By Stephany Carr
This is in response to the guest commentary by Alan Keller, Ph.D, published on Jan. 27.
“As for bankruptcies, studies consistently implicate medical costs as a major factor in knocking lower- and middle-class families into severe economic difficulties, including bankruptcy.”
I am consistently outraged when people who rarely, if ever, have been in bankruptcy court cite “studies” regarding bankruptcy.
In over 20 years of practicing bankruptcy law, I have had one case in which primary reason for filing the bankruptcy was medical costs. This family had insurance, however their baby almost died. Their insurance did not cover catastrophic events.
While some medical expenses may be involved, I have observed most people who file bankruptcy have been recently divorced, lost their job, and/or made irresponsible financial choices.
Since 2006, many of my consumer clients have filed bankruptcy because of banks and credit unions pursuing them for deficiency judgments. I did not understand why banks and credit unions would foreclose on people who were offering to pay the entire mortgage, plus interest and other costs.
I learned that government-backed programs were paying banks and credit unions to foreclose on the mortgages. While banks and credit unions are required by law to have a “Loss Mitigation Department”, the Loss Mitigation Departments are form over substance. They do not mitigate much loss.
Why would they? As I explain to my clients, tax dollars are paying banks and credit unions for the foreclosed mortgages. The banks and credit unions can pursue deficiency judgments, keep what they have already received and sell the foreclosed property.
People proclaiming to be “experts” should stick to their fields of expertise.