Some may wonder, why can’t people just pay their bills? Often those who are more fortunate are quick to pass judgment against those who have filed or are in danger of filing bankruptcy. There’s certainly a disconnect in the perception of economic status across all classes. No one ever plans for this, there are just too many special circumstances around each person who files bankruptcy that leads them this way.

Major Causes of Bankruptcy

Unemployment - All throughout 2008 businesses began slowing down and plans for expanding were halted, particularly for the bigger companies. Local business in every town across the country were hit first, overall causing massive layoffs.

Foreclosures and Balloon Mortgages – In previous posts we discussed how these types of loans were a major cause of bankruptcy for many since the housing market begain its collapse. Many who managed to hang on and continue paying their mortages for the last year are starting to follow the path that millions of others have taken to relieve themselves of the burden of these subprime mortgage loans.

Medical Expenses – This particularly applies to those who are unemployed, if savings is able to get families by on living expenses and minor costs, medical expenses would certainly put a significant burden on the financial stability of the unemployed.

Divorce - The rate of divorce has always been high in the U.S. the current enconomy is perhaps a major cause of divorce rates in 2008 going into 2009. Because divorces often involve common property and debt, filers often find themselves in need of filing bankruptcy to rid themselves of bad debt and start all over.

Other less obvious causes of bankruptcy may include, having your identity stolen and not being able to resolve the crime, it’s rare but it does happen. Risky investments, such as over hyped stocks and foreign trust funds etc.

How can bankruptcy help me in this Economy?

Regardless of the state of the economy, if your debts are keeping you up and you’re simply not able to sustain a comfortable living, you may very well need to consider this option. Only a qualified attorney can determine for you whether you qualify to file and discharge your debts.

The current economy gives everyone the impression that worse days are ahead, it’s only natural to assume the worst, but carrying your debts along into worse economic times will only prove disastrous for you. When you’re no longer able to pay your bills, if you have not filed for bankruptcy protection your creditors are legally allowed to come after you. Once collections agencies begin harrasing you, you’ll know that it’s time seek protection under bankruptcy.

Whatever the causes of your financial burdens are, bankruptcy protection is a right extended to all US citizens by the federal goverment and it is a bailout that has helped millions of people get a second chance in their finances.

One of the most common doubts for bankruptcy filers is in determining what assets are exempt when filing bankruptcy, this is not always clear especially if there are versified assets involved. As always it is best to consult a bankruptcy attorney to determine this with precision, but this post should give you an idea.

Exempt assets are those that can not be included in the bankruptcy estate, for example your retirement account. 401K, IRA accounts and other retirement accounts are in most states exempt from liquidation, however some states do consider these types of assets non-exempt so it’s important that you check with your attorney to make sure that yours will be safe.

Non-exempt assets are those that will be included in the bankruptcy estate and you must surrender in order to process your bankruptcy discharge. The bankruptcy trustee will use these assets to liquidate them and use the cash proceedings to pay your creditors before any debt can be discharged.

The law currently states that $16,500 of your home’s equity is exempt or double that amount if you’re married. Also you may exempt up to $2,500 of your vehicles total value. Home items like your furniture, items in your wardrobe and home collectibles may be exempt up to a value that can be determined by your attorney since this also varies per state. Any health or medical aids that you need for treatment or life support that are of high value are also exempt.

Any personal injury compensation, and disability payments that you’re receiving may also be exempt depending on which state you’re in.

Other assets like pension plans in which employees contribute to ERISA qualified plans, or deferred compensation plans, health insurance plans and certain annuities can be considered bankruptcy exempt assets.

Education funds to your child’s college education, or state tuition programs that were started at least one year prior to filing for bankruptcy, can be excluded from the bankruptcy estate. These funds educational funds however must clearly have as a beneficiary a child or grandchild of the debtor.

Can I exempt my house entirely?

