San Jose Bankruptcy Law Blog

It appears that many consumers are starting to borrow more, even though wages are staying the same. This means that while more spending may indicate an increase in economic confidence, there is still the chance that people will end up making purchases they cannot afford.

According to the Federal Reserve, for the fourth quarter of 2011 consumer debt increased from 19.3 billion to $2.5 trillion. Within that spending, credit card debt rose by 4.5 percent, and non-credit card debt, like that from auto loans, topped out at $1.697 billion.

Borrowing for college has been an institution for decades. But for recent graduates, paying off these loans has been problematic as unemployment has plagued the U.S. economy. In 2011, student loan debt outpaced credit card debt, with Americans owing $829.78 billion in educational loans compared to $826.5 billion in revolving debt.

Recently, a survey conducted by the National Association of Consumer Bankruptcy Attorneys suggested that more borrowers were seeking bankruptcy protection because of student loan debt. Of 860 attorneys surveyed, 80 percent saw an increase in clients who had student loan debt. Additionally, 39 percent reported that they saw potential student loan client cases increase by 50 percent in the last three years, while 23 percent saw such cases double during that time.

A number of different events in life can often result in a person going severely into debt. Sometimes a divorce can bring on new debts. Other times out of control credit card debt can lead to a filing. And while these circumstances are surely true for some the thousands of California residents who have filed for bankruptcy, it turns out that even the famous can run into their fair share of financial difficulties too.

Recently, well-known actor Gary Busey filed for Chapter 7 bankruptcy. The "Lethal Weapon" actor, who has appeared in dozens or movies and TV shows, claims to have $50,000 or less in assets, yet somewhere between $500,000 and $1 million in debt. Those debts include owing to Santa Monica UCLA Medical Center, the Internal Revenue Service and a storage company.

At this very moment thousands of families are struggling to find ways to avoid foreclosure and stay in their homes. In many cases, unforeseen circumstances, such as the loss of a job or unexpected medical bills, have caused California homeowners to fall behind on their mortgage payments. However, while some may not realize it, the truth if that filing for bankruptcy may actually help at-risk homeowners, as it may halt the foreclosure process.

Over the past few years of the housing crisis, when homeowners were unable to make their scheduled mortgage payments they would contact their lender in hopes of working out a loan modification that would result in more manageable payments. Unfortunately, many times the process of obtaining a modification is long, drawn-out and confusing -- and doesn't even always result in the homeowner actually receiving a modification.

Successfully being able to sell a product can be expensive. There's the advertisement that needs to happen to get your product known to the world, coupled with the actual production costs to make whatever it is that you're selling. Sometimes, the costs can end up just getting too out of hand, and before you know it, the company owes more to creditors than it actually has in assets. This often leads to the decision to just cut your losses and file for bankruptcy.

This seems to be what happened to Infinite Spirits Inc., which is known for being the maker of Shakers Vodka. Recently, the company filed for Chapter 7 bankruptcy with plans to completely liquidate.

The recent Obama administration announcement to extend and expand programs to help homeowners who are struggling to keep their homes is certainly welcomed news for many California residents who are in danger of foreclosure.

The Home Affordable Modification Program, known commonly as HAMP, is a $29 billion mortgage modification program that has come under heavy scrutiny the last few years. Many homeowners who have gone through the process of requesting a modification claim the banks frequently lose paperwork and do not return phone calls. In turn, many homeowners end up not getting accepting into the program.

Buried under insurmountable debt, a California dairy farmer was forced to file for Chapter 7 bankruptcy. The Bakersfield-area man was tied to a number of companies and pending projects, which could have ended up employing hundreds of locals. However, with his bankruptcy, there is a chance that these projects could be put on hold -- or even canceled all together.

According to his bankruptcy filing, the dairy farmer has $13.10 million in liabilities, and just $1.44 million in assets.

In this current economy, financial hardships can happen to anyone. There's issues related to underwater mortgages, credit card debt -- and for some -- the negative financial implications of divorce. For those faced with all of these economic issues, bankruptcy many times is the best choice that can be made.

One former state representative said this is exactly what happened to him and his wife. The couple ended up filing for Chapter 13 bankruptcy back in May. He resigned from the House just three months later. At the time, he cited personal reasons and has since come out and said that his decision to file for bankruptcy did play a role in his resignation.