Another bad sign of the times is the rise of bankruptcy's in New Mexico. According to the Albuquerque Journal today, first quarter filings were up 41 percent from a year earlier. The vast majority, 91 percent, were Chapter 7 liquidation. According to the Journal, a common thread among people filing for bankruptcy court protection is a change in employment status that reduces income. One thing noted in the column was described as amateur real estate speculators. Investors in '04, '05, '06 bought investment houses with no money down and when the market slowed and home values began to erode, they couldn't sell the properties to pay off their mortgages. Unable to rent the properties, the mortgage payments drive them into bankruptcy. Another problem for financially troubled consumers can be credit card companies suddenly changing the terms on their credit cards. The companies are tightening repayment plans, raising interest rates and minimum payments. The are cutting people off entirely. People are getting squeezed from all directions.
While New Mexico is reported as being #40 as to the number of foreclosures by state, we may see a creep up if bankruptcys continue at this rate. It is important that every realtor get educated about short sales so that we can help consumers out of their situations without incurring a foreclosure on their credit. Uneducated realtors do a real disservice to their clients when they represent them in a short sale without the knowledge to handle the transaction. If they are unwilling to get the education, then they should refer them to someone who specializes in this area.
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