Typically no, but in today’s crashing real estate market it is difficult to find a home with a significant amount of equity worth liquidating for the bankruptcy trustee. So presently you may be able to keep your house if the trustee is not interested in selling it, but you must continue to pay the mortgage on it even after you get a discharge since this is a secured debt.

If there’s more equity in the home than the allowed exempt amount of $16,500 or double if you’re married, then it is likely that the trustee will move forward with including the property in the estate and sell it. However if the equity is below the allowed amount then you should be fine just make sure you pay the mortgage. Also remember that the lender is not interested in the house, they’d rather you got caught up on payments and will only proceed with foreclosure as a last resort since this is typically an expensive and time consuming effort for the lender.

Can I exempt my vehicle?

Vehicles normally depreciate in value rather quickly, so unless you own luxury or vintage vehicles that hold good value and are above the allowed exemption value of $2500, the trustee will also probably choose to overlook this asset. Most people own vehicles that they’re either leasing or still paying for and because of the depreciation value of most vehicles it is difficult to consider them in the bankruptcy estate as worthy assets. So if your vehicle is a couple of years old with moderate to high mileage you probably have little to worry about.

When can I exempt everything?

If you’re filing chapter 7, more than likely you won’t have to try too hard to exempt certain things you own since most people who file chapter 7 bankruptcy have already exhausted their own resources to get caught up and failed. Including selling some of those assets. In most cases there were never really any assets to begin with. This is why often chapter 7 bankruptcy cases are no-asset-cases, in which the largest if any assets at all are the individual retirement accounts the filers have through their employers. Even if there are assets that can be liquidated they’re often overlooked due to the exempt assets rules.

There will be cases in which the filer has a significant amount of non-exempt assets and there are legal ways of converting non-exempt assets into exempt assets, these circumstances are unique and this will not apply to everyone who has a lot of assets. This can only be done by a seasoned bankruptcy attorney so do not make any assumptions on your own, this can be very serious if it is determined that you tried to purposely defraud or hinder the proceedings. If this is the case for you, then take this very seriously and talk with a bankruptcy attorney because bankrutpcy excemptions are a very important part of the process and most people simply do not have the knowledge to do this correctly.

Credit Scores – the warm and fuzzy creditors love.

Credit reports are more than just a list of accounts with their payment history, yes it’s true that creditors love to see lots of green tabs and positive check marks on your credit history. But lately, one of the most important factors and probably the deciding factor in whether you get credit approval or not is your credit score.

This three digit number speaks volumes to anyone researching your financial life. It’s no surprise that so much emphasis has been placed on credit scores in the last few years since that’s the first impression creditors get from you. Consumers have also gotten more apt to actively manipulate their scores by doing certain things that can legally raise their scores. From making larger monthly payments, to paying in full and then borrowing again, to fixing inaccuracies in their credit reports either alone or by hiring a credit repair agency.

What to do about credit inaccuracies.

Many people today are living with credit inaccuracies and outdated information, mostly for lack of knowledge on what to do about them or simply because they don’t even know they’re there. These entries vary from late payments that were never late, to closed accounts that still show as open, to defaulted accounts that should be included in bankruptcy, etc

The Fair Credit Reporting Act established for consumers the right to dispute credit entries for free, however the process is often lengthy and complicated so handling it on your own is definitely the hard way of doing it and although you can save you money this way it can’t guarantee results.

Hiring a credit repair agency would be a better approach, BUT! Proceed with caution. What does that mean? Well, you can’t erase accurate entries from your credit report nor can any credit repair agency. No one has these magical powers or special ways of doing this. I mention this because there are in deed a lot of scams in the field of credit repair, so many in fact that it’s really hard to tell anymore if an agency is legit or not.

If you have true inaccuracies and outdated information that needs to be fixed then by all means begin by consulting a credit repair agency and get a good feel for how they work and what it is exactly that they intend to do for you.

Finding reputable credit repair agencies.

