I was hit by a new wave of new bankruptcies recently -- many pushed into bankruptcy by the federal changes in rules for credit cards which went into effect this past Thursday. I think a lot of credit card companies increased rates, minimum payments, etc. before the law changes went into effect.
Debtors who were able to make the minimum payments in perpetuity no longer can do so when the payments doubled.
I am wondering whether that was a one-time deal or whether it will get worse.
My feeling -- just a hunch, really -- is that we will see another cascade.
Also, housing prices in the outer counties continue to drop like rocks. I have learned not to say "holy shit!" when I see how the prices have dropped, as it tends to cause my clients to burst into tears.
Closer in housing prices may be stabilizing. Or at least not dropping like rocks.
For clients who can afford to pay their first mortgage, we are stripping off wholly unsecured second mortgages in Chapter 13, a loophole in the bankruptcy law that was not getting much use back in the days when everybody had equity. Rumor has it that lenders have, in general, written off second mortgages.
So, they dump the credit cards, they dump the second mortgage, they keep the house and the first mortgage, and the cars. The retirement accounts are totally exempt, so they keep those, as well. Not exactly TEOTWAWKI. |
