No fault bankruptcy when life changes the rules

Bankruptcy laws were strengthened in 2005. Many contend it was no accident, although it appeared to be unjustified at the time. Today’s economy, job losses, and the failed subprime experiment had risks associated with the economy, and bankruptcy changes insulated the financial sector while the government experimented with mortgages. Other changes in life also effect the equasion.

Many web site owners rely on Google Adsense for additional income. When Google changes algorithms revenue goes down. Product life cycles phase out and end quickly. Store owners with merchandise effected by product life cycles watch as revenue decreases. Fixed costs effect the overall budget, and fuel is a fixed cost. Ethanol is another experiment that effects every household. Made from corn, we see price increases for everything related to corn. Cattle feed, eggs, meat, and milk are examples.

Were changes in bankruptcy laws enacted because of the ethanol experiment or the mortgage experiment? Only the government knows, and they are not telling us. However, the value of the United States dollar is so low that we all feel the pinch. Oil is an import. My neighbor bought a new vehicle last summer, but fuel has increased so much that he is not any better off than he was before. Now he has a car payment too. Sometimes bankruptcy is a valid option when changes in life pass us by, regardless of how intelligent our decisions might be when we make those decisions.

The problem is not the well meaning honest American who cannot pay his or her bills. The problem comes from experimenting with the U.S. economy, which drives the honest American to bankruptcy. In the absence of regulatory oversight the greedy get worse, the opportunists appear, and the family suffers. Bankruptcy may not be your fault at all.