By John Clark

The Class of 2013 could be in for a big surprise this fall, as the average college graduate will leave school with more than $35,000 in debt, according to an alarming report from CNN.

Sources note that the total price tag includes student loans, credit card debt, and personal loans, and it represents a significant leap from the debt load belonging to students only a few years ago.

Bulk of College Graduate Debt is Owed to Federal Government

According to sources, most of the debt accrued by the Class of 2013 has taken the form of government loans, as the average graduate owes the government $26,000.

But the average graduate is also carrying roughly $3,000 in credit card debt, as well as several thousand dollars in personal debt, which usually includes loans from family members, sources say.

And the high debt wasn’t necessarily part of the plan. According to Keith Bernhardt, vice president of college planning at Fidelity Investments, the study found that students “are still surprised at the level of debt they’re graduating with.”

The fact that the debt comes as a surprise “suggests we still have a long way to go in terms of having conversations about planning for college, saving for college and figuring out the best place to go [to college,” said Bernhardt.

Indeed, if the trend continues, and more students are forced to file for bankruptcy to shed college debt, parents and students may need to change the way they view their college plans.

Study Shows Many Students Regret Taking out Loans

Sources say the study, which was conducted by Fidelity Investments, revealed that 39 percent of college students would have behaved differently if they had a second chance.

Many students, for example, said they would have started saving extra money earlier in college, researched financial aid options more carefully, or cut down on their college spending.

Remarkably, 12 percent of respondents said they completely regretted their decision to attend college, claiming that the cost of their education didn’t justify its potential rewards.

This seems alarming, but it begins to make more sense when one considers that half of the graduates surveyed said it will take more than nine years to pay off their loans.

And 25 percent of graduates claimed they will have to seek help from parents or family in order to repay some or all of their debt. Moreover, 21 percent of graduates say they will have to find a second job.

By John Clark

During the last 12 months, 41 percent of adults between the ages of 19 and 64 had trouble paying medical debt, or were paying off debt over a long period of time, according to a report from the Dallas Morning News.

Sources say the data was collected during a survey led by the Commonwealth Fund, a private foundation that lobbies for health care reform.

High Number of American Families Burdened With Medical Debt

Medical debt, which is one of the leading causes of bankruptcy in the United States, has long been identified as a serious problem, but the Commonwealth Fund study shows just how dangerous it has become.

In addition to the 41 percent of Americans struggling to pay their hospital bills, 29 percent of Americans were found to be carrying more than $4,000 in medical debt, a figure that the survey labeled “substantial.”

In addition, roughly 16 percent of Americans reported having more than $8,000 in medical debt, and a healthy percentage of these people carried tens of thousands in unpaid bills, according to sources.

And the survey wasn’t a sloppy affair. Sources say it was conducted over the course of three months using telephone interviews with more than 4,000 adults who were selected at random.

According to Sara Collins, a vice president at the Commonwealth Fund, the most common reasons for the increase in medical debt include poor insurance coverage, gaps in health insurance, and higher costs for routine medical services.

Congress Tries to Address Skyrocketing Medical Bills

While more and more Americans go bankruptcy due to medical bills, Congress has made some efforts to address the problem. The Affordable Care Act, which will be fully implemented next year, has offered some aid.

For example, a provision that allows adult children to stay on their parents’ insurance plans until the age of 26 has expanded coverage for young adults, which is a “major reversal in terms of the trends that we’ve seen among young adults over time,” according to Collins.

In addition, the new health care law will, in theory, allow millions of uninsured and underinsured Americans to improve their coverage.

And, according to Collins, once these people get adequate health coverage, “they’re obviously going to have financial protection and they’re not going to be hit with these catastrophic bills.”

But the efficacy of the new law has yet to be seen, so millions of Americans may continue to struggle under the weight of excessive medical bills in the near future.

By John Clark

Just a few months after its inception, the U.S. Consumer Financial Protection Bureau (“CFPB”) has flexed its muscles by pushing for mandatory personal finance education for American children, according to a report from TIME magazine.

Sources say the agency recently released a directive, “Transforming the Financial Lives of a Generation of Young Americans,” which pushes for increased financial education for children from kindergarten through 12th grade.

In addition, the Treasury Department has launched moneyasyoulearn.org, a website that offers personal finance lessons for teachers looking to add fiscal education to a broad range of classes, including English and math courses.

Federal Government Emphasizes Personal Finance Literacy

Sources are quick to note that schools in the United States are governed by individual states, and that the federal government has little power over curriculum choices.

Most states, however, have agreed to implement a new series of core curriculum requirements that will reach across state lines.

Among these requirements will be an emphasis on financial education. With consumer debt levels reaching historic heights, consumer watchdogs are concerned that the average American is at an extreme information disadvantage when dealing with banks and other financial institutions.

Because of this trend, the CFPB, which was founded to protect the financial health of individual citizens, has launched an aggressive campaign to education American youth about the world of finance.

According to the agency’s director, Richard Cordray, today’s youth “should not have to repeat the financial mistakes made by earlier generations,” which is “why the CFPB is supporting a plan to bring financial education into K-12 classrooms.”

