Bankruptcy Reform and Foreclosures from the Perspective of the Taxpayer

Abstract

The debate over bankruptcy law is generally thought of as a conflict between the rights of debtors and creditors. However, the U.S. government is now providing direct financial aid to financial institutions and to homeowners. Several potential revisions to the bankruptcy code could help homeowners avoid foreclosure and substantially reduce potential financial bailout costs for the taxpayer. The U.S. taxpayer now has an important stake in policy discussions on the bankruptcy code.

Keywords: taxes, bankruptcy, foreclosure, mortgages, credit card debt

JEL Classification: R31, R33, D14, K35, H20