Banks are increasingly playing the moral hazard card to avoid helping troubled homeowners, according to the New York Times.
Despite being accused of some moral oversights of their own (robo-signing, anyone?) lenders are now claiming that, by taking steps such as reducing the principal on an underwater mortgage, they would be encouraging more borrowers to behave badly.
The concept of moral hazard first came into the national spotlight in 2008, when ordinary American consumers began to question why we should help bail out the banks that sent our economy into a tailspin in the first place.
Now those banks are using the same argument to avoid bailing us out of the problems they created.
Lenders say that helping homeowners who default will only encourage others - many of whom can actually afford to pay their mortgage - to default as well in order to take advantage of better terms.
Yet the data shows otherwise, say Tennessee bankruptcy lawyers. It turns out that 10 to 15 percent of homeowners who default could have actually continued paying their mortgage. That leaves up to 90 percent who had no other choice.
Banks aren't taking into account the consequences that homeowners would suffer by submitting to foreclosure or walking away from a mortgage.
In addition to losing a place to call home - and any equity in it - homeowners are also left with tarnished credit. Poor credit can make it difficult to find a rental, qualify for future loans, and even get hired for a job.
Most homeowners in Tennessee and beyond default because they think they have no other option. In reality, they do have an option: bankruptcy.
Filing for Chapter 13 bankruptcy in Tennessee is the only surefire way to stop foreclosure and give yourself a chance to catch up, whether you've missed your first payment or are already on the path to eviction.
Banks may not give you the time of day, but Tennessee bankruptcy law was created to protect the consumer. And there's never been a time when consumers needed more protection than today.
By allowing consumers to eliminate unsecured debts like credit card debt, more money is freed up for making house payments and other important bills.
Bankruptcy allows consumers to do the right thing - i.e., making good on their mortgage - while also relieving the burden of debt. Best of all, you don't need to go through your bank to make it happen.
To learn if bankruptcy is right for your situation, call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today to speak with a Tennessee bankruptcy attorney. Call 800-440-7235.
More Blog Entries:
Moral Hazard: A Tempest Tossed Idea, by Shaila Dewan, The New York Times