Posted: January 10th, 2010 | Author: Joe | Filed under: Debt, Economy | Tags: Bankruptcy, Debt, Economy | 5 Comments »
In case you needed any further indication that 2009 was a terrible year, 2009 saw an almost record 1.4 million bankruptcy filings submitted by consumers and business, making 2009 the 7th worst year on record – just behind 1998 and 2001-2005.
That’s an increase of 32% over 2008 filings. In December alone, there were 116,000 filings, up 22% from December 2008.
None of this is particularly surprising, given the magnitude and nature of the recession we’re in, but I think the regions hardest hit were interesting:
(in order from worst to.. least bad):
- Arizona – up 77%
- Wyoming – up 60%
- Nevada – up 59%
- California – up 58%
California is not surprising, given that the entire state government is bankrupt. But Arizona, Wyoming and Nevada? I would have thought California would be higher, and Michigan close behind, given the woes of Detroit and the auto industry.
All 50 states had an increase in bankruptcy filings, these states had the lowest increase:
- Alaska – up 12%
- Nebraska – up 12%
- North Dakota – up 14%
While these numbers are bad, they were a little worse back in 2005 when bankruptcies shot past the 2 million mark, as consumers rushed to file before the bankruptcy reform laws took effect. After that, the numbers dropped back to 600,000 in 2006.
Source
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Posted: July 14th, 2009 | Author: Joe | Filed under: Debt | Tags: Bankruptcy, Debt | 1 Comment »
According to Investopedia these are the 9 most common ways to go bankrupt. (Don’t do them!)
1. Ignoring Identity Theft Tactics
Let’s face it, once someone has your identity, they have the keys to your financial kingdom, such as it is. It’s trivial for the scam artist to destroy your credit history he his actions are left unchecked. Here’s an article on How To Avoid Identity Theft.
2. Getting A Divorce
Perhaps the second quickest way to bankruptcy for most people is divorce. Not only are you likely to lose half of your assets, but there’s usually a great deal of expense in the actual divorce proceedings. That’s not even factoring in child support, if applicable.
Bankruptcy has been used by some as a means of avoiding alimony and child support, but in April 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The BAPCPA seeks to limit bankruptcy abuses.
3. Having (and using) Too Many Credit Cards
Consumer debt, in the form of credit cards, is incredibly damaging financially. Up until recently, it was so easy to get a new credit card when the last one was maxed out. Multiple credit cards not only let you rack up debt faster, but also ruin your credit score. If you find yourself in this situation, learn how to control your credit cards.
4. Paying Credit Debt With Credit Cards
Often times, people who have multiple credit cards find themselves playing Russian roulette with balance transfers. It starts off innocently enough. You have an $8,000 balance on your platinum card, and get an offer to open a new preferred card with 0% on balance transfers for 6 months. You figure you’ll be able to pay down the balance without interest, only life gets in the way and the balance never gets paid down. This is really a symptom of #9 below, and not changing your spending behavior. That doesn’t mean there isn’t a way to Cut Credit Debt though.
5. Buying Too Much House
We’re seeing this play out today in high foreclosure rates. Factor in the amount of borrowing people did against their homes, 2nd mortgages and ARMS, interest only payments and homes worth less than the mortgage and you’ve got a deadly bankruptcy cocktail. And that’s not even considering school and property taxes!
6. Putting All Your Eggs In One Basket
We saw this with Enron, and Madoff. Investors pile all their assets into a single investment or stock, only to be left holding the bag when the hole thing goes up in smoke. This is one of the reasons diversification is so important – it’s about risk, not just return.
7. Not Building An Emergency Fund
Living paycheck to paycheck leaves no room for error. All it takes is one little visit from Murphy and your sunk! Emergency funds are essential !
8. Not Understanding What Your Investments
Short selling, options, trading on margin… these are playing with fire. If you don’t understand the methods and the risks, you will get burned.
9. Failing To Address Your Current Financial Situation
Ultimately, what dooms most people to bankruptcy is a failure to recognize and change bad behavior regarding money. Continuously spending more than you earn is a surefire way to dig yourself into debt, and eventual bankruptcy. That’s why the single most important step to getting out of debt is to realize you have a problem, and resolve yourself to changing your behavior to not only get out of debt, but stay out.
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Posted: August 12th, 2008 | Author: Joe | Filed under: spending | Tags: Bankruptcy, Gift Cards, Sharper Image | No Comments »
By now, you probably already know that many gift cards charge a fee against the unused balance if the card is not used by a year after purchase. But the recent bankrupting of Sharper Image shows a new peril with giving the gift of card.
Specifically, what happens to the card holder if the company files chapter 11?
According to the consumer reports blog :
“Some three weeks after the specialty retailer filed Chapter 11 bankruptcy on Feb. 19, owners of gift cards and merchandise certificates are facing confusing options about what to do with those obligations, which the retailer initially said it wouldn’t honor, at least for the time being.
On March 7, the U.S. Bankruptcy Court for the District of Delaware granted the retailer’s request to resume honoring its cards and certificates-but only for customers who make a purchase of at least twice the value of the card or certificate. So to use up a $50 gift card, a customer would have to buy at least $100 in merchandise.”
In short, a big legal mess has ensued. The cards are either no longer worth the plastic of which they’re made, or they are at least worth considerably less than face value.
This leaves card holders with 3 options:
- Bust out the scissors and practice a little gift card origami.
- Run, don’t walk, to your nearest branch of the store and buy what you can with what’s left of the card.
- Try to sell it at http://plasticjungle.com/, where people can buy, sell or trade gift cards.
Technorati Tags: sharper image, bankruptcy
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