Meltdown 101: Bankruptcy won't help borrowers much

Can filing for bankruptcy help homeowners facing foreclosure? For most people, trying to negotiate changes in their loan with help from a housing counselor or lawyer is a far better option. While bankruptcy judges can reduce or eliminate certain kinds of debt, they aren't allowed to alter the total amount owed or interest rate of primary mortgages. Whether to change this law to help with the mortgage crisis promises to be a fierce battle on Capitol Hill next year. Consumer advocates and Democrats — including Sen. Barack Obama, the Democratic presidential nominee — have been pushing for such a change, arguing it would benefit troubled homeowners. Republicans and the mortgage industry have fought intensely against this idea, saying it would make lenders less willing to lend and thus would push up interest rates. The Mortgage... [read full story]