October 28, 2009
/24-7PressRelease/ --
Bankruptcies Rising Among "House Rich"
Article provided by Green & Kapsos Law Offices, L.L.C.
Visit us at
www.greenkapsos.com
In Wisconsin and across the nation, more and more people thought of as affluent are facing bankruptcy because they are "house rich and cash poor." That expression has come into play in recent years as well-to-do Americans saw sizable mortgages go upside-down, meaning more is owed on the house than it's worth on the market.
According to Moody's economy.com, nearly one-third of all homeowners with a first mortgage were upside down on that mortgage in the second quarter of 2009. That translates into 16 million homeowners faced with the unpleasant prospect of trying to make mortgage payments on a house that has plunged in value. This has led to a dramatic increase in bankruptcy filings as people struggle to make ends meet.
Bankruptcies Jump
Chapter 11 bankruptcy filings among wealthy individuals has jumped 73 percent from a year ago, according to the National Bankruptcy Research Center. Chapter 11 bankruptcies are typically associated with business reorganizations, yet rising numbers of individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured debt are making use of its protections from creditors.
The problem for many wealthy people facing bankruptcy is often as simple and straightforward as it is for those of more modest means: they're unable to make mortgage payments, refinance or sell their properties.
Total bankruptcy filings are up dramatically this year: just over 700,000 in the first half of 2009, compared with 522,000 in the first six months of 2008. That's a 36 percent increase, according to the American Bankruptcy Institute.
Though there are some rays of economic hope beginning to emerge, not everyone is convinced the economy is ready to rebound. Noted bank analyst Meredith Whitney recently told CNBC that the high unemployment rate could drive the housing market down another 25 percent in coming months.
That could mean more Chapter 7, Chapter 11 and Chapter 13 bankruptcies on the horizon.
Article provided by Green & Kapsos Law Offices, L.L.C.
Visit us at
www.greenkapsos.com---
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