Go Sarah!
Bankruptcy question could and should have been answered. Sarah could have spun it into “personal responsibility”.
The new bankruptcy law is aimed at personal responsibility. It is meant to curb those debtors who were repeatedly using and abusing the system by running up debts, and then repeatedly claiming bankruptcy every few years. It put a longer time-line on how often one could claim bankruptcy.
It also changed bankruptcy from being a strict “assets less debt” to a modified approach that now includes one’s income. Sometimes, those who are “upside down” (their total debt exceeds total assets), still have a positive cash flow (their total income exceeds their total debt payment and living expenses). The new rules make is harder for those with a positive cash flow to claim bankruptcy. Again, it’s to curb debtors who abused the system.
Coming back to the housing market, almost everyone here in Ft. Myers is “upside down” because of our houses. But, many of us still have the same job making the same money that could be used to pay our mortgages. Should we claim bankruptcy just because we are upside down? No. If our incomes cover the mortgages, there is no reason. If our incomes can’t cover our spiraling mortgages and debts, then bankruptcy is one option. Either way, we face losing our houses (foreclosure or bankruptcy) if we can’t make the monthly payments.
Again, it was a great question that Sarah could have batted out of the park with a “personal responsibility”spin to it.
