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Step 1: Mortgage and banks companies where writing bad loans.<br> <br> Step 2: people were buying too much house. When energy prices went up, then gasoline, then food, budgets got squeezed<br> Step 3: People started filing Ch 7 in order to keep thier house and try stay aflaot. The smart ones also got out of thier too much house and or changed their spending habits.<br> <br> Step 4: Banks wanted something back for being arm twisted into bad loans that were causing more credit card write offs than they liked. ( they were still doing well)<br> <br> Step: 5 Ch 7 reform. This is were the accouting comes in. If I have two debts one with really interst and fixed rate that is being serviced, and a loan with really high interst fees charges, that i also force merchants to take a discount on from at the front end; by the time that loan default I ,ost likely have alrady recapped 2/3 of the principal. With Ch 7 reform poeple can no longer walk on the loans the the pricipal is kinda inflated by the high rates and fees, still stuck with too much mortgage debt, then they walk on the mortgage debt which carries a muh higher loss percentage.<br> <br> Setp 6: Major melt down.<br> <br> It was due to lobbist and goverment interfereing in the free market. <br> <br> But I agree the Ch 7 reform 3was needed put as written it gave too much to the banks. They got exactly what they asked for.
By Mark winfrey, CPA
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