Los Angeles Bankruptcy Law Blog

One of the topics we often discuss here on this blog is the nearly impossible task of discharging student loan debt. Many students leave college with a degree that is supposed to help them land a career-launching job; but with the job market still relatively unstable, this degree saddles post-graduates with immense debt and only a slightly improved chance of obtaining work.

There seems to be a growing movement, both at the local and federal levels, to try to make this sort of debt discharge possible. Chapter 7 bankruptcy allows the filer to clear out much of the debt they have. Sometimes this can be all of it; but in many cases, there is still a little bit of debt left over because it is protected (like with student debt).

When it comes to filing for bankruptcy, some Los Angeles residents may think it is a very easy process -- as if someone can just up and file without much hassle. Other residents may think it is more complicated than it actually is, and thus incorrectly decide that bankruptcy is not the route for them.

The truth is that filing for bankruptcy is somewhere between these two schools of thought. Bankruptcy is complicated; but it also does not have to be the major issue that it is often portrayed to be. And, ultimately, it can be very beneficial for the filer.

In 2005, when the Bankruptcy Code of the United States was altered to grant more oversight of consumer bankruptcy filings, Congress charged the U.S. Trustee Program with undertaking the vast challenge of reviewing potentially fraudulent filings. If an in-debt individual claimed incomes or expenditures that were out of the ordinary, the organization of trustees would pinpoint the case and bring in an outside accountant to perform the audit.

However, the program has run low on funds, to the point that audits have been ceased. This move likely is only being made for the time being -- but if the budgetary constraints on the organization are strict enough, a major overhaul to the system could be necessary.

Last year, the internet was abuzz after Hostess Brands filed for Chapter 11 bankruptcy. People feared that their beloved sponge cake treat, the Twinkie, would disappear forever as a result of the bankruptcy (far fewer tears were shed for Ho Hos and Ding Dongs). The fears were legitimate -- but it appears they have been allayed, as a couple of investors have turned into heroes for the Twinkie faithful.

The two investment firms -- one that owns Pabst beer, and another that has a stake in Hardee's and Carl's Jr. fast food restaurants -- have agreed to a $410 million deal that will see them take over numerous brands from Hostess, including Twinkies, Ho Hos and Ding Dongs. One of the firms has the ambition to get the treats back on the shelves by the summer, and there could be some celebrity endorsers (Will Ferrell was floated as a potential pitchman).