Agency Makes Specific Financial Education Recommendations

Sources say the CFPB has crafted a specific list of recommendations to guide schools in their efforts to improve financial literacy.

These tips include introducing core financial ideas as early as kindergarten, adding personal finance questions to standardized tests, and requiring students to pass a personal finance class before graduating from high school.

In addition, the agency asked schools to include hands-on experiences with managing money, training teachers in several different types of classes to lead personal finance discussions, and encouraging parents to discuss money issues at home.

But while the agency has lofty ambitions, it has a long road towards implementing these measures. Sources say just four states currently require students to take a personal finance course.

In addition, a recent survey found that only 20 percent of primary school teachers feel adequately prepared to teach a class about money management.

By John Clark

A child custody battle has left Kelly Rutherford, the former star of “Gossip Girl,” completely penniless, and she may soon file for bankruptcy, according to a report from Business Insider.

Sources say Rutherford, who played a wealthy resident of Manhattan’s Upper East Side on the hit television series, has battled her former husband for more than four years to regain custody of her children.

But her former husband, German businessman Daniel Giersch, lives overseas, and shows no intention of relinquishing her kids.

Kelly Rutherford Nears Bankruptcy After Custody Battle

Sources say Rutherford has fought for four years to regain custody of her children, who were shipped to France to live with their father after what ABC News called “one of the worst custody decisions ever.”

According to sources, a family law judge in California awarded custody of the couple’s three-year old daughter and six-year-old son to Giersch, despite the fact that the father had been forced to live in France because his American visa was revoked.

Rutherford says her children are allowed to visit her “during their holidays in the summer,” but she says she has “no idea when my children are actually going to come back and live in the United States, according to reports.

She told sources that she has “traveled 40 times to either facilitate contact with their dad or visit them and bring them back and forth and paid for everything.”

During her prolonged battle with her former husband, Rutherford has reportedly burned through all of her savings from the television show.

She says she’s used “every penny” from “Gossip Girl, and has also gone through her pension and investments, which helps explain why sources say she has considered calling a bankruptcy lawyer.

Divorce and Bankruptcy

Divorce can be incredibly expensive, especially when a large amount of money is at stake, so divorce often ends in bankruptcy for some couples.

So, if Rutherford is forced to enter bankruptcy in order to repair her financial health, she certainly won’t be alone.

Of course, while Rutherford is worried about her finances, and is currently living with a friend because she can’t afford an apartment, her children remain her primary concern.

Sources say Rutherford plans to continue her fight against her former husband, and has a child custody hearing scheduled for September in which she will try to convince a judge that her children should live with her in the United States.

By John Clark

Robbie Perkins, the mayor of Greensboro, North Carolina, is filing for personal bankruptcy in order to shed more than $10 million in debt, according to a report from the Winston-Salem Journal.

Sources say Perkins, a real estate developer with a track record of financial success, filed for Chapter 7 bankruptcy in Charlotte last week.

And his political opponents have already started threatening to end his career, despite the fact that many politicians in similar circumstances have kept their jobs through a bankruptcy filing.

North Carolina Mayor Files Chapter 7 Bankruptcy

According to court records, Perkins owes $10.8 million to a wide range of creditors, although most of the debts are related to his business holdings, sources say.

Perkins claims that the sluggish economy hampered his ability to develop new pieces of real estate, which is certainly a likely scenario, given the struggles of the building industry over the past five years.

But Perkins has also been struggling with the financial consequences of a recent divorce. Sources say he remains embroiled in a legal fight over alimony and child support with his wife.

According to sources, Perkins was initially ordered to pay his wife and children roughly $13,000 a month, but he has appealed this decision and hopes to pay a significant lower sum.

In addition to the business debt and family troubles, the mayor also owes nearly $200,000 in unpaid taxes to federal and state officials. Sources say Perkins filed for bankruptcy in order to reduce these various financial burdens.

Greensboro Mayor Holds Long List of Personal Debt

While Perkins reportedly has about $1.4 million in assets, including real estate holdings and personal property, he owes nearly $11 million in debt.

Fortunately for the mayor, $8.7million of the debt is unsecured, which means that some or all of that debt could potentially be discharged in Chapter 7 bankruptcy.

But he has a remarkably long list of creditors. Sources say Perkins owes $75,000 to his business partner, $32,000 to his daughter’s school, $47,000 to American National Bank, and $23,000 in credit card debt.

Perkins is also crippled by more than $600,000 in mortgage debt, which is owed on his house and a vacant lot next door to his home.

Sources note that Perkins will likely be able to lose a significant amount of debt through his Chapter7 bankruptcy case. And the mayor remains hopeful that his political career will remain intact after he recovers his financial health in bankruptcy court.

By John Clark

Billions of dollars in tax refunds could be at risk of being stolen by identity thieves, according to a recent report from WDRB News in Louisville, Kentucky.

And this isn’t a hollow threat created by zealous financial advisers. The IRS itself is warning taxpayers about the potential dangers of identity theft during tax season.

So consumers should be careful this spring, and make sure they are taking active steps to prevent identity theft.