Just like you shop for auto insurance or a primary care provider, you should take care of doing the proper screening when looking for a reputable credit repair agency. The Better Business Bureau is not a bad place to start your research and definitely only consider those companies with satisfactory records.

Also it’s important that you know that the Credit Repair Organizations Act establishes that these agencies must follow specific guidelines in order to protect consumers. You should be made aware of these and be given any disclosures before you sign anything. Your contract should have the following information:

• Terms for Services, which should include any limitations and disclosures.
• A detailed description of the services to be performed and their total costs.
• The time it will take to achieve the promised results.
• Any guarantees they are offering you.
• The Agency’s name, Point of contact, business address and website.

Be suspicious of any company that does not have a website, this is a sign that they’re not well established or not established at all and you could be dealing with someone whose intent is to run with your money. On that note here’s a list of tell tale sings that you may be dealing with a professional scammer and not a legitimate credit repair agency:

• The agency representative asks for payment before the services are provided. According to the Credit Repair Organizations Act, this is a violation and more than likely you’re not dealing with someone who adheres by these laws.
• Outrageous promises, like removing all bad entries from your credit report to include your bankruptcy record, any judgments, leans etc. Once again, “no one” has the power or right to do this, if the entries are accurate.
• The agency representative insists that all credit entries are disputable and encourages you to participate in your own dispute by sending letters to the credit bureaus. This is based on the theory that if creditors do not respond within 30 days the entries can be erased. The process of verifying credit entries today is much easier than it was 5 years ago, it does not take 30 days to verify these entries, they can be done within hours of receiving the dispute.
• The agency representative suggests or lays down a plan for you to get a new identity under a new social security number. Should you hear these words come through the phone line, simply hang up immediately and report the agency. You do not want to willingly participate in such procedures, you will be held liable for such actions and prosecuted by the federal government. This is a felony and it is very serious!
• The agency representative makes outrageous claims about their experience and the number of clients they have helped, yet has no way of proving it, or insists on you reading testimonials on their website or pamphlet. Never base your decision on testimonials these are heavily abused and never worth the time reading anyway. The best testimonial you can read is that which the Better Business Bureau provides for its registered companies.

Should you want to consider giving it a go on your own, visit the Federal Trade Commission’s website and at the bottom of that article you’ll find a sample dispute letter that you can tailor to your situation. Keep in mind that this approach will take you more time and effort, but it is most certainly possible to achieve the same results if you truly believe that you have inaccurate entries on your credit report.

Limit the number of credit cards you sign up for – Ideally each individual should have no more than 3 credit cards, this is engouh to get you started building some credit history. You should also never sign up for more than one credit card at a time. Each time you submit an application, your credit is queried and this normally is ok once, but if you have several creditors querying your credit for the same thing, you’ll likely lose precious points off the top. More credit cards can be added later, but I would recommend that overall you have no more than 5 credit cards total.

Always pay more than the minimum – Paying on time is only part of your FICO score, your overall score will take into account how well you’re able to reduce the total outstanding balance on your credit card. If you only pay the minimum on your bill, you will continually show a high balance that’s only creeping down slowly. Try alternating the increase on payments each month, so if you’re minimun payment averages $40 dollars, you can pay that $40 dollars this month and next month pay at least 50% more of the minimum payment. This will crearly show that you are able to eliminate your balances.

Don’t close credit accounts you don’t use – I used to think this was a good idea, but it turns out that you really are deleting good history from your credit report, especially if these are accounts you’ve had for some time. It’s important that you show that you have been managing your own credit for some time, this experience counts. Also, and most importantly, if you close an account you’re eliminating available credit, you could potentially borrow from this account and this is taken into account as well in determining your overall FICO score. However, it’s also important that you keep in mind that there’s an even more important factor to this formula and that is to keep a ratio of no more than 30% of that available credit in use.

