A Suggested Change to Contract Law

The reality of the unemployed is they cannot pay their debts. The reality of the debt holders is they are not collecting the monthly payments that are due. The reality is both of their incomes have stopped. Can we recognize this reality and make this change something along this line. Once a person is approved for unemployment benefits ALL debt payments should be required to be suspended without penalty until the worker is re-employed for at least 90 days. This cost the taxpayers NOTHING. In fact, it costs no one anything because projected losses are already estimated in interest rates and in the costs of all products for sale. However, it does keep the unemployed in their homes and in their cars. Most can be saved from bankruptcy. The mortgage holders, and secured and unsecured note holders, will have a much better chance of collecting on their notes in the long run since after 90 days of continuous employment most will be able to resume payments. Those who cannot still will have the ability to seek protection through bankruptcy. The rest of us will not have to pay the increased prices to cover the costs of the debts and products being written off.
This also eliminates the need of worrying about upside down mortgages. I bought a home in 1981 for $60,000 and by 1988 it was worth $20,000 in the depression that attacked Houston, TX. My wife and I struggled through that nightmare, lost jobs and all, but kept making our payments. It took until 2000 for the value of our home passed $60,000. And when we sold it in 2004 it was worth $120,000. We were lucky enough to get through that period, but thousands were not so lucky. Most could have been saved if such a plan was in effect, the Saving and Loan industry might still be in existence, and the American taxpayer would not have to have picked up the cost of the Resolution Trust Corporation. A plan along these lines keeps the responsibility of achieving ownership where it belongs, in the market place and away from the government.

Wayne Johnson