Identity Thieves Target Tax Refunds

According to sources, IRS officials have started to warn taxpayers that, if their refunds are rejected, they may have been the target of identity thieves.

In the typical scenario, identity thieves steal the social security number of a particular taxpayer, and then brazenly file a fake return.

The identity thieves often get away with this scam, since the IRS has few defenses against stolen social security numbers, and frequently get away with taking the refund by having it automatically deposited in their bank accounts.

By the time an innocent consumer files his or her taxes, it’s too late, since the IRS has already sent a refund to what it thought was the appropriate person.

And the fraud issues aren’t limited in scope. According to Bill Meyer, a certified public accountant in Kentucky, “billions of dollars” have been stolen across the country, and identity theft remains a “huge problem” for the IRS.

Sources also say that the IRS investigated nearly a thousand complaints of identity theft involving tax refunds in 2012, which is more than three times the number of similar investigations in 2011.

Tax Refund Fraud Proves to be Major Headache

Despite raised awareness of the issue, tax refund fraud promises to remain a problem as long as the IRS continues operating as usual.

According to Meyer, there is a lot of “pressure on the IRS to get the checks out as fast as possible,” which raises the likelihood of errors.

In addition, another problem is that the “IRS does not match the data that people file with information that should be in their system like W-2 information,” says Meyer.

In order to prevent identity theft in these situations, Meyer recommends that consumers should carefully guard their social security numbers.

While protecting social security numbers is important, Meyer also suggests that consumers constantly check their credit reports and bank accounts in order to catch identity thieves before they can wreak too much havoc.

By John Clark

More doctors are filing for personal bankruptcy, revealing the unsettling truth that patients are not the only victims of medical debt, according to a recent report from CNN.

Sources say most doctors are able to continue practicing medicine after filing bankruptcy, but debt troubles can have a negative impact on physicians and patients alike.

And if doctors are forced to close their doors due to debt, patients often have to travel to distant, and more expensive, clinics to continue their treatment. So patients have a rooting interest in the financial health of their doctors.

More Doctors are Filing for Bankruptcy Help

In recent weeks, at least eight medical clinics have filed for Chapter 11 bankruptcy, which doesn’t sound like a particularly high number, but is actually “very unusual,” according to Bobby Guy, the co-chair of the American Bankruptcy Institute’s health care committee.

And reports from state bankruptcy attorneys provide anecdotal support for the broader evidence compiled by groups like the American Bankruptcy Institute.

One bankruptcy lawyer in Plantation, Florida, claims that he did not have a single doctor as a client as recently as five years ago. In recent years, however, he has aided at least six doctors, including an orthopedic surgeon, in bankruptcy court.

According to that attorney, the doctors were all well respected in the medical community, and their bankruptcies were not a result of malpractice lawsuits or other costly mistakes.

Several Reasons for Increased Bankruptcies Among Doctors

The reasons for the rising bankruptcy filings among doctors are numerous, and they are all trends that show no signs of abating.

The primary factor, of course, is the weak economy that has continued to sputter since the recession struck five years ago.

Sources say that patients, wary of medical debt, have reduced their number of office visits and delayed elective surgeries that once provided consistent sources of income for American doctors.

In addition to lowered revenues, doctors are also contending with the rising cost of malpractice insurance, inconsistent insurance reimbursements, and a rapidly changing regulatory landscape.

The Affordable Care Act offers some promise of financial relief, especially for doctors with smaller operations, but it may be several years before the new law’s provisions have a significant impact, sources say.

And if the economics of medical practice don’t change, more and more doctors will be forced to head to bankruptcy court, and patients and physicians will both continue to suffer.

By John Clark

Dionne Warwick, a legendary singer who has been a staple of pop culture for several decades, is filing for personal bankruptcy in New Jersey, according to a report from ABC News.

Sources say Warwick’s financial ills are mostly a result of a massive tax debt. Warwick reportedly owes more than $10 million in unpaid taxes to the federal government and the state of California.

And while bankruptcy may not allow her to discharge all of her tax debt, it could reduce her overwhelming financial burden.

Dionne Warwick Seeks Bankruptcy Help

Warwick filed her petition a few days ago in New Jersey, where she currently lives and once launched her career, according to sources.

The entertainer reportedly owes a staggering sum of $10.7 million in taxes and late fees to the Internal Revenue Service and tax authorities in California.

According to Warwick’s public relations representative, Kevin Sasaki, Warwick “has repeatedly attempted to offer re-payment plans and proposals to the IRS and the California Franchise Tax Board for taxes owed.”

These officials, however, did not accept the plans, which caused “escalating interest and penalties,” and helped foster her remarkably high tax debt.

Sasaki also claimed that Warwick had paid her unpaid taxes, but was simply on the hook for an unfair amount of interest and penalty fees, which Sasaki says are a result of “negligent and gross financial mismanagement.”

Legendary Singer Files Bankruptcy to Escape Tax Debt

According to sources, the 72-year-old singer told the bankruptcy court that she earns $20,950 each month, and that she only receives roughly $1,000 per month in music royalties.

