Written by Charleston Bankruptcy Lawyer, Russell A. DeMott
South Carolina median income numbers effective November 1, 2011 are now out. They are as follows:
Household of 1: $37,660
Household of 2: $47,853
Household of 3: $50,824
Household of 4: $62,912
For each household member over four, add $7,500.
What’s this mean?
You had to ask.
It really means your government has set up a system to kick people when they are down. For all household sizes except households of one, it gets harder to file a Chapter 7 bankruptcy on November 1st.
That’s the easy question: Money, lobbyists, politicians behaving like prostitutes instead of statesmen, and so on. The more interesting question is how. The how is due to the fact that median income figures go down during rough economic times. Everyone knows that!
So here’s how it works: During good economic times, let’s say median income for a family of four is $70,000. Times are good, so our hypothetical family of four with median income (that’s the 50th percentile for those of you who didn’t take statistics) is making more money.
But then Wall Street comes along with help of the banksters and, bam, the economy slides into the toilet. Then maybe median income for that family of four is down to $65,000. Then, when the economy slides down the toilet completely (like now), median income goes down to $62,912.
To see how this works, check out this post I did in March of 2010! (Click here.) Note how much higher South Carolina median incomes were back then! Folks, that wasn’t even two years ago!
You see how it works?
The worse the economy gets, the harder your “representatives” (House Reps. and Senators) make it for you to file a Chapter 7 bankruptcy, rather than a five-year Chapter 13 bankruptcy.
Median income figures control two things: (1) who must complete the entire means test form (or, as we sometimes say “take the means test”), and (2) whether the debtor’s Chapter 13 plan must run three years or five years. If the debtor is below median income, the Chapter 13 plan need only run three years. Go over median income and, congratulations, you must now pay VISA, MasterCard, and that mortgage deficiency another two years.
So it’s good news for MasterCard and VISA, but not so much for the those who can’t buy a Congressman…
This system is a disgrace and these new figures underscore that fact. It’s what happens when consumer bankruptcy lawyers, bankruptcy judges, and law professors are locked out of the decision making on bankruptcy legislation. As one bankruptcy judge said best, “I cannot say in polite company what I think of this legislation.” Ditto.
Postscript: After posting this, I was reading Martin Andelman’s “Mandelman Matters” blog which deals with foreclosure issues. Martin’s current post is entitled, “WSJ [Wall Street Journal] Economist Survey…U.S. Incomes Won’t Make Up Lost Ground Until 2021.” Martin comments on the report by saying, “Yesterday, for the first time since the recession began, the Wall Street Journal survey of 50 economists now say that incomes in this country have been falling since 2000 and they don’t expect us to make up the lost ground before 2021. How it is that these economists only now have realized that’s the case, I can’t explain, except to say that over the last few years I’ve learned that optimism is a difficult thing of which to let go.” Julia Coronado of BNP Paribas is quoted as saying, “Standards of living in the U.S. will continue to decline as we deleverage and emerging markets take over as the growth engine of the global economy.”
Let me translate that for you. It means third world countries will grow but we will not. And as incomes go down, it becomes harder and harder for middle class Americans to discharge their debts. Remember, just because incomes go down doesn’t mean prices go down! (Think gasoline!)