According to John Cox, reporting for the Bakersfield Californian, Kern County California is turning into the poster-child for the recession-era pains gripping communities across the United States.
In Kern County, bankruptcy filings are up nearly 100% over the past twelve months. Unfortunately, California bankruptcy is a rising trend.
The story in Bakersfield features a familiar cast of villains, including the mortgage meltdown, rising rates of job loss and underemployment, tightening credit lines, and financial hardship brought on by insufficient health insurance.
The situation in Kern County is not expected to improve any time soon, and is further compounded by California’s dire financial straits—the state has begun handing out IOUs in lieu of payments.
Many consumers will continue to struggle against unmanageable debt until the struggle leads them to the relative relief of filing bankruptcy.
“The vast majority of people are simply trying to hang on,” Maureen Thompson, legislative director of the National Association of Consumer Bankruptcy Attorneys, told the Bakersfield Californian.
“I think that the situation – the economic situation and the housing and the unemployment – has made it extraordinarily difficult for consumers to keep a roof over their head.”
The plight of Kern County is nearly three times worse than the national average. In fact, 3,105 people filed for bankruptcy in the county over the past twelve months.
That's higher than neighboring Fresno County by 19 percentage points and nearly three times the national bankruptcy filing increase of 32%.
Bankruptcy attorneys in the area see lenders as a major piece of the puzzle.
“I think the majority of the problem was made by lenders who made loans without giving them much thought,” Pat Kavanagh, a local bankruptcy attorney told the newspaper.
Phillip Gillet, another bankruptcy lawyer, illustrates the unwinnable scenario many of his clients have found themselves fighting through,“They were using their income to try and make the house payments, and they were using the credit card” to pay for food and other essential items.
Thompson points out that essential expenses alone have not led 92% more people into filing bankruptcy.
“The way people have maintained their standard of living is (by using) credit cards and home equity loans and equity in their home – or expected equity in their home.”
Kavanagh concedes that many of his clients overspent, but he notes that they may have been unfairly encouraged.
“I think some (consumers) were exuberant – irrationally exuberant. But some were ripped off, and some were unfortunate.”
The growing number of bankruptcies in Kern County has revealed a shift in the climate producing them.
According to another bankruptcy attorney, Cindy Scully, fewer individuals are turning to bankruptcy laws because they were hurt in the housing bubble, but more are filing because their work hours have been cut down to levels that make their debts unmanageable.
From Bakersfield, California, to Bangor, Maine, Americans are struggling against national and even global forces, but the difficult truth remains: some communities are taking more damage than others.
Source: Bakersfield Californian