Warwick, who has won five Grammy Awards during her career, also listed a large number of assets, including two fur coats, a few pairs of diamond earnings, several evening gowns, and a small collection of living room furniture.

Sources also note, however, that Warwick spends $5,000 per month on housekeeping and also pays her personal assistant about $4,000 per month.

Before looking for a bankruptcy attorney, Warwick was a soul sensation in the 1980s and 1990s, and has performed soul music for more than five decades, according to sources.

After earning praise for her music, Warwick started appearing on television in a number of formats. In the 1990s, for example, Warwick was featured in infomercials for the Psychic Friends Network, which also filed for bankruptcy years ago.

Her latest television appearance was in 2011, when she appeared on “The Celebrity Apprentice,” a show founded by Donald Trump, who has seen his fair share of bankruptcy courtrooms.

By John Clark

Bobby Mason, a craft beer entrepreneur who founded Michigan Brewing Co., has decided to file for Chapter 7 bankruptcy, according to a report this week from the Lansing State Journal.

Sources say Mason owes more than $8 million to a wide range of creditors. And Mason’s struggles to operate his brewery represent the difficulties that often arise when entrepreneurs launch small businesses.

Craft Beer Businessman Files Chapter 7 Bankruptcy

According to sources, Mason, a resident of tiny Williamston, Michigan, headed to U.S. Bankruptcy Court a few weeks ago, shortly after sending his company, Michigan Brewing, into bankruptcy, as well.

In his personal petition, Mason claimed to have $8.2 million in debt, compared with only $51,000 in assets. Sources note that he owes money to more than 350 different creditors.

His company, which is based in Webberville, Michigan, listed a total of $11 million in liabilities in its own petition. A significant chunk of Mason’s personal debts include a tax bill worth more roughly $865,000, according to sources.

Sources say these tax debts included unpaid sales taxes, income taxes, and unemployment insurance, as well as several arcane beer brewing taxes.

Interestingly, Mason also owes his parents, who together hold the Mason Family Enterprise, about $3 million, which probably has a negative effect on the mood at family holidays.

Small Business Collapses Under Weight of Debt

According to sources, Mason founded his once-popular company with a home-brewing kit seventeen years ago. Over the next several years, Michigan Brewing exploded, and at the height of its success, agreed to brew a signature beer created by Detroit legend Kid Rock.

Recently, though, Michigan Brewing, which had Mason’s wife serving as chief financial officer, started to experience debt troubles, and Mason eventually lost his brewery and restaurant to a forced foreclosure sale.

Today, Mason has a paltry amount of assets, which will likely simplify his bankruptcy. According to sources, Mason only has $236 in two personal checking accounts, and owns no real estate, furniture, or household goods.

He also claims to own four firearms, worth a total of $1,700, and says he own 10 empty beer kegs, which are collectively worth about $1,000.

But Mason owes money to entities that are often less than forgiving. In addition to his tax debts, which are owed to more than 20 different agencies, Mason is also personally liable for a $1.4 million loan his company received from the U.S. Small Business Administration.

By John Clark

Young Americans have tackled rampant credit card debt among their cohorts with a unique solution: Many have simply decided to eliminate credit cards altogether.

Only 39 percent of college students between the ages of 18 and 24 owned a credit card last year, which was a significant drop from the nearly 50 percent of students the same age who had a credit card in 2011, according to a report from the Boston Globe.

Younger Americans Embrace Wiser Credit Card Use

In addition to the decrease in the number of college students who hold credit cards, those who do use plastic are being more responsible with their purchases.

Sources say the median balance on a credit card for users under the age of 35 was $1,600 in 2010. This represents a large drop from the median balance of $2,500 in 2001, according to a report from Sallie Mae and Ipsos Public Affairs.

Of course, credit card borrowing has dropped for all age groups since the start of the recession in 2007. During the past five years, overall credit card declined by $25 billion, which also led to a slight decrease in the number of consumers filing for Chapter 7 bankruptcy.

Interestingly, since the start of the fourth quarter in 2007, consumer credit card debt, thanks in part to high levels of unemployment, has dropped by a total of almost 20 percent, sources say.

But the decrease has been driven by younger Americans, and sources believe this could be partially attributable to the enactment of the Credit Card Accountability Responsibility and Disclosure Act, which limited lenders’ freedom to market their services on college campuses.

Lack of Credit Card Use Could Pose Financial Risks

Despite the myriad positive benefits of lowered credit card use, young Americans might be taking a financial risk by failing to develop a credit history, which is often necessary to secure home or car loans.

According to Ann Schnare, a mortgage industry consultant, students who fail to develop credit card histories may not be able to get home mortgages in the future, which “could have dire economic consequences.

Schnare admitted, however, that such a prediction “assumes a static model,” but the financial industry has already started to adjust to the new credit landscape.

She believes “the industry will respond,” which is already taking place, as credit reporting agencies have started collecting data not tied to credit cards, like rental histories, and telephone bill payments, sources say.

