Thus, the rash of bankruptcy protection actions taken by everyday working class Americans is alarming to both Congress and the Obama Administration at a time when the nation’s economic recovery has stalled; leaving many Americans wanting at a time when big corporations are still getting financial assistance from the federal government. Also, bankruptcy is now on the table for many home owners here in Gardiner and across the nation because Fannie Mae and other government aid agencies are not meeting goals to help both homeowners and lenders find solutions before the “B-word” is mentioned.

At the same time, more struggling homeowners are asking Fannie Mae the question this government agency doesn’t like to hear, and that’s claiming bankruptcy as a last ditch effort to save the roof over their heads.

In turn, a spokesman for Fannie Mae stated “that we never encourage bankruptcy,” but recommends various alternatives for those who are desperate to save their homes before they have no choice but to accept foreclosure action from banks who’ve been bullish as of late in removing people from their homes.

While claiming bankruptcy is not the idea, said one laid-off Gardiner worker here, “it’s better to try and keep our house than the alternative, which is being homeless like so many of my former neighbors.”

Homeowners finding success with bankruptcy

It’s no secret that both foreclosures and bankruptcies are climbing as this recession wears on. In fact, with unemployment along the central Oregon coast at record levels of 20 percent or higher, the number of those opting for bankruptcy protection is “at an all time high,” said one financial expert who reviews bankruptcies on a “day-to-day basis.”

For instance, the American Bankruptcy Institute – a financial think tank that regularly reports to Congress – the number of those who asked for bankruptcy help in 2010 number more than 1.5 million. The institute stated in a recent news release that this was nearly 10 percent higher than in 2009 and more than 15 percent higher than in 2008.

Bankruptcy “distasteful” for many Americans

At the same time, the issue of bankruptcy is a “hurtful thing because it says we failed horribly, and it’s shameful. I’d say going broke, being bankrupt is distasteful,” says Gardiner homeowner William “Bud” Mendel.

“I was raised by my parents to pay my bills, and filing bankruptcy – as many of my neighbors have – goes against the grain of what I was taught. I’m considering it as our last resort, but it sickens me to think I have to do it when all those banks got bailed out. Who’s bailing me out,” asserts Mendel with tears in his eyes.

Lower-income home owners here in Gardiner – a severely economically depressed community with a “historic district” that dates to 1870 – once worked at a thriving “International Paper Mill.” The paper mill operated from 1963 to 1999, and was considered to be one of the largest employers on the southern Oregon coast.

The Gardiner mill’s massive spread of buildings – that served as the only industry in the town – were all demolished in 2006. What remains is a shattered small town with one bar, one post office, one volunteer fire truck and dozens of homes with threats of foreclosure signs dotting their lawns.

Fannie Mae is a publicly traded company which operates under a congressional charter that directs it to channel efforts into “increasing the availability and affordability of homeownership for low, moderate and middle-income Americans.

Fannie Mae offers lots of advice to stop bankruptcy while protecting banks

Fannie Mae is a publicly traded company which operates under a congressional charter that directs it to channel efforts into “increasing the availability and affordability of homeownership for low, moderate and middle-income Americans.

However, the Fannie Mae mission does not include handing out money to help pay past due mortgages.

In addition, Fannie Mae home loan assistance officials are not keen to endorse bankruptcy as a way out of a possible foreclosure action, its web site does point to bankruptcy as “a possible option” since it’s known that those who filed bankruptcy were later able to get their credit back.

However, mortgage loan officials in nearby Eugene – that are offering pro bono assistance for lower income homeowners in desperate states – concur with Fannie Mae guidance to “never consider bankruptcy filing unless it’s the last possible resort.”

In turn, Fannie Mae’s web site details how to “negotiate” with lenders so as to create “an opportunity to get out of any foreclosure without the need to file bankruptcy,” stated the mortgage official.

Fannie Mae will help, but only if you ask and ask, say officials

“What we have here is Fannie Mae being almost overwhelmed with Americans needing their own bailout due to a recession that’s dried-up their jobs and, in turn, cut off jobs and earning needed to sustain their mortgage payments. Many have no other option than to claim bankruptcy,” added mortgage assistance officials in Eugene.

In turn, the official also noted that Fannie Mae will help with bankruptcy guidance but “only if you ask and ask. You must be that squeaky wheel to get action these days.”

According to Fannie Mae, bankruptcies will stop the foreclosure process. In turn, the time it takes to sort out one’s particular bankruptcy will give homeowners the time to “possibly” get back on track with some sort of mortgage payments.

However, there’s a warning from these professional mortgage experts: “Don’t think Fannie Mae or your banker will tell you that filing for bankruptcy is your best move to stall foreclosure and getting booted out on the street. It’s your decision,” the official added.

What does bankruptcy involve and how are you hurt

The official then explained that filing for bankruptcy “means your credit report will be more or less trashed for the next seven years, and even after that you will have hassles when it comes to asking for credit.”

In turn, new bankruptcy laws passed that were passed by Congress last year put’s the typical -- “I want to save my home bankruptcy” -- into the category of a “Chapter 13 action” where debts are reviewed by a judge who then sorts out payment arrangements.

A bankruptcy lawyer in Eugene also noted that by taking a Chapter 13, a homeowner can save his or her house, depending on various state regulations with most states allowing someone who files bankruptcy to keep their home, car and some cash in the bank.

At the same time, the recent changes to bankruptcy laws include a viewpoint from lawmakers that “bankruptcy is there for people who are in trouble financially and desire a new start.”