For the 1 million Americans who filed for personal bankruptcy in 2008, more than 580,000 of them held mortgages. 2 weeks ago, Citigroup made a bold move to allow bankruptcy judges to modify their customer’s mortgages in bankruptcy court. This move flies in the face of conventional mortgage loan modification, but is a positive step towards mitigating foreclosure proceedings for honest hard-working homeowners. Given time and money, this move can allow hundreds of thousands of homeowners to remain in their homes, reducing poverty and homelessness.

Traditionally, homeowners have to seek loan modification outside of bankruptcy court before they file. It was pure luck whether or not a bank wanted to work with their customers. In the era of adjustable-rate mortgages, most banks did not care to work with their consumers and reclaimed homes as assets. As a result, many consumer rights advocates demanded legislation to protect the consumer and force banks to modify loans for honest customers trying to maintain their investment.

For many of these homeowners, foreclosure led to their bankruptcy as they struggled to pay rising mortgage costs and fees. In mid 2008, the HOPE for Homeowners program was a Congress-led initiative to bring relief to struggling homeowners. The HOPE program allowed homeowners to adjust the principal they owe and reduce their payments into a fixed rate conventional mortgage. The HOPE for Homeowners program lacked one important thing: it did not force lenders to modify loans. In fact, lenders had a choice if they even wanted to use the HOPE for Homeowners program and inform their customers if they qualified.

As a result, only 400 applications for HOPE have been used. The initial goal was 400,000 applications. Only 1% of lenders agreed to use the program and work with consumers to save their homes. The rest of the banks decided to take a risk and repossess the lost property. The mortgage crisis deepened, and the risk those banks bet on cost them dearly. So much that they vied for “bailout” funds to stay afloat.

Citigroup was one of the banks that adamantly fought against government intervention on home loan modification. On January 9, after receiving over $45 billion in bailout money, Citigroup changed its tune and agreed to allow judges to change home loans in bankruptcy court. Banking lobbyists claim the move will make home loans more expensive and risky for banks, since judges will usually side with the consumer and allow major modifications. Consumer groups are proud of the move, recognizing the government is finally forcing banks to work with their customers and prevent homelessness.

For more information, see: MSNBC

There’s always been a running joke of the broke college student, barely struggling to make ends meet, living off of Ramen noodles and pizza. The joke usually ends with the college student graduating and moving onto a successful life-long career. For “Generation Y” (Adults 18-29), this