Consumer Law In the News

Pity the Rich? Everyone’s Impacted By the Coming Recession

This might be a bit controversial but I think it’s important to demonstrate the widespread impact of the current economic forces at play.

It’s true I normally represent low- to mid-income individuals, couples, and families. But those who are struggling with finances aren’t the only ones who are feeling the pinch, as shown by this article sent to me by a friend (”Help! I Can’t Sell My McMansion” - ABC News.com).

I’m also seeing more and more higher-income folks in my practice. What brought them there? Any number of things but often it’s either catalyzed by, or complicated by, the failure to sell a house. Homes are on the market for upwards of 12 months that, previously, would have sold in weeks, even kick-started a bidding war in a prior economy. Now, these “McMansions” languish on the market, unsold, often bringing their increasingly-anxious owners even more heartburn when the Adjustable Rate Mortgage (ARM) gets kicked into an even higher interest rate.

Here’s just one little factoid that might show how desperate the relatively wealthy are becoming: in order to increase the chances of a sale, more and more owners are throwing in extras, including the (scratch resistant, sparkling stainless steel with Vola designer faucet) kitchen sink. But by “extras,” I don’t mean things like roman shades or a lamp — I mean things like cars.

Bankruptcy relief is hard to contemplate for folks who’ve put a great deal of pride into their money management skills. Many see it as a sign of failure. I suggest, however, that the well-made decision to investigate filing for bankruptcy protection can be a sign of strength. After all, which is more honorable — having your home repossessed, or being proactive enough to propose a Chapter 13 payment plan?

I’ll have more posts during the week about foreclosures, the housing market, the subprime crisis and how bankruptcy fits into all this. Come back tomorrow!

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