Essex County Bankruptcy Law Blog

If anyone needs any more proof that the Great Recession has affected all income levels across New Jersey and throughout the country, perhaps it came this past week with news that Hollywood star Gary Busey has filed for bankruptcy protection.

The long-time actor, once nominated for an Oscar for his starring role in "The Buddy Holly Story," filed a Chapter 7 petition on Feb. 7. The 67-year-old actor has listed assets of less than $50,000 against debts totaling up to $1 million. Among the creditors listed were the UCLA Medical Center and the Internal Revenue Service. Additionally, Busey listed a claim filed against him by a woman who accused him of assaulting her in May 2011.

The sports agent who inspired the movie "Jerry Maguire" has filed for bankruptcy, chronicling a slow descent into financial turmoil fueled by alcohol and divorce. Leigh Steinberg may no longer be a poster boy for the movie's catchphrase "show me the money," but he is now working to reconstruct his life, starting with filing for bankruptcy.

The Chapter 7 petition lists debts exceeding $3 million for a man credited with negotiating more than $2 billion worth of sports contracts, including some of the NFL's biggest stars. His debts include New Jersey taxes said to be owed to the Mercer County tax collector.

The good news is that foreclosure filings in New Jersey dropped by a whopping 73 percent in 2011. While some may see that as evidence of an improving economy, others say it is simply the calm before the storm. Much of the statistical findings about this debt struggle revolve around what is described as a dysfunctional foreclosure process, with lenders relying on improper and sometimes even falsified documentation to repossess property. Those issues have had greater effects in states, like New Jersey, that rely upon the courts for resolution of mortgage disputes. That has led to delays throughout the state to the point where the average foreclosure takes about two and a half years to complete.

The issue is compounded in our state because of pending litigation challenging the right of a lender to proceed based on faulty paperwork. Specifically, the lender in the case before the New Jersey Supreme Court is accused of violating the state's Fair Foreclosure Act by failing to properly identify itself. One reason for the lag in foreclosures in Essex County and elsewhere is said to be the result of lenders waiting to learn the outcome of the lawsuit. At issue is what the consequences will be if the court determines a house was taken improperly, and mortgage companies appear to have been deferring action until they know the answer.

As New Jersey residents know, a poor economy often leads people into financial turmoil. In the most recent recession, many people lost their jobs. Not only that, but the housing market struggled as well. Both of these factors can force many people into serious debt.

When homeowners face mounting debt, foreclosure may become an issue. The recession brought with it a spike in foreclosure filings, but recent data shows that last year's number of foreclosure filings saw a significant decline. However, some have attributed this to the lingering effects of the robo-signing problem rather than a recovering economy.