I am not a bankruptcy lawyer. But my sister is one. We were talking about the mortgage "crisis" and she pointed out a flaw in the bankruptcy code that remains unaddressed.
Unlike virtually every other form of debt, a debtor in bankruptcy cannot modify a home mortgage loan. I can buy three investment properties and force the lender to accept less money as part of my bankruptcy plan, but I can't do it with my home mortgage. I'm wondering, aloud, how that makes sense.
Andrea turned me on to a blog called Creditslips where bankruptcy people hang out. In a recent posting there, Mortgage Modification in Bankruptcy: Redux, the commentator intelligently discusses this issue.
And for all you free market fans out there, this would eliminate the need for the giant bureaucracy that Congress is about to create. One of the commenters on Credit Slips wondered if there was a connection between the bankruptcy code revisions in 2005 and the problems we're facing now.
Somebody has to sweep up after the elephants when the circus leaves town. Looks like it's the taxpayer once again.
That's the view from The Law Planet, Jupiter, Florida.