Previously, if you declared bankruptcy you could keep the house. Not now.
The banks didn’t like bankruptcy judges lowering mortgage payments so in the 2005 Bankruptcy Reform, that option was eliminated, according to businessweek.com.
“If you file for bankruptcy, you don’t get relief on the mortgage,” says Michelle J. White, an economist at the University of California at San Diego.
It seems your house gets no special protection. Now homeowners are more likely to just walk away from the home instead of declaring bankruptcy.
I love it when the banks shoot themselves in the foot, feet and both knees.
The banks got what they wanted in bankruptcy reform. Now they gotta lotta homes to sell which is further lowering housing prices and further increasing foreclosures.
Way to go Einsteins!