Friday, December 21, 2007

Remember the Bankruptcy Bill?

Remember 2 years ago, when they passed that bill that stopped people from declaring bankruptcy?

They didn't count on a housing recession.

Bankruptcy Law Backfires as Foreclosures Offset Gains

Nov. 8 (Bloomberg) -- Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills.

The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.

``Be careful what you wish for,'' Westbrook said. ``They wanted to make sure that people kept paying their credit cards, and what they're getting is more foreclosures.''

Basically, people can't declare bankruptcy anymore. So rather than letting the credit cards go so they can pay off the house, they're letting the HOUSE go so they can pay off the credit cards.. And the housing lenders are taking it in the ass.

"Whosoever diggeth a pit shall fall in it."

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