Posted on 04/10/2004 10:48:08 PM PDT by lewislynn
April 10, 2004, 11:32PM
Three years ago Adrian Gaspar could easily supplement his $45,000 Houston police officer's salary by moonlighting as a security guard at local construction sites. At one point he made as much as $100,000.
Last year the 39-year-old found himself fighting off creditors.
"I'm here from Romania, and I thought, 'Hey, this is the American Dream I'm living.' And then all of a sudden I was filing for bankruptcy," Gaspar said.
The economic slump that worsened following the 2001 terrorist attacks dried up new construction and left Gaspar without a second job. The Manvel resident drained his savings, sold his two extra cars and a Harley-Davidson, hawked car parts on eBay and cashed in his gun collection to pay his bills. He resorted to bankruptcy when he ran out of things to sell.
"I'll have a bad mark on my credit report for several years, but at least I can feed my family," he said. "Family comes first."
Gaspar was one of 25,210 individuals who filed for personal bankruptcy last year in the U.S. Southern District of Texas, helping to make it the nation's top judicial district in terms of the percentage increase in filings.
The number who filed in 2002 was 20,459.
Personal bankruptcy filings increased 5.3 percent nationwide, but they jumped 23.2 in the Southern District of Texas and 15 percent statewide. Nationally, personal bankruptcy filings edged up to 1,625,208 from 1,539,111.
Gaspar's situation is typical of most personal bankruptcies, where consumers have financially overextended themselves. But Joyce Cavanagh, a family economics specialist at Texas A&M University, says South Texas' high 2003 unemployment figures may be why the number of bankruptcy filings in the area grew.
The Southern District includes 43 counties in southeast Texas, including the Houston, Galveston, Victoria, Corpus Christi, Laredo, McAllen and Brownsville areas.
The national unemployment rate last year stood at an average 6.0 percent. Houston's was 6.9 percent, and McAllen's was as high as 13.6 percent, according to the Texas Workforce Commission.
"Those numbers don't include people who have gotten discouraged and stopped looking," Cavanagh added. Some of those frustrated job seekers are still living off credit cards and other debt.
As the unemployed ran through their savings and started racking up debt, many were likely forced to file for bankruptcy.
Bankruptcy lets those mired in debt declare financial insolvency through the court and be freed of financial obligations.
But the process is noted on credit reports, which can make it harder or more expensive to get loans, credit cards or auto insurance.
Declaring bankruptcy won't wipe out all of a person's debt. Filers still have to pay money owed for child support or alimony, fines and some taxes, as well as student loans owed to a school or government agency, unless the court decides that payment would be an undue hardship.
Layoffs in the energy sector in 2002 have especially affected Houston, said Kelly Rote, spokeswoman for Money Management International, a Houston-based consumer credit counselor. Mergers in the petrochemical industry have also left a number of people displaced, she added.
"I've known some relatively wealthy people forced into unemployment for a long time," Rote said. "Even they are forced into bankruptcy to survive."
Texans in the southern region of the state also tend to have lower incomes and may not be insured, making them more inclined to take out cash advances or payday loans at high interest rates.
"Medical costs facing our seniors as well as those uninsured are making it more challenging for families throughout Texas," Rote said.
Between 750,000 and 1.1 million people in Harris County are uninsured or underinsured, according to Gateway to Care, which works to increase health care access in the county. As unemployment grows, so does the number of people losing their health insurance. The numbers are likely greater farther south, experts said.
Others said news about pending reforms to bankruptcy laws also usually cause a spike in filings as people rush to the courts before changes take effect.
One bankruptcy attorney said filings were on the rise in Kingwood because many home buyers had taken out mortgages in the area that they couldn't afford and couldn't keep up with the payments.
"It's different here," said Peter Bergman, a bankruptcy attorney in Kingwood. "People bought more house than they should have."
I'm a broke college student, but still manage to pay rent, bills, and even have a couple (not many) luxeries. (I consider 'net access a necessity!!)
IF I had to however, I would glady give up my luxuries if I found that my income could not support it.
God provides my necessities.
I hate that people end up going the bankruptcy route, but jeez, people. Don't assume more debt than you can handle!!!
People go bankrupt in boom times too.
Of course, I am sure this is Bush's fault.
That's pretty hard to ignore. I know you'd rather this article be about California, but it's about Texas.
And housing boomed just about everywhere else.
sold his two extra cars and a Harley-Davidson, hawked car parts on eBay and cashed in his gun collection to pay his bills. He resorted to bankruptcy when he ran out of things to sell.
The "spend it on material goods as fast as you make it" mentality is rampant all across this country. Had he invested in some quality cash flow real estate instead of depreciating goods he might not have to work by now. (Ha, can you tell what I do with my money?) I hate to see people waste their money on excesses that don't bring any return. Been there, done that, never again.
Some gun collections increase in value the longer you keep them. :p
Yeah, from reading the article, it sounds as if Adrian Gaspar is not living within his means. $45,000, in Texas.
Not to minimize your friend's plight, but I think that maybe he is in the minority of those that do end up filing for bankruptcy.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.