By John Clark

The owner of the parking garages at the newly constructed Yankee Stadium, home of baseball’s most polarizing team, has hired a team of bankruptcy attorneys, according to a report from Bloomberg News.

Sources are quick to note, however, that Bronx Parking Development Corp. has promised that it is not actually planning to file for bankruptcy.

The company claims that the bankruptcy attorneys have only been hired to offer financial advice, rather than pave the way for a Chapter 11.

Parking Garage at Yankee Stadium Falls into Serious Debt

Sources say Bronx Parking tried to conceal the hiring of the bankruptcy attorneys, but the information was released when it filed its 2013 operating budget with the Municipal Securities Rulemaking Board.

At its inception, the company took on $240 million in tax-exempt debt, which was determined to be a reasonable amount of debt for the parking garage firm, which expected to earn much more revenue over the first few years of its deal with the Yankees.

But the garages, which have a total of 9,300 parking spaces, have earned much less revenue than expected, as most Yankees fans have decided to take public transportation, via bus or train, to the ballpark instead of driving.

The high cost of parking for a single game, reportedly 35 dollars, has likely led a lot of fans to avoid parking in favor of cheaper forms of transportation.

And most Major League Baseball teams saw a drop in attendance over the past few years, as the unemployment rate continued to rise and the cost of tickets and concessions saw a marked increase across the league.

Bronx Parking Claims that a Bankruptcy Filing is Unlikely

It’s not a particularly good time to be in the baseball business, especially if you’re a debt-laden parking garage company that has to convince nearly 10,000 fans to drive to every game in a city with the best public transportation network in the United States.

But Bronx Parking insists that it is having productive conversations with its creditors, despite one official’s admission that the company is going through “very, very delicate times,” as it may not meet a $6.9 million interest payment due later this month.

Of course, even if it is able to settle its current debts, Bronx Parking still only has about 4,000 of its 9,300 spaces full on game days. Without more customers, the parking company may have no choice but to file for bankruptcy protection.

By John Clark

Roughly 45 percent of American consumers have more credit card debt than emergency cash reserves, according to a recent report from ABC News.

The disturbing data was collected from a survey conducted by Bankrate.com, which asked consumers whether they had more credit card debt or cash in emergency savings.

And the research helps explain why hundreds of thousands of consumers found it necessary to file for Chapter 7 bankruptcy in 2012, and why thousands more are expected to file in 2013.

Credit Card Debt Begins to Trump Personal Savings

While the data for this year is disturbing enough, sources note that the figure is roughly similar to the amount of credit card debt related to savings held by consumer in 2011 and 2012, which means that the trend doesn’t show any signs of changing soon.

According to Greg McBride, a senior financial analyst for the company that performed the survey, the debt “needle has not moved in the past 24 months,” despite the recent uptick in economic activity.

McBride also noted that the personal savings rate has experience a slow but steady decline over the past two decades, and even a slight increase in personal savings during the recent recession did not alter the overall downward trend.

One of the primary problems is that wages have stagnated over the past several years, which means consumers have been forced to spend most of their disposable income instead of saving it for a rainy day.

And the decrease in savings means that consumers are frequently leaving themselves in vulnerable positions, especially as layoffs become routine across the economic landscape.

Most financial experts recommend that people keep three months’ living expenses in emergency savings, but many Americans are unable to meet this benchmark, according to sources.

Debt Disparity Impacts Consumers Across Economic Spectrum

While low-income Americans are disproportionately impacted by high credit card debt, even wealthy consumers have trouble keeping their savings higher than their credit card debt.

According to sources, amongst consumers who make more than $75,000 per year, 33 percent of people in this bracket still had more credit card debt than emergency savings.

This is roughly similar to the 41 percent of people making less than $30,000 annually who owe more to their credit card companies than they have in the bank, sources say.

Interestingly, the study also found something of a gender gap. According to sources, 60 percent of men have more money saved than they owe to credit card companies, while only 49 percent of women are in similarly strong financial positions.

By John Clark

While payday lenders are often viewed as rogue operations working outside mainstream finance, they’re apparently being aided by major banks, according to an investigative report from The New York Times.

Sources say major banks, including JPMorgan Chase, Bank of America, and Wells Fargo, serve as an important link between payday lenders, which have been banned in 15 states, and their customers.

But banks have kept their involvement with payday lenders very quiet, as they lenders often charge interest rates as high as 500 percent for short-term loans, a practice that has forced many consumers to seek debt relief through personal bankruptcy.

Big Banks Work in Tandem with Payday Lenders

According to reports, payday lenders often fail to gather unpaid debts from customers who live in states where the lenders are banned, or who simply ignore their demands.

To address this problem, payday lenders have started to team up with major banks, which allow the lenders to withdraw funds from their customers’ bank accounts. Shockingly, the practice also occurs in states where payday lending has been outlawed.

According to Josh Zinner, the director of an economic development program in New York, payday lenders “simply couldn’t operate” without the help of banks in “processing and sending electronic funds.”

As more and more payday lenders move their operations overseas to avoid state-mandated caps on interest rates, they increasingly rely on the services of major banks to keep the cash flowing, sources say.

