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Bankruptcy

: Credit Slips

Chrysler and Foreclosures: the Contrast

By Adam Levitin

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Today it's reported that Chrysler has convinced its creditors to agree to modify its debt obligations.  Chrysler was able to do this in part because of the leverage it had by threatening to file for bankruptcy.  It's instructive to contrast the Chrysler situation to the situation of homeowners.  The voluntary home mortgage loan modifications are still not happening on the scale necessary to address the foreclosure crisis.  How different would the world look if homeowners had the leverage of bankruptcy to induce voluntary modifications? 

Full post as published by Credit Slips on April 28, 2009 (boomark / email).

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