I'm a fan of Tom's therealestatebloggers.com blog and he has a great post today on why new bankruptcy laws are creating more foreclosures:

Back in 2005 when the new bankruptcy laws were passed by Congress many worried that the laws would have consequences no one imagined. And surprise to surprise, the new bankruptcy law is contributing to the rise in foreclosures across the country.

Everyone thinks of bankruptcy as a tool to get out of debt, but the real reason for bankruptcy is to allow entreprenuers to take on more risk. One of the great things about the American economy is that innovation is very highly valued. And that failure is not punished like in the rest of the world. This has given the United States a competitive advantage that is  disappearing when we fail to reward risk taking.

Remember these facts:

Bankruptcy does not stop foreclosure It temporarily stalls it. Then the foreclosure continues

Bankruptcy is the worst thing you can do for your credit. If you are an entrepreneur, as Tom mentions, you can of course seek the refuge of bankruptcy but if you do, you will have to face continued questions on why you filed and so forth for a number of years. Business partners and prospective clients can easily find out. Whether they care or not is another issue.

You can avoid bankruptcy rather easily. You can negotiate on your own behalf with creditors. You can reduce interest rates, stretch out payments, and get them to report nice things about you to the credit bureaus.

You can get a new start without bankruptcy. Find out more about getting credit card debt relief while avoiding bankruptcy, and lowering your payments