Looking for the silver lining in the bankrupty law.

[The Backlash Cometh]

Economists can correct me on this one, but I did think of one good reason for the bankrupty rule: To protect the one investment most Americans have: the equity on their homes. At first, this may seem like a contradiction, but hear me out.

I'm sure you've come across articles regarding the real estate gamble that many people are taking to make a quick buck. People are buying real estate property with little concern for the mortgage terms because they plan on selling the property right away. Many are over-extended because they buy multiple properties. In some places, this is saturating the market with houses "for sale". Many investors plan to turn over their investment, even before the house is built.

As more people delve into this form of investment, this will quicken the bursting of the real estate bubble because of the market saturation. To temper that event, the bankruptcy law slows down these investors by making sure they don't abuse the investment process. If they get caught in the bubble, they still have to own up to the loans on those mortgages, where before, they would have just filed for bankrupty.

Does this seem plausible?

[flygal]

1. I had to read your post about five times before I got it

it does make sense. But, I'm concerned about those who have taken out of their equity for medical purposes. These are the ones who have a lot to lose.

[The Backlash Cometh]

2. Thanks for your patience.

I think the Dems have a winner if they push protections for people who go bankrupt due to medical bills or natural calamities like hurricanes. It's obvious that the private and public sector is failing Americans in these areas.