Is foreclosure and bankruptcy just around the corner for you?

It’s no secret that many people in the United States have faced foreclosure in recent years. In 2013, the number of foreclosures dropped dramatically, leading many real estate agents to believe that the economy had picked up and things were looking up. The only problem with this is that the number of unemployed continues to rise. Sure, the government says many people are back to work, but the jobs that are being filled are low-paying minimum wage jobs. Some people have been forced to take one of these jobs because their unemployment insurance has run out and some have simply stopped looking for work altogether. So I don’t know how anyone could say that the economy is actually improving when the numbers tell a different story. If the numbers tell the true story, this is the calm before the storm and we can expect to see a large number of people file for bankruptcy and lose their homes to foreclosure in the next year or two. This shadow inventory of homes that are in some stage of default or foreclosure now exceeds 5 million nationwide. I think the banks are holding off on foreclosures on these properties to shore up the value of the assets they own. If all of these hit the market at the same time, we would see the bottom of the housing market fall.

There has been a lot of fuss about the fiscal cliff and the expiration of the mortgage forgiveness tax which expired at the end of 2012. This means that people who lose their homes to foreclosure will be responsible for paying income tax on their deficiency. mortgage that was repossessed. This will put many Americans in a bad financial position to pay money they don’t have. That is why it has become common to see that people who lose their homes to foreclosure will have to file bankruptcy as well to eliminate liability. Initially, most people file for bankruptcy to stop foreclosure in the hope that they can reach an agreement with their lender. In some cases it works and in others it is better to give it up and let it go. In our society, people believe that owning a home is a right. That became apparent in the early 2000s when people making $50,000 a year were buying $600,000 houses. In what world does this make any sense? The government pushed it and the banks bought it and everybody knows how it ended in 2007. All these bad loans were packaged up and sold on the derivatives market. That set in motion a virtual collapse of the banking system in the US that trickles down globally. After everyone thought we would learn from our mistakes, the same thing is happening today. The only difference is that it is not with real estate. Now since the banking crisis and the Fed has been printing money to buy mortgage backed securities and bail out the banks. In other words, they are using Monopoly money to buy worthless paper. All of this is not going to end well when hyperinflation sets in and drives the housing market to record lows. It’s not if it’s going to happen, but when.

People living on the edge and close to foreclosure should really take a close look at their finances and what is going on financially. Nothing should be taken for granted in these dangerous times in which we live. For those who are barely getting by, they should take the time to consult a bankruptcy attorney and see if it is time to pull the trigger. When it comes to filing for bankruptcy, timing is everything. Even if someone doesn’t need to file now, at least she will have an education from the bankruptcy attorney on how the process works and what to do if she needs to in the future.