Wealthy Families in U.S. Resort to Bankruptcy, Dragged Down by Real Estate

[marmar]

Wealthy Families Succumb to Bankruptcy as Real Estate Crashes
By Jeff Plungis


Sept. 9 (Bloomberg) -- Wealthy individuals’ Chapter 11 bankruptcy filings jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center, a research firm in Burlingame, California.

More individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured are using Chapter 11 of the U.S. bankruptcy code typically associated with business reorganizations. Falling U.S. home prices leaves them unable to refinance or sell their property when they drop below the value of their mortgage, said Chicago bankruptcy attorney Joseph Baldi.

Chapter 11 is more expensive and time-consuming for debtors and creditors than a Chapter 7 liquidation of assets. Wealthier people filing for bankruptcy typically have large homes, two car payments and children in private schools, said Leslie Linfield, executive director of the Institute for Financial Literacy in Portland, Maine, a credit-counseling and research group.

“You’re living on the edge, you’re juggling those financial balls,” Linfield said. “When one ball goes, they all fall down.” ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aOYQzpAp2o9w

[GCP]

1. I have absolutely no patience for people 'living on the edge' on a salary over $100,000

It's called

LIVING WITHIN YOUR MEANS

Dickens said it very well:

My other piece of advice, Copperfield, said Mr. Micawber, you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, andand, in short, you are for ever floored. As I am!

[Fresh_Start]

10. You can live within your means

and have an income over $100,000 and lose a job and be just as badly damaged by the economy as someone earning less to begin with.

You were living within your means until your job(s) went away.

[lunatica]

2. I guess those bankruptcy laws

written by the credit card companies isn't working for some of the rich either.

[hadrons]

9. and look who's writing the health care ....

I guess this article will be recycled for the future use

[Nikki Stone1]

3. This is not wealthy--it's upper middle class. And it's a sign that all middle class wealth is on

the way out.

We'll have a super rich transnational class and a world full of serfs.

[GCP]

4. There's still no reason to live beyond your means

I chose the $100,000 figure arbitrarily - it applied to millionaires too. If you can't pay off your credit card in full at the end of the month, you're living beyond your means.
I've never bought something I couldn't really afford, apart from the house, and we paid that off early instead of buying new cars and fancy vacations.

[Nikki Stone1]

6. I'll bet you a lot of this debt is housing debt, which is normally considered "good" debt.

I'm with you that you shouldn't live beyond your means, but a bad economy (deliberately caused by Wall Street) makes even responsible debt impossible to pay back.

[Lost4words]

7. so are you saying their problems are of their own making?

and deserve no assistance whatsoever?

[GCP]

8. Yes, if they've got huge mansions, kids in private school

And the only way they were able to do it was leveraging their mansion or second home which is now not worth as much - yes they brought it on themselves and I'd much rather help the hourly paid who are literally on the bones of their asses and losing their homes.
I'm so left wing I believe the millionaires should be taxed at at least 40%.

[madrchsod]

5. even the guys on "million dollar listings" are having a hard time ...

and jeff lewis is no longer flipping houses. i wonder if there`s a new season of "the real housewives of orange county" ...maybe they are all broke or http://tv.blogdig.net/archives/articles/September2009/06/Real_Orange_County_wife_evicted_and_scandalized.html