Is The American Dream Slipping Away? - Part 2
By Peter Orville, Attorney at Law on May 30, 2008 in Chapter 13 Bankruptcy, General Bankruptcy Information
There is a new class of Chapter 13 debtors brought on by the approaching recession, according to Robin Weiner, President of the National Association of Chapter Thirteen Trustees (NACTT). These debtors earn over $100,000 per year but cannot keep up with their fixed expenses. They are builders, real estate agents, mortgage brokers and loan officers. They are doctors, lawyers and accountants. They work in retail sales, restaurants, entertainment and the tourist industry.
This new class of debtors fully bought into the American Dream, and reaped the benefits…for a while. They purchased large expensive homes, often with low interest adjustable rates that required interest only payments. They got their gas-guzzling SUV’s, and used their credit cards to buy big screen TV’s and go out for gourmet meals. Their investments kept going up, and their home values kept going up. It was easy to get more and more credit. As their home values increased, many people refinanced their mortgages several times, using the increasing equity to (temporarily) pay off their credit cards and pay for unnecessary expenses. “They appeared to be doing well when, in fact, they were living on borrowed money” says Ms. Weiner. “Their misguided sense of immunity from the current economic crisis backfired”
The bottom fell out, says the NACTT President. Home values plummeted, property taxes, health care and insurance costs skyrocketed. Oil went over $100 per barrel and credit card interest rates exploded.
Many filed Chapter 13 in order to save their homes. For the first time they are worried about job security. Their income and their futures are impacted by the decline in consumer spending. NACTT President Weiner says many of these debtors cannot save their homes, and have to move into rentals, making the rental market even more expensive. She asks some hard questions.
*With credit tightening, how long will it take them to qualify for mortgages again?
*Will they ever own again?
*Will their Chapter 13 help them to live more modestly, or when they are
done will they begin charging again?
*Who will be debtors in the future?
*How will today’s economic crisis affect the filers of tomorrow?
*What about the next generation?
*Will they be able to buy their own homes? Take vacations? Save for their futures?
*Will hard work and perseverance be enough for them to realize the American Dream?
If you liked that post, then try these...
Preparing Your Chapter 13 Budget--Part One by Däna Wilkinson, Attorney at Law
When Can I File Bankruptcy Again? by Michael G. Doan, San Diego Bankruptcy Attorney
If I File Bankruptcy, Will I Lose My Paid-For Car (or anything else)? by Karen Oakes, Southern Oregon Bankruptcy Attorney
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