Chicago Bankruptcy Lawyer Blog

This week we were forced (yet again) to watch, hear and read about the $700 billion bailout package presented before the U.S. Congress… first the House of Representatives, then to the Senate and next back to the House. Apparently there is no other financial news anywhere else in the world.

It’s getting kind of tiresome for the average Joe, who pretty much understands that there’s very little in that huge bailout package for him. No golden parachutes, not even enough gold to make a hankie, if you get right down to it. Joe is in a financial pickle – he’s worried about his financial future, whether or not he’ll keep his job or find one, worried about how he’s going to pay his bills and put food on the table, worried whether or not he’ll still have a roof over his head in the next few months.

The rescue plan helps Wall Street lenders and financiers put their financial houses in order. The very people who got us into this mess to begin with. It doesn’t do anything at all to stop the degradation of the U.S. housing market. And it certainly doesn’t help average Joe keep his own house. Joe’s going to have a rude awakening from his American dream.

Home ownership is the dream of every red-blooded American, and about 66% of Americans do own their own home. For now. But the U.S. housing market is tanking big time. Housing starts haven’t been this low in almost 25 years, and vacant houses are at the highest level ever, at least since the government started keeping records almost 50 years ago. Millions of American homeowners are underwater or upside down or whatever terminology you use – in simple language, they owe more on their mortgage than their house is worth, and property values and home prices continue to fall. Foreclosure rates are accelerating at an unprecedented rate; according to the New York Times, nearly 6 million Americans will default on their mortgages within the next 15 months.

It’s clear (to me, at least, but not, apparently, the Federal government) that homeowners need urgent help. For the U.S. housing sector to be saved from prolonged deterioration and eventual collapse, the bailout package should address issues such as renegotiation of mortgage terms for distressed homeowners.

Banks are “afraid” to lend to each other. Isn’t that frightening? If they won’t lend to each other, they’re certainly not going to be willing to lend to average Joe? They’re not even willing to renegotiate your existing loan with you.

A new government program instituted last week is supposed to help something like 400,000 homeowners to keep their homes. Wow! Four hundred thousand. Six million homeowners are in danger of defaulting. That’s less than 7% of homeowners. What happens to the other 93%?

Okay, so that would be good news for a few chosen homeowners if the banks were willing to take part. You see, the program requires the banks to voluntarily refinance the defaulting mortgage, by reducing the loan balance to 90% of the property’s value. The key words here are “voluntarily refinance.” Banks don’t “voluntarily” do anything which would reduce their profit margins. According to banking sector officials, they are doing “other” things to help homeowners, like lowering their interest rates or lengthening the terms. Sure they are. The fact is it’s easier for them to foreclose on your loan, than to sit down and renegotiate a workable plan for you.

So, what’s average Joe going to do? Should he sit back and wait for his own personal financial bailout plan? He’s not going to get one; not from the government. Average Joe is going to do what he does best, pull himself up by his bootstraps, and find his own rescue plan. Joe doesn’t know what will happen about his job, that’s not under his control. But what Joe can do, at least right now and if he acts swiftly, is control his spending, manage his debt and keep his home.

The way to do that is with the Average Joe Rescue Plan, more familiarly known as a Chapter 13 bankruptcy. It will allow him to reorganize his debt, and more importantly, prevent a desperate lender from foreclosing on his home. Contact our DebtStoppers attorneys, and learn how we can help you keep your American dream alive.

--Debt Diva