Tuesday, October 23, 2007

Going BK to stop foreclosures....

The WSJ reports that some California homeowners are attempting to fend off foreclosure by going BK.

"In recent months ... an increasing number of homeowners have filed for bankruptcy under Chapter 13, which staves off foreclosure proceedings while the homeowner works out a plan to pay off mortgage debt and other obligations over time -- usually three to five years. To qualify, debtors must have a regular income and must stay current on their new bills. About four in 10 filers today are filing under Chapter 13 -- up from three in 10 two years ago. The 2005 change in bankruptcy laws was designed in part to shift more filers to Chapter 13, which forgives less debt than Chapter 7."

How does this effect us potential buyers? My guess is: not at all. For one thing the people who have what it takes to undertake this course of action to save their homes are few and far between. Even assuming you could successfully undertake this endeavor, why would you want to retain a rapicly depreciating asset (an asset for which you dramatically overpaid)?

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