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Author Topic: primitive's ex-wife files for bankruptcy  (Read 1452 times)

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Offline franksolich

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primitive's ex-wife files for bankruptcy
« on: March 06, 2015, 06:14:23 PM »
http://www.democraticunderground.com/1121724

Oh my.

Quote
SHRED (11,225 posts)    Thu Mar 5, 2015, 01:25 PM

Filing for bankruptcy
 
My ex and her husband bought a home in 2006 on an ARM (adjustable rate mortgage). Not too bright. Here's the thing...they took out against the house to the hilt. Remodel, exotic vacations, car, etc...

It all fell apart after the crash in 2008 when the ARM started to balloon and the home's value took a big drop.

They declared bankruptcy and got their debt wiped out.

My question is...how was this debt absorbed? Through raised interest for the rest of us? By the lender? U.S. taxpayers? Combination?

I ask this because they are so damn quick to bash Obama as a "socialist" among other nonsensical rants against the "government" and I am looking for knowledge of just how big of hypocrites they are in getting their debt erased.

P.s...I just learned they bought another house. That was quick. I had know idea you could buy another place after only three or four years away from a bankruptcy.

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elleng (53,735 posts)    Thu Mar 5, 2015, 01:44 PM

1. I don't know the details, as to 'how was this debt absorbed,'
 
depends to some extent on to whom the debt was owed, but would say that their decisions have not been socially positive, just good for them. (I do realize that bankruptcy is and has been for a long time a legally acceptable way to deal with debt.)

Quote
A HERETIC I AM (13,909 posts)    Thu Mar 5, 2015, 02:21 PM

2. The way I understand it, it's a "Write Down"
 
The actual money they were given with which they bought the house and everything else came from the sale of bonds.

Those bonds and billions of dollars worth of others were written down (not "off) such that their Par Value of $1000 a piece settled or will settle for, in some cases pennies on the dollar, if not default to zero.

The losers in that scenario were those individuals, mutual funds, pension funds, banks etc. that bought the bonds. That's where the debt was "absorbed" as you put it. They bought bonds they anticipated would pay interest for a specific length of time and at the end of that time they would get their initial investment back.

The result of this all was in part good and in part, bad.

The good is that lenders tightened requirements back to where they should be and as a result the quality of bonds issued in this sleeve are able to properly earn and be given better (higher) credit ratings.

The bad is that now it is much more difficult for many millions of Americans to get a mortgage and other high end credit.
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Offline JohnnyReb

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Re: primitive's ex-wife files for bankruptcy
« Reply #1 on: March 06, 2015, 06:30:10 PM »
The losers in that scenario were those individuals, mutual funds, pension funds, banks etc. that bought the bonds. That's where the debt was "absorbed" as you put it. They bought bonds they anticipated would pay interest for a specific length of time and at the end of that time they would get their initial investment back.

So the rich got soaked for the debt and that makes the DUmmies happy.
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Offline Bad Dog

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Re: primitive's ex-wife files for bankruptcy
« Reply #2 on: March 06, 2015, 06:33:42 PM »
Quote from: JohnnyReb on March 06, 2015, 06:30:10 PM
The losers in that scenario were those individuals, mutual funds, pension funds, banks etc. that bought the bonds. That's where the debt was "absorbed" as you put it. They bought bonds they anticipated would pay interest for a specific length of time and at the end of that time they would get their initial investment back.

So the rich got soaked for the debt and that makes the DUmmies happy.

Except they are wondering why their pension funds are in the toilet.
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Offline Carl

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Re: primitive's ex-wife files for bankruptcy
« Reply #3 on: March 06, 2015, 07:42:34 PM »
Quote
My question is...how was this debt absorbed? Through raised interest for the rest of us? By the lender? U.S. taxpayers? Combination?

Yes.
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Offline I_B_Perky

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Re: primitive's ex-wife files for bankruptcy
« Reply #4 on: March 06, 2015, 07:46:12 PM »
Quote
A HERETIC I AM (13,909 posts)    Thu Mar 5, 2015, 02:21 PM

2. The way I understand it, it's a "Write Down"
 
The actual money they were given with which they bought the house and everything else came from the sale of bonds.

Those bonds and billions of dollars worth of others were written down (not "off) such that their Par Value of $1000 a piece settled or will settle for, in some cases pennies on the dollar, if not default to zero.

The losers in that scenario were those individuals, mutual funds, pension funds, banks etc. that bought the bonds. That's where the debt was "absorbed" as you put it. They bought bonds they anticipated would pay interest for a specific length of time and at the end of that time they would get their initial investment back.

The result of this all was in part good and in part, bad.

The good is that lenders tightened requirements back to where they should be and as a result the quality of bonds issued in this sleeve are able to properly earn and be given better (higher) credit ratings.

The bad is that now it is much more difficult for many millions of Americans to get a mortgage and other high end credit.

So hardworking folks that scrimped, saved and invested in 401's, IRA's and such that invested in those bonds got hosed. Along with pension funds.

She married the dummie so I'll say she is a dummie herself. Just found a little higher quality dummie and left the first one. Then proceeded to do what dummies always do. Go broke and depend on the government.
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Offline DumbAss Tanker

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Re: primitive's ex-wife files for bankruptcy
« Reply #5 on: March 06, 2015, 08:23:01 PM »
It's a write-down for the lender (To be used to set off profits on the current balance sheet, but ultimately passed along to consumers) unless it was a Federally-insured mortgage, in which case it's the taxpayers that pay the freight in the end.  And yes, it is surprisingly easy to get credit again after a bankruptcy (With a substantial risk premium in the interest rate), because the lenders know you can't pull that crap on them again for seven years.
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Offline Carl

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Re: primitive's ex-wife files for bankruptcy
« Reply #6 on: March 06, 2015, 08:47:56 PM »
Quote from: DumbAss Tanker on March 06, 2015, 08:23:01 PM
It's a write-down for the lender (To be used to set off profits on the current balance sheet, but ultimately passed along to consumers) unless it was a Federally-insured mortgage, in which case it's the taxpayers that pay the freight in the end.  And yes, it is surprisingly easy to get credit again after a bankruptcy (With a substantial risk premium in the interest rate), because the lenders know you can't pull that crap on them again for seven years.

That is the bottom line no matter how complex the road to get there may be...it is responsible citizens and taxpayers that bear the cost through a variety of ways.
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Offline obumazombie

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Re: primitive's ex-wife files for bankruptcy
« Reply #7 on: March 06, 2015, 10:51:47 PM »
Part of the costs of bankruptcy are paid by those that file. They must list all their assets and put them up against their liabilities.
The trick for lenders is to not let anyone borrow money without them having "skin in the game".
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