Kealy, D. M. (2022). Bankruptcy, Foreclosure, Homestead Exemptions, and Deficiency Judgments: Evaluating National Financial Advice through the Lens of State Law. Pathways to Research in Business & Economics BUS010, 1-11.
Instead of relying on national-level financial advice, individuals and businesses should evaluate their worst-case scenarios through the lens of their own state’s laws. They may find that when burdened by debt and unemployment, a fresh start through bankruptcy may look more appealing in states with homestead exemptions. Similarly, being highly leveraged on a residence before a real estate crash may not be as risky as it appears for borrowers in states that do not allow deficiency judgments on personal residences. This article looks at the impact state laws can have on financial decisions made by individuals investing in or starting a small business.