recent article in the Washington Post pointed out that Joe Biden was one of the Democrats to cross party lines and help pass the Bankruptcy Reform Act in 2005. He now regrets that, and supports Elizabeth Warren’s plan to revise the bankruptcy system.  

I would just like to reality check, from my perspective, some of the claims. The articles says that the means test has prevented many people from filing due to the paperwork, and also says that the 2005 bankruptcy reform made it harder for poor people to file. Fact is, while the means test does require a lot more paperwork, it only affects higher-income debtors, probably fewer than 15% of the people who contact me for debt relief.  

The article also says:  

The cost of an average Chapter 7 bankruptcy rose from about $600 in 2004 to about $1,000 in 2008. Now the cost approaches $2,000. 

My recollection is that I was charging about $850 in 2005, then my base rate increased to about $1,250 in 2006 – the new laws made it twice as much work to file, but I only charged 50% more. Fourteen years later, my base rate is still under $1,500.  

The big thing with Senator Warren’s plan that I would wholeheartedly support, is student loan relief in bankruptcy. The current framework only provides for a discharge of student loans in case of “undue hardship,” which not only requires a trial that is expensive to try, because the Department of Education always fights it, but more importantly, the courts have construed this standard to be virtually impossible. I see lots of people with $100,000 in student loan debt, who also have $10,000 in medical or credit card debt, who need to file bankruptcy just to take care of what they can, then they are off to other remedies on the student loans, such as income-contingent plans.  

One final comment: Senator Warren’s plan says it will “Help address shameful racial and gender disparities that plague our bankruptcy system.”  

I am not aware of such disparities. If you feel that your gender or race has been a barrier to seeking bankruptcy relief, please reach out to me and I will personally make whatever accommodations are necessary to get you through the system in a gender and race-appropriate manner, including customized payment arrangements and possibly even pro bono service.