Some banks have even gone so far as to allow access to checking account after consumers have specifically asked them to stop allowing the withdrawals.

And the benefits to banks are potentially enormous. Sources say about 27 percent of people who borrow payday loans eventually draw more money from their accounts than they have, which reportedly generates billions of dollars in extra fees for major banks.

Banking Industry Defends Alliance with Payday Lenders

In their defense, banks claim that it’s impossible to monitor the destination of every transaction that occurs through a massive financial institution.

Virginia O’Neill, an attorney with the American Bankers Association, notes that banks are “not in a position to monitor customer accounts to see where their payments are going.”

Of course, these words provide little solace to the victims of payday lending, which have helped contribute to a significant rise in consumer debt over the past decade. And the banks likely won’t stop the practice until they receive serious pressure from Congress, sources say.

By John Clark

Francesco Rotondo, the president and founder of USA Springs, is filing for Chapter 7 bankruptcy just months after his water bottle company did the same, according to a report from the New Hampshire Business Review.

Sources say Rotondo, a resident of Pelham, New Hampshire, is filing for bankruptcy in order to prevent home foreclosure, as creditors have already started circling around his $500,000 home in Maine.

And Rotondo also told reporters that he hopes the bankruptcy will convince law enforcement officials to help him pursue a $60 million judgment against a financing company that reportedly defrauded the water bottle tycoon.

Water Bottle Seller Files for Chapter 7 Relief

According to sources, Rotondo invested millions of dollars of his own money in USA Springs, which is currently up for sale at a bankruptcy auction after years of poor sales performances.

The entrepreneur reportedly has more than $70 million in assets, but a significant portion of those assets are tied up in the $60 million judgment owed by the financing company.

Rotondo, however, has an overwhelming amount of personal debt, and owes more than $9 million for the mortgages on his Maine residence and the property that houses USA Springs, according to reports.

Local sources note that Rotondo has been a “lightning rod for controversy” since he founded USA Springs, which reportedly planned to bottle more than 300,000 gallons of water a day from a rural portion of New Hampshire.

But before the company could fully complete its primary plant, USA Springs reportedly filed for Chapter 11 bankruptcy in an effort to find emergency investors.

This effort, however, has not been particularly fruitful, although Rotondo’s attorney claims that a local businessman has offered $1 million to purchase the company, and that a bottling company in California has expressed serious interest.

Rotondo Blames Bankruptcy on Rogue Financing Company

The founder of USA Springs believes that his company’s financial struggles are the direct result of the alleged fraud committed by Malom Group Ltd., a financing company based in Switzerland that is being investigated for illegal activities.

Sources say Rotondo has asked for a $60 million judgment against the firm, but Rotondo believes that federal officials are dragging their heels on the issue.

According to Rotondo, he feels like “David with a slingshot,” and is eager to “lay down” the “Goliaths that ruined” his company. Rotondo promised that these so-called “Goliaths” are “all going to fall.”

By John Clark

After Hostess Brands recently announced its plan to file for bankruptcy, customers across the country feared that their beloved Twinkies would quickly disappear from store shelves.

Recent events, however, could give hope to shoppers looking for a Twinkie fix, as well as creditors of Hostess looking to recover some of their debt.

This week, a bankruptcy judge gave Hostess permission to sell select assets, including the Twinkie brand, according to a report from The Wall Street Journal.

Hostess Plans to Sell Twinkies at Bankruptcy Auction

According to sources, Hostess has been granted permission to sell several of its brands, including Twinkie, Dolly Madison, Ho Hos, and Ding Dongs.

The laundry list of low-grade snacks may seem like an insignificant sale, but sources expect that the sale could be worth more than $400 million.

In fact, two private equity firms, Apollo Global Management and Metropoulos & Co., have already bid $410 million for the rights to sell the pastry brands. Sources note that this bid would also include the rights to a wide range of baking equipment.

The U.S. Bankruptcy Court in White Plains, New York, also gave Hostess permission to sell its Drake’s brand to the maker of Little Debbie snack cakes. This company has reportedly offered $27.5 million for the rights to Drake’s snacks.

Other brands that will likely be sold at a bankruptcy auction include Sweetheart, Eddy’s, Standish Farms, and Grandma Emilie’s. None of these brands carry the weight of Twinkies, but sources note that the minor brands may still be worth millions of dollars for Hostess.

Bankruptcy Auction to Help Hostess Shed its Debts

The bankruptcy auction, which will reportedly be held on March 13, will reap hundreds of millions of dollars for Hostess, which will then work with the bankruptcy trustee to repay some of its debts, and potentially discharge others.

The snack company, which is based in Irving, Texas, announced its intention to file for bankruptcy last November. Shortly after this announcement, Hostess closed its 36 plants, which led to the loss of more than 18,000 jobs, according to sources.

Sources note that Hostess opted for bankruptcy after failing to reach a labor deal with one of its unions, but the company had been struggling financially for years before the labor dispute.

All told, the company expects to earn more than $850 million through the sale of its dessert snacks, as well as a few of its major bread brands, including Nature’s Pride and Wonder.