Nevermind those department store credit cards – Don’t bother with these, sure they entice you with a 10% discount, but this is another oppotunity for you to amount debt that must be paid back at a high interest rate no matter what your credit score is. Not only that but you will get another hit on your credit, which will take more points off your current FICO score. You may say to yourself “I won’t use it” I just want the 10% discount, but the damage is done once you turn the application in. Your credit will be queried and you will lose points; all so you can save 10%. It’s just not worth it.

Do not lend your credit! – I probably should have put this on top. I have also mentioned this point through other posts on this blog. Your credit should be like your underwear, you just don’t let others borrow it. There are so many dangers in doing this, you have to realize that you’re putting yourself on the line when you co-sign for credit card applications or major purchases like an auto mobile or anything else that requires someone else to bring a co-signer. Chances are, they don’t qualify for the credit on their own because they were not responsible with their own credit. There are times of course, when there are exceptions to this rule, and that is when you’re dealing with family members. Obviously it’s tough to turn your back on your family when they’re in need, by all means lend a hand just make sure they understand that you are taking on a risk that can affect your LIFE. They must understant this clearly.

Souther California is one of the hardest hit regions in the country for personal bankruptcy filings, this is highly credited to the over valuation of real estate property during 2001 through 2005 and the sub-prime loans that funded the majority of these properties. The number of people filing for personal bankruptcy, compared to last year are up 90% for LA county, 125% for Riverside county and a staggering 150% for Orange County.

The state of Colorado has seen a rise of 35% since last year, and again it is home owners with high interest mortgage loans that make up over 60% of the bankruptcy cases.

Things are due to get worse according to economic experts, who predict no relief will be seen until two to three years from now. Because gas prices are gradually increasing each day, the cost of commodities and other consumer products have kept up with the price, adding further strain on the already heavily burdened communities of consumers across the country.

Overall the entire country is currently seeing a rise of 50% since last year. It is expected that by the end of 2008, we will see a total number of over one million personal bankruptcy cases which will continue throughout 2009.

Our economy is susceptible to many different factors, including external factors like the overall world economy. A contributor to the price of oil is none other than China. The country has emerged economically demanding more gas, food and quality of life. The once low waged workers are currently climbing the ladders economically and this new demand is now plugged to the main line of distribution for commodities like oil, wheat, and sugar.

It doesn’t matter how much money exists in any one region, it is the demand for these goods that drives up inflation.

So the economic state of the US, which is already affected by the real estate melt down, can expect to see higher prices for commodities and further escapes from debts through bankruptcy filings. Again no solid plan is in place to overcome this, any plan brought forth by the political parties are nothing more than pandering attempts.

Save what you can and invest in hard assets, paper assets will be worthless soon.

The fact of the matter is that it is now a done deal, you’ve filed for bankruptcy and you’ve been discharged and although that was somewhat of a relief initially, you are now facing a bleak future with your new credit. There are some things you can do for yourself to help you get through this and recover from bankruptcy in a progressive manner.

Reestablish credit with a bankruptcy credit card – It’s not that you can’t get credit anymore, it’s that you don’t qualify for a good rate. Because creditors who will consider your application are in fact taking a chance on you. So they invented programs where you can get a credit card again and this is an important move in recovering your credit. This is often referred to as a bankruptcy credit card, you just have to pay more on your interest rate. Much more sometimes. it’s not unheard of that creditors will charge anywhere from 19% to 29% for these types of programs. So do some digging but always shop around and try your best to get the best deal. Once you do get your new credit card, use it only for necessities and emergencies. Do not take cash advances unless it’s a true emergency and always pay on time. Reestablishing a positive record of credit transactions will begin the recovery process for your credit and soon enough you’ll forget that you filed bankruptcy.

