As congress begins to close its door for the remainder of the year, legislators are looking to once again revive a bill next congressional session that will allow bankruptcy judges to rewrite mortgage terms. Allowing bankruptcy judges to rewrite mortgage terms will assist financially woeful homeowners to remain in possession of their home.

This bill was introduced earlier in the year by then Senator Obama but was defeated. However, more Democrats are entering office when congress reconvenes in 2009 and many expect the bill to quickly resurface and likely to be supported by the new President Obama. The current version of the bill isn’t expected to pass, because time is running thin for this session of congress. This latest version of the bill includes restrictions on banks participating in the $700 billion dollars bailout from increasing dividends and regulateing excessive management salaries.

Through out time many people have had to face bankruptcy. Bankruptcy was created to give anyone overburdened by debt and unable to maintain their personal finances, the opportunity to re-start with a clean financial slate. The historical registry of bankruptcy petitioners includes American most notable sons. Among the petitioners for bankruptcy are two of our greatest presidents, Thomas Jefferson and Abraham Lincoln. In fact, Jefferson filed for bankruptcy several times.

The remaining list of bankruptcy petitioners reads like a who’s who of American business icons. The likes of Walt Disney, Milton Hershey, Henry Ford, HJ Heinz and PT Barnum head the list of well-known bankruptcy petitioners. As with any bankruptcy situation, these future icons simple owed more money than they earned and had to seek protection from their creditors via a bankruptcy. The bright side is these industry leaders were able to re-organize and repay their debts and move forward to the greatness.

The increase of home foreclosures has created a plethora of fraudulent foreclosure prevention companies popping up across the nation. In addition, overwhelming reports are recorded of homeowners paying exorbitant upfront contract fees only to later discovery no one has spoken to the mortgage company on their behalf. This unfortunate surge of fraudulent activity has prompted the State of Illinois to pass legislation regulating these foreclosure consultant companies.

Recently, the Illinois bankruptcy-attorney.shtml">Attorney General filed suit against more than a half of dozen firms promoting foreclosure prevention services. These firms crossed the legal line of operation by charging up front fees and for failure to clearly define their services and manners of foreclosure mitigation on its agreement contracts. Additionally, the Illinois law states the distressed homeowner should be able to back out of the contract anytime without cause. The Illinois law was created to prevent these firms from preying on stressed and anxious defaulting homeowners.

President – elect Obama spoke on whether a bankruptcy or government bailout would be the best option for the US automakers and the nation’s economy. Obama thought automakers’ management, labor unions, creditors and all other stakeholders will need to be involved in a collective effort to avert the automakers’ predicted catastrophe. If US automakers declared bankruptcy, there would still be a need for government involvement in the form of a debt guarantee. This guarantee may encourage the banks to start lending to the cash strapped auto industry again.

Obama referenced the past accomplishments of US airlines. In previous economic crisis, the US airlines were able to rise from bankruptcy, more apt to perform on a profitable level. The idea that a chapter 11 bankruptcy may shepherd a financially healthier US automaker is being heavily debated by advisors and federal legislators. However, the government should prepare itself to establish a leadership role during the restructuring of the auto industry finances regardless of a bailout or bankruptcy.

The top three US automakers and the head of the Auto Workers Union are testifying before congress in an effort to encourage a government bailout for their industry. The automakers are seeking a $25 billion government injection into the US auto industry. US automakers have suffered because of the economy crisis and decreased consumer spending, but have also lost a 10 percent market share over the last two years. If the government denies immediate assistance of $25 billion then the only alternative to these auto executives would be the protection of a chapter 11 bankruptcy.

Opinions have been mixed among lawmakers and the white house administration as to the use of any funds from the $700 billion economic bailout for the auto industry. Many believe the government should send a message to the business community that the government is not a safety net for failing industries, despite economic conditions. By filing bankruptcy, some economist believe US automakers may become financially leaner and more production efficient, just as US airlines experienced in previous financial downturns. Jobs will still be lost and debts restructured for repayment with an automaker bailout or bankruptcy.

The real concern is the auto industry affects those well beyond the Midwest. US automakers directly employs over 250,000 persons. However, they indirectly employ over 2.3 million through auto suppliers and manufacturers across the nation, which translates to 2 percent of the total US workforce. Additionally, many industries, such as insurance, banking and the media heavily rely on the revenues generated by their association with the US auto industry. In 2007, banks loaned $77 million to US automaker and the media collected $17 billion in marketing costs. The auto executives believe their failure will create a massive amount of job loss and increased foreclosures throughout the Midwest and South regions. Increase negative economic data will only send another horrific blow to an already crippled national economy. Whether the government steps in or not, the fact remains that the faltering automakers are predicting a fall from grace soon and there will be a mess so large that a governmental involvement is all but assured sooner or later.