By John Clark

Millions of Americans will likely go to their graves owing some money to credit card lenders, according to an unsettling report from the Huffington Post.

Sources say people who are currently in their late 20s and early 30s carry a much larger amount of credit card debt than their older peers, and researchers from Ohio State University believe this trend will continue for the foreseeable future.

Young Americans Have More Credit Card Debt

According to researchers, Americans born between 1980 and 1984 owe, on average, roughly $5,700 more to their credit card companies than do people who were born between 1950 and 1954.

And the figures are more staggering if one looks at older populations. Sources note that the average young person owes $8,200 more than the average person born between 1920 and 1924.

Equally troubling is the fact that young people are slower to pay off their debts than older Americans, as well as the reality that this trend will likely plague young Americans into retirement, according to researchers.

The study also seems relatively sound, as it surveyed more than 32,000 consumers over the course of twelve years, and was recently published in the journal Economic Inquiry.

Some of the factors cited by researchers that likely contribute to the generational debt disparity include stagnant wages over the past several years, as well as the massive job losses incurred during the recent recession.

But these trends may only trouble young Americans in the short term. Some analysts fear that the high levels of consumer debt and bankruptcy among young people may also be attributable to the Internet revolution.

Online Shopping Leads to Major Increase in Consumer Debt

According to Stuart Vyse, a professor of psychology at Connecticut College, Americans who were born between 1980 and 1984 were the first wave of people to be subjected to online consumption.

Before the advent of the Internet, shopping required physical activities, such as “getting in the car, going somewhere, climbing stairs, lifting,” according to Vyse.

Today, however, Vyse says that shopping is much easier to practice from the comfort of one’s own home, which he claims results in “more impulsive decisions” because “our wiser selves don’t have time to be activated.”

Unfortunately, the rise of impulse shopping has coincided with the deepest economic recession in decades. And if younger Americans are serious about reducing their credit card debt, they may have to reconsider their shopping habits.

By John Clark

Casey Anthony, the Orlando, Florida, resident who was recently acquitted of killing her young daughter, is reportedly filing for Chapter 7 bankruptcy, according to a report from the Los Angeles Times.

Sources say the 26-year-old woman, whose whereabouts are currently being protected thanks to a judicial order, is more than $790,000 in debt, and only has $1,000 worth of assets to her name.

Casey Anthony Files for Chapter 7 Bankruptcy

This Friday, the same day she learned that a Florida appellate court had overturned two of her four misdemeanor convictions for lying to investigators, Casey Anthony filed for bankruptcy in a Florida court.

Sources note that Anthony’s finances have been in dire straits since her prolonged criminal trial, which was a result of allegations that Anthony had killed her 2-year-old daughter, Caylee.

In December 2008, state officials found Caylee’s body inside a trash bag near Anthony’s home. After a lengthy and very public trial, Anthony was eventually acquitted, but she was convicted on four counts of lying to investigators.

After her acquittal, Anthony immediately turned to media outlets to earn back the money that had been depleted by her criminal defense.

According to sources, ABC News paid Anthony $200,000 for a series of personal photographs, but this money went quickly as Anthony attempted to repay debts to state officials and her own defense team.

Unfortunately for Anthony, she also owes a significant amount of money to the Internal Revenue Service and the Florida Department of Law Enforcement.

To make matters worse, Anthony has been unemployed for four years, has no current income, and only owns a small collection of relatively inexpensive jewelry, sources say.

Anthony Faces Multiple Lawsuits and Assorted Debts

The laundry list of debts was reason enough for Anthony to call a bankruptcy attorney, but sources note that the reluctant celebrity is also facing a horde of lawsuits.

For example, a Texas horseback search group has sued Anthony for her allegedly false claims that her daughter was still alive. In addition, a woman who shares the same as the fake babysitter Anthony invented during the criminal investigation has also filed a lawsuit for defamation.

During one portion of the investigation, Anthony created a fake babysitter and claimed she had kidnapped her daughter.

This allegation, however, was denied at her trial, and Anthony instead claimed that her daughter had accidentally drowned in the family pool, according to the Los Angeles Times.

By John Clark

Atari Interactive, the legendary video game creator that remains revered by millions of gaming enthusiasts, is filing for Chapter 11 bankruptcy protection, according to a report from The New York Times.

Sources say Atari Interactive, which is the United States subsidiary of the French company Atari S.A., is looking to sever its ties to its French parent during the bankruptcy process.

The company is also looking to sell a number of its assets, including rights to famous games like “Asteroids” and “Centipede,” but sources say the company plans to continue its normal operations while it navigates through bankruptcy.

Atari Helped Popularize Gaming Before Bankruptcy Filing

The sale of Atari’s most significant assets represents a major turning point for the video game company, although Atari has been down this road before.

Sources say the company originally introduced Americans to video games more than the three decades ago with the game “Pong,” which simply involved users hitting a small ball back and forth across a low-resolution screen.

After “Pong,” some of Atari’s major hits included “Asteroids” and “Centipede,” both of which look incredibly dated today, but represented a major revolution in gaming during their prime.