Check your credit history often – This is something that a lot of people overlook, they think that because their credit is ruined they should not bother to check it anymore. You may find that your credit will have more mistakes after filing bankruptcy. Sometimes after bankruptcy some of your debts will remain recorded in default on your credit report, when they should be labeled “included in bankruptcy”, if this is the case then you need to take the necessary steps to fix this, because if the entires remain in default no one will ever lend you a penny. Also collections accounts may appear especially if your debts were sold to collections agencies and then your debts were discharged in bankruptcy. No creditor will ever bother to make sure that your credit is updated correctly and since they won’t be getting paid the last thing they’re going to do for you is a favor. So make sure you use the credit bureaus dispute systems to get these entries corrected. Next, you need to sign up for credit monitoring from one of the three credit bureaus for a fee or sign up for your annualcreditreport.com, for free, which you can only do once a year, but you need to get something.

Be on the alert for shoddy deals – Lenders will access public records to target filers of consumer bankruptcy, this is a well known fact because your bankruptcy file is public record and anyone can access them. They access these records so that they can offer you credit, auto deals, and even home financing. Often they will emphasize that your credit does not matter and they can finance anyone. You MUST be very cautious with these deals. They are geared to making lots of money from desperate people. This is not a good way to start recovering from bankruptcy. Read these terms carefully and ask all the questions you can and if it does not feel right to you then don’t do it. Keep looking and you’ll eventually find a creditor with a better deal, it’s a bit tougher and the choices are limited but you have to realize that you could be getting yourself into more trouble financially than actually helping your cause. Remember that always, these companies would not come after you if they didn’t have something very valuable to gain. They are never acting in your best interest.

Consult with professionals and get support – You don’t have to have a lot of capital to go to a financial planner, they’re there to assist everyone. After your bankruptcy discharge you should be clear of your some debts or repaying them under better terms, you should be on a tight budget and making sure your extra cash is going some place where you can’t touch it. You won’t always have the knowledge to know how to invest your money and you may not always know what kind of budget you should adopt to start making significant improvements, that’s why financial counselors are there. You won’t be able to recover from bankruptcy if you don’t adjust your budget considerably. It’s all about change and it’s all about looking back at where you were before and where you are now and most importantly what you can do to ensure your future brightens up. Consult a professional and ask them to work out a good reasonable budget for you and then stick to it, do not negotiate with yourself and do not compromise. This is how you’ll avoid bankruptcy again.

Think about your future and your family’s future – This also means setting goals, you may have had plans to retire at a certain age. You can still accomplish these things if you continue to work on your attitude about money. Bankruptcy is not the end, it is the beginning of something new. If you continually focus on the future you’ll naturally begin to take action towards accomplishing those things, but it must be a constant effort and your behavior with your money needs to show it. If you do not see yourself advancing in the right direction you can always stop and study your plans again and make the necessary changes. Always stay in touch with your financial counselor and bring up any questions or concerns. You should not be investing aggressively, you should be investing consistently to help you recover from bankruptcy.

Change your attitude and practice discipline - What you did before obviously did not work too well. Maybe you always thought that it was ok to buy things you needed on credit. Maybe you thought it was a good idea to finance your home with a sub-prime loan and pay interest only and maybe you only made the minimum payment on your credit cards. Since none of those things proved to be wise decisions and only lead you bankruptcy, it’s time to change your habits, change your way of rationalizing when it comes to making purchases from now on. There’s a difference between needing and wanting something, but we often make ourselves think that what we want is what we need. You had everything to do with the decision making process in your finances so start with that and change it completely. Bankruptcy protection is over with, if you end up in serious debt again, there will be nothing anyone can do for you.

You need to know what debts are discharged under bankruptcy, this is particularly relative to bankruptcy chapter 7 filings, where you can basically get all your “unsecured” debts discharged at no further obligations to you, but it’s only these unsecured debts that get discharged. Then of course there are the “secured” debts, which you still need to worry about. So to be perfectly clear about this “Not all debts are discharged when you file for bankruptcy“.

