In July 2008, The New York Times posted a large interactive chart showing that debt levels in the US have reached more than $100,000 for some consumers. It's hard to decipher who the post was describing. That is, it's unclear whether the chart was talking about the average household, homeowner, or consumer. Regardless, the message is clear- debt levels for many consumers have increased in recent years.

And this isn't the first article by a major site illustrating the mounting consumer debt levels. In fact, you see it all over the news. It's almost like the debt and "negative equity" housing issues are in the papers constantly. Everywhere you look, all you see are headlines about record mortgage defaults, credit card debt, double increases in the number of bankruptcy filings and a seemingly record number of foreclosures. And, given that many adjustable rate mortgages haven't reset yet, this might not be the end of the doom and gloom headlines.

Where did all this come from? What caused all of this? Can anyone give an answer that they are certain of? Well, let's see if we can figure this out. Where do we start?

To begin with, take a look at the evening TV news & watch the commercials. What does the average viewer see advertised? 0% interest credit cards, fancy vacations to 5 star resorts, nice new cars that everyone seems to be driving, giant estates. It's all so tempting, isn't it? I'll say.

It seems like everyone is buying new stuff continually & that money is flowing like water.

But start doing the math.

How can this be?

If the average household makes $45,000 per year, how many people can realistically afford a lifestyle like this? Maybe not as many as we'd like to think. In fact, hardly any when you start calculating the stats.

Sure, there must be people out there who can afford the fancy lifestyles that are advertised on TV and there have to be at least some consumers for whom expenses don't matter. But now that the latest increases in foreclosures and bankruptcy filings are surfacing, it may be that more people went into debt to buy all that stuff & the bills are finally coming due.

As a result, some consumers are facing up to the facts that their debts may be unmanageable & therefore they may be looking into filing bankruptcy in order to get a fresh start. However, in 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in order to deal with consumers who were allegedly abusing the bankruptcy process.

Were the abuses so real to warrant a major change in the bankruptcy law? Will the BAPCPA have the intended effect of making it more difficult for some consumers to discharge unsecured debts in Chapter 7 proceedings? This remains to be seen. The 2005 changes to the bankruptcy law will undoubtedly be debated for years to come. And many consumers might find themselves forced to file Chapter 13 bankruptcy which generally is more focused on getting debtors to design repayment plans as opposed to discharging unsecured debts.

However, one thing can be said about this situation. If the statistics are real, bankruptcies appear to be on the rise in many states.

This might not be the end of the story either. Many of the "bubble states" which have seen home prices deflate also have seen major increases in the number of bankruptcies filed. Are these correlated? It's possible, isn't it?

And what about the other side of the equation- income losses? If a consumer loses his job, can he service his debt? Bills can quickly add up if expenses aren't adjusted downward.

Whatever the answers are, bankruptcy filings have seemed to increased in 2008 as debt levels have become unrealistic for some consumers....