But Atari’s initial success struck a roadblock in 1983, when several video game companies saw their shares plummet after initial optimism about the financial health of the gaming industry.

The company survived its debt crisis in 1983, and continued to reinvent itself over the next few decades. By 2000, Atari had folded into its French parent company and started producing mobile and online games.

Among its most popular creations today are adaptions of its original games for mobile devices, which remain relatively popular for nostalgic adults.

Increased Competition Pushes Atari into Bankruptcy Court

Despite the company’s recent creativity, it hasn’t been able to avoid debt trouble. And its parent’s struggles haven’t helped. Over the past year, Atari S.A. has seen its shares drop by nearly 50 percent.

This financial trouble, coupled with decreased revenues from its legacy games, convinced Atari officials that filing for bankruptcy was a necessary step.
When discussing the decision to seek debt relief, Jim Wilson, the company’s chief executive, told sources that Atari is looking to sever itself from the parent company in order to “protect the company and its shareholders.

Wilson also said that a sale of the company’s major assets in bankruptcy court will allow Atari to “maximize the proceeds in the best interest” of the company and the legion of people who own shares in the iconic company.

By John Clark

According to a Forbes report, unpaid medical debt accounted for more than $41 billion in outstanding health care bills in 2011, which likely rivals the amount patients owed last year, as well.

After collecting comprehensive data from every health care field, the American Hospital Association announced this week that patients still owed $41 billion for health care at the end of the last calendar year, which is a five percent jump from the previous twelve months.

And the incredible amount of medical debt reveals why so many Americans have opted to file for Chapter 7 bankruptcy in order to tackle their growing health care expenses.

Weak Economy Contributes to Rising Medical Debt

Sources say the weak economy, as well as the rapidly aging American population, helped contribute to the $41 billion sum. Notably, this figure is nearly double the amount of medical debt held by patients in 200.

In addition to the weak economy, high levels of unemployment forced many Americans to skip payments on medical debt in order to meet other basic costs, including food, housing, and transportation.

According to the American Hospital Association, the lack of reimbursement for medical care forced several health care providers to close their doors in 2012, despite rising patient demand.

Last year, the number of hospitals in the United States dipped slightly from 4,985 to 4,973, although most of these closings were a result of mergers and other types of consolidation.

And hospitals fear that 2013 will be another dark year for the finances of medical providers, as they will continue to have to provide uncompensated care to many patients while they wait for the implementation of the Affordable Care Act in 2014.

Health Care Providers and Patients Await Political Reform

Recent political reforms, however, have given both hospitals and patients hope that the medical debt crisis could be coming to a close.

In January 2014, private insurance companies will be obligated to offer subsidized health insurance to individuals and small businesses through exchanges that will be regulated by the federal government.

Moreover, most states (at least the ones that opt into the program) will expand their Medicaid coverage for indigent patients. This, in theory, will reduce the debt load of working Americans, and ensure that hospitals are compensated for the services they provide.

In practice, some observers are skeptical that the insurance exchanges will truly reduce health care costs, but many other analysts are eager to see whether the Affordable Care Act will live up to its potential.

By John Clark

The married leaders of a Florida tutoring company are filing for personal bankruptcy after defaulting on several loans, revealing the perils of starting a small business during the past few years.

After failing to keep their finances above water, Matthew and Larina Hintze opted to file for Chapter 7 bankruptcy protection in U.S. Bankruptcy Court in the Northern District of Florida, according to a report from The Gainesville Sun.

And the Hintze’s journey towards bankruptcy shows the risks couples make when they decide to purchase small businesses during tough economic times.

Tutoring Entrepreneurs File for Chapter 7 Bankruptcy

Just a few years after purchasing TutoringZone from its original founder, the Hintzes found themselves in a deep financial hole. Sources say the couple owes roughly $2.7 million to more than 50 creditors.

And while the couple still owns more than $600,000 in real estate and personal property, their debts include more than $1 million in personal loans to a dozen people. So their lopsided financial sheet certainly makes them good candidates for bankruptcy help.

The couple’s financial struggles started a few years ago when their tutoring company saw a dramatic decline in customers as the effects of the recession began to plague the private education sector.

During the recession, many families cut what they perceived to be discretionary purchases. For many Floridians, private tutoring was simply a luxury they couldn’t afford.

As the Hintzes saw business decline, they started taking our personal loans from both friends and family, which led to millions of dollars in debt and the decision to file for Chapter 7 bankruptcy, according to sources.

How Chapter 7 Will Impact Their Finances

While the Hintzes have promised to repay their investors, they may not have any obligation to do so, depending on the outcome of their bankruptcy case.

During Chapter 7, many filers look to discharge some or all of their unsecured debts. If a bankruptcy court discharges a debt, filers typically have no duty to repay those canceled debts.

But regardless of whether he ends up repaying his investors, Hintze is “just thankful for the opportunity to move forward” and is looking forward to salvaging his company, which he and his wife originally purchased for $835,000.

And the company plans to continue its operations with the help of a $275,000 loan from a finance professor at the University of Florida who purchased the tutoring company’s intellectual property as part of the deal.