If you had already defaulted on your debts prior to filing bankruptcy, it’s probable that your creditors sold your debts to collections agencies prior to you filing bankruptcy, who can then come after you for that debt plus additional fees. When you get a bankruptcy discharged, you need to make sure that you keep your discharge papers handy at all times. Make several copies of them and keep them ready to mail to whoever needs to see them for you to prove that you did in fact file bankruptcy and were your unsecured debts discharged.

When a collections agency contacts you about debt that was discharged in bankruptcy, you don’t necessarily want to ignore the call or letter, you need to let them know that the debt they’re seeking repayment for was discharged in bankruptcy and you need to provide them with the correct paperwork of your bankruptcy discharge to prove this. If they continue to pursue this even after you provide the documentation, and they will sometimes push it, then you must contact the bankruptcy attorney that represented you and make them aware of it, they will know just what to do about it. If you filed bankruptcy alone, then try first contacting the courthouse where you filed your petition and bring it to their attention.

Collecting discharged debts goes against the order by a federal court that you have no further obligation to this debt, but collections agencies sometimes push this in hopes that you won’t know any better or that you will simply give in and just start paying again. Once you threaten to take legal action against them they will back off since it can cost them money to fight a case they can not win.

On the flip side of that coin, if you ignore secured debts after your bankruptcy discharge, you are not only going to get chased by collections agencies, but you are causing further damage to your credit since collections accounts normally get recorded in your credit history.

Some of the debts that are considered secured debts are student loans, mortgage leans on your home, car payments, federal and state taxes and basically anything else that has some kind of collateral to it. However certain items that you buy with consumer accounts like those you get from a furniture store or department store where you might make large purchases, need to be clearly defined in your bankruptcy file as either exempt items or assets that can be liquidated. If they were marked as exempt, then they can not be taken back, though again they will try.

You must continue to pay for your secured debt or surrender the collateral, such as the car or home attached to the lean. When it comes to student loans and taxes, there are no actual collaterals for these debts, they are just obligations that you must take care of. The federal government in particular, does not need an external collections agency to collect taxes you may owe. The IRS will start by contacting you via mail about your debt, you need to act immediately and establish a repayment schedule, otherwise they can levy any assets you may have and/or you may even be sent to jail for not paying your taxes.

Do not ignore the warnings, if it’s unsecured debt, provide the appropriate proof of discharge and consult a your bankruptcy attorney. If it’s secured debt then continue paying it or surrender the asset.

1. Don’t buy things out of impulse – Going back to the first article I mentioned how we as consumers are targeted everyday and the efforts by commercial entities to market their products are so sophisticated that even human psychology is employed to more effectively entice consumers. What ultimately happens then is that your impulses take over your better judgment and you make the purchase. How many times does this happen to you? Exercise discipline with your finances, minimize your shopping trips and train yourself to ignore the trends and temptations to keep up with them. Make a distinctive evaluation of the product you intend to buy and determine if it’s something you actually need. People have conditioned themselves to negotiate their wants into needs and it’s a habit that only leads to high credit card balances.

2. Ignoring your savings account – If you aren’t actively and systematically saving money in a savings account, then hopefully you’re doing it via your employer’s 401K plan and contributing the most you can in order to get a match contribution from your employer. If you aren’t doing either, then most likely you’re living the paycheck to paycheck routine. Why is this dangerous? Not saving money means you have nothing to fall back on if you were to have an emergency or if you were to lose your job. You may think you can rely on family members to help you, but that only transfers the burdens of your debt on to others. The worst part of not having a savings account is accumulating debt on top of not having any of your own money. It’s a bad habit and it doesn’t prepare you for anything.

3. Paying the minimum payments on credit cards - If you are actively using your credit cards for what you’re judging as necessities you may also be brewing a storm. Credit cards are so heavily marketed that people forget what they’re really for. They’re not so you can get the latest gadget now because you don’t have the cash, they’re not so you can finance your ski trips, they’re for emergencies! Oh yes the credit card company forgot to tell you that I’m sure. If you’re only making minimum payments on your cards, you’re more than likely doubling the total amount owed when it’s finally paid off. The problem with these habits is that sometimes you make yourself feel good by sending a larger payment one month and then think that you’ve caught up, and then you use the credit card again. These are bad decisions and you can find yourself in the kind of debt that often leads to bankruptcy. Pay down your balance, never mind what the credit card company says about the minimum payment, send larger payments and pay that balance down.

