Congress To Limit Homestead Exemption

The US Senate passed a bill that curbs the amount of home equity that can be sheilded in a bankruptcy. The National Association of Home Builders is a supporter of the measure, which would "stipulate that home owners who filed for bankruptcy within 40 months of buying a home would be able to protect no more than $125,000 of home equity from creditors."

Congress has been hard at work changing bankruptcy rules lately. This is causing more than one pundit to wonder if they are protecting lenders from any potential crash in the debt bubble.

"The NAHB today applauded Senate passage of S. 256, the Bankruptcy Abuse Prevention Act of 2005, noting that the measure contains two beneficial provisions for home builders." Most large home builders also have lending subsidiaries and lenders are among the strongest lobby groups in Washington.