Daily Real Estate News  |  July 23, 2007  |   Subprime Issues Boost Bankruptcy Rates
Almost two years after the U.S. Bankruptcy Code was amended to make it more difficult to file for bankruptcy, three states in the Southeast continue to have high and increasing filings. The three highest-filing states in the country are Tennessee, Georgia, and Alabama.

In Tennessee, 5.8 residents out of every 1,000 file for bankruptcy, compared with the national average of 2.52 per 1,000. In Georgia and Alabama, the rates are 4.87 and 4.77, respectively.

Part of the reason the bankruptcy rate is so high are subprime mortgages, says Gene Marsh, University of Alabama law professor. "Alabama has always been gung-ho in the subprime lending area," Marsh says. "We like our grits, our collard greens, and our subprime lending. Add in Chapter 13 and you've got trouble in River City."

In Georgia, state laws give home owners who default on their mortgages less than one month after receiving a foreclosure notice to stop the liquidation of their home, sending defaulters scrambling to file for Chapter 13 protection.

Source: Associated Press (07/20/07)