Foreclosures: Bankruptcies Rise 35%
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The court system is reporting a massive rise in bankruptcies, a sure-fire indicator of foreclosure activity.
In the 12-month period ending June 30, 2009, there were 1,306,315 bankruptcy cases filed, according to statistics released by the Administrative Office of the U.S. Courts. That’s a 35 percent increase compared to filings for the 12-month period ending June 30, 2008, when cases totaled 967,831.
What’s absolutely remarkable about these statistics is that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was supposed to greatly reduce bankruptcy totals. How? By protecting creditors, making it extremely difficult to get into bankruptcy court and by limiting claims.
For instance:
- You have to have six months of credit counseling before you can file for bankruptcy. By then, of course, your home is likely foreclosed.
- A judge can modify the mortgage on a second home, a yacht or a plane, but not a primary residence.
- If you use credit cards to buy goods worth $500 in the two months before seeking bankruptcy the debt cannot be written off.
- Student loans have become virtually impossible to discharge.
The list goes on but you get the idea.
The concept of forgiving debts goes back at least to biblical times. The idea of “remission” is found in Deuteronomy where it says debts should be forgiven every seven years. Every 50 years there should be a “jubilee” year when debts are forgiven according to Leviticus.
Meanwhile, in the US, we’ve come to believe that debts should effectively not be forgiven at all. Is it any wonder that people are furious?
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