed.