They do get the bad guys
Sunday, October 19, 2008 at 11:36PM Was having dinner at a friends place saturday and the conversation veered towards the one thing at all conversations veer towards these days..
Yes. Note that down..
All party conversations lead to the Bailout!
The probability of this happening is actually higher than all roads leading to Rome.
A tax accountant there answered my question "so what does happen to the bad guys? Do they go free?"
He said "Lets say the guy bought a house for 400k with 10k down, which he should not have in the first place and lets also say that the house is now worth 200k, if his loan is forgiven to an extent of 200k, not only does he lose his 10k, he gets a 1099 from the IRS for the forgiven 200k on which he has to pay taxes!"
This, made me happy for all of 10 minutes.
While driving back home, I was just thinking... wait a second.. The guy declared bankruptcy? So how is he going to pay taxes?
Also he is supposed to be a credit risk and this is supposed to make it difficult for him to borrow going forward and make me, a five-star borrower?
He is going to go to the same banker who gave him that 390k loan and get himself some more money?
No?
Let me know....
ps. A corollary to Bob Dylan singing "when you got nothing, you got nothing to lose" is "when you are bankrupt, you got no taxes to pay"...
.
Reader Comments (4)
What if all of us declare bankruptcy..no taxes then..right ?
:)
wrong Kavi..
lets say A paid 10k down and got house for 400k and B paid 80k down and got house for 400k
both the houses drop to 200k.
both the guys have to foreclose
A loses 10k, B loses 80k..
Bank takes both houses.
Both A and B declare bankruptcy
if on a case where both of them have difficulty payign the mortgage, the bank would probably chose to go after B because they can take his money.. if they go after A, they dont get much..
A, who is irresponsible in the first place, has nothing to lose.. and would probably complain loudly abotu the govt. scrweing him.. and the politicians will appease him by lowering his rate.
B, a genuine dude will get screwed out of his downpayment and equity and would instead get commended as a good credit risk going forward so the bank can dole him out money in the future at more exhorbitant rates.. in other words he is a sucker.
A keeps going to his bank buddy and helps himself to loads of cash after he declares bankruptcy because there is no check and balance there anyways..
now, get the picture?
:(
Phew !
Being polite is of no use when the loud mouth behind in the queue gets serviced first !
kavi, that was a nice analogy.. it is actually what is going to happen here..
ezhaigalin vayitril adiththar Bush, Obama, etc.. and the guys will be forgiven..