San Diego unemployment rises in March as does American food stamp usage. What does it all mean?

Here in my city of San Diego unemployment has increased in March much to everyone’s surprise. This was detailed in an article in the San Diego Union Tribune.  This fact certainly calls into question whether there is a recovery occurring at all in San Diego.  According to the article San Diego would need to add 20,000 to 25,000 jobs per year but only 6,700 are currently being added.  This is far short of what is needed for a full recovery according to some economists.

This article also explains that California unemployment is on the rise.  California unemployment rose to 11% in March.  18,000 jobs were created in California in March and that may sound like a lot but 2 million people still are unemployed in the state.  They also mention in the article that nationwide there seems to ba a decrease in unemployment.  I would argue thought that this nationwide rise in employment looks good but must be balanced against other factors. (See here for my blog on unemployment is rising when the governement says it is not).

For instance the Wall Street Journal reports that 34 million people are on food stamps currently and that is an all time high.  This represents an increase of 70% since 2007 and 1 person in 7 is now on food stamps.  A 70% increase is significant and calls into question the state of the economy as a whole.  Are these people receiving food stamps unemployed or are they people with jobs? Are the employed (or underemployed) getting on food stamps because they can’t afford to buy food with their salaries?

Another article in Investor’s Business Daily tells of an increase in the number of people on disability.  Are suddenly getting more disabled in this country or is something else happening?

I believe something else is happening.  First of all more people are out of the work force than ever according to recent articles.  As they come back into the work force this could increase unemployment.  But also you have this massive over-spending by government and “quantitative easing” or straight money printing.  As I argued in a blog (http://bit.ly/I9XMnU) about governments like the Weimar Republic who choose to print money,  massive money printing can only lead to massive devaluation of the currency.  This devaluation in turn leads to a huge increase in the prices of foodstuffs.

We are seeing prices go up dramatically in the past two years especially in the area of food and energy.  I also blogged about this phenomenon some time ago  ( http://bit.ly/IahMZf).  These increases in food have even caused farmland to increase in prices.  There was a story today on Fox Business how farmland is currently selling for very high prices when it just recently used to be very cheap.  It only makes sense that this is happening because food is a commodity that is increasing in price so it will become more profitable to produce in the future.  It is also true that food and energy are increasing but government inflation figures do not reflect this because they conveniently exclude food and energy from inflation measures.

So it appears that prices are up and currency values are down and unemployment is sideways.  It is also true that government figures usually don’t reflect real world conditions.  This is why I belive that people are getting on food stamps and disability.  Even if they are employed full-time they cannot afford the ever higher prices for everything today.  Even two income couples are struggling especially if there are kids.

The underemployed and unemployed are even in a worse condition than the employed.  But employed people on food stamps in these large numbers is a new phenomenon in America.  It used to be that you got off food stamps as soon as you got a job.  I suspect that is not the case today.  People are staying on food stamps no matter what because they simply can’t afford the ordinary costs of life.  The food stamp statistics reflect this reality.

My clients who I see in my office every single day also reflect these changes in society.  They come to see the bankruptcy attorney  to get out of their old debt which they certainly can’t afford.  They can barely afford their current expenses as commodity prices increase but their wages do not.  For my clients bankruptcy can eliminate the old debt and make it easier to go forward.

We do not know if there is a recovery but there are other economic factors out there affecting everyday people.  With prices on the rise and the government not admitting it I expect to see many more bankruptcies in the future out of necessity.  It is not a matter anymore that is even subject to debate.  Many of my clients do not anymore debate whether it is worth it to file bankruptcy.  It is literally a case of having enough food on the table.  Food that will undoubtably cost more next month.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

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Is the economy improving? Will I be “means tested” out of bankruptcy if I get a good paying job?

I don’t know if the economy is improving but if you are going to be starting a new job soon it could mean that it’s a good time to file bankruptcy.  If you have been unemployed and you have a lot of debts that you wish to discharge in bankruptcy then it might be good for you to file before you get a new job.  If the economy is actually improving then so will job prospects.  If you get a new job then this will possibly impact your ability to file.  If you make too much money you may be “means tested” out of bankruptcy.  There are limits to how much income you can make and still file a chapter 7 bankruptcy.

The means test was added in 2005 to force people into a chapter 13 so the creditors could get some sort of payments on their debts.  The law was lobbied for and written by the credit card companies and big banks (same thing).

At the time of this article in San Diego county income limits range from just over $47,000 per year for an individual to $77,596 for a family of four.  (You add $7,500 per year for each family member after 4 people).  If you make more than these amounts that are allowed for your family size then you would go into the means test.  When you are in the means test then all of the deductions for mortgages, cars, healthcare, charity, and taxes are subtracted from your income to see if you pass.  If you do not pass the means test then you must do a chapter 13 bankruptcy as you are “means tested” out of a chapter 7.

It is far better though to not go into the means test at all.  It is better to fall below the means test cut-off line and not take the test at all.  If you file while you are still unemployed or soon after you job starts then you will have a higher chance of coming in below the means test limits.

If your income is going to go up significantly then it is a good time to file sooner rather than later.  The means test looks back six months so if you just started a job then you would still be okay but don’t delay the filing and risk not qualifying for a chapter 7.   A chapter 7 will allow you to eliminate all of your dischargeable debts and then get a fresh start as you move on with your life and your new job.

Remember that most people can keep most of their assets in a bankruptcy and most people can eliminate all of their dischargeable debts.  Some debts are not dischargeable but consult me or another bankruptcy attorney if you are wondering which debts are dischargeable.  Also you can file alone and your spouse does not have to file with you.  Bankruptcy will remain on your credit report for up to ten years but with the proper re-building most people can get their score up significantly after two or three years.

So bankruptcy is not the end but a new beginning!  It is a fresh start that many need!  It might be a good time to file now though if you are going to start a new job so you can start a new life debt free!

I am San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.