4. Lending money to friends and family – You may not want to hear this one because you’re probably very close to your family and your friends may even be like family to you. But lending money to your friends and family can get you in trouble as well. Ask what they need the money for to begin with, people get themselves in trouble financially for a lot of reasons if they are real need then you can certainly make an exception. But you should never support any kind of debt that involves gambling, leisure spending or just any other kind of activity that isn’t a necessity. Lending them all you have can hurt you and put you in a really tight spot financially. This one can be a challenge so careful not too let you feelings take over your better judgment.

5. Never co-sign a purchase contract with someone else – Your mom or dad may have done it for you in the past and you may think that this is ok to do if someone doesn’t have the credit. One thing that is often overlooked in this situation is that if the person who needs you to co-sign for them defaults on payments to whatever it is they’re financing, you are now responsible for those payments. The creditor will come after both of you or whoever can pay the bill. Should you fail to pay for your friend or family member, your credit will be hit with late payment or defaults damaging your credit history. It’s not uncommon that bankruptcy results from such situations for innocent parties who were only trying to help out. Creditors only care about collecting payments and if you’re name is on that contract you’re on the hook.

Over 200,000 homes have already been lost to foreclosures in the first three months of this year. Some of the most affected areas are the states of Nevada, California and Arizona, where real estate prices sky rocketed during the real estate boom that started approximately in late 2000 lasting through 2005 and finally stabilizing in 2006 before beginning a solid decline. During this time investors quickly snatched single family homes and condos in these areas hoping to turn a profit when reselling the homes.

Many industry experts consider the current foreclosure situation an ongoing problem that will not see the bottom of its free fall for some time yet. Loan modifications and homeowner assistance are not benefiting all who could use the help. The State Foreclosure Prevention Working Group (SFPWG) reported their estimations to be that for every 10 homeowners who apply for loan modifications, only 3 are able to get somewhere with their lenders. Also the number of troubled borrowers is increasing each month, more defaults are occurring and neither lenders nor the federal government’s efforts to afford help has been keeping up with the rising numbers of defaults.

Along with the rising numbers of defaults and foreclosures is the number of vacant homes for sale across the country, which is at a record high compared to last year. The housing boom which lasted approximately five years, fueled the rate of new home construction across the west, particularly California. Because this was an unnatural rate of growth, and over valuing of real property, it was only a matter of time before a correction occurred.

Not only are these rescue efforts slow and limited, but the latest activity from Washington where Democrats had proposed a housing package has been met with strong opposition from the Bush administration. The package would provide $15 Billion dollars to buy and rehabilitate properties across the country. The White House opposes the package saying that it is excessive risk of tax payer money.

Also a second bill was approved by the Senate earlier this month that addresses a suite of benefits. Tax breaks would be provided for home builders and other businesses, a $7,000 tax credit for anyone who buys a foreclosed property, a program to counsel borrowers would take $150 million and local government would get $4 Billion to buy abandoned and foreclosed properties.

Because there are so many propositions and plans from many source, the housing relief act has not taken shape well enough and has moved very slowly in the direction it needed to when it was first conceived. It isn’t yet clear what the final action will be and what if any relief will being flowing down to home owners who need help. Also amendments to bankruptcy laws are in the works and we should be hearing news about those before the end of this year. So far it’s been rumored that the changes do not benefit the filers, but the creditors.

For more information on finding ways to modify your existing loan and other default and foreclosure options, review the post about free foreclosure help, in which I talk about a site that was launched not long ago with the only aim being to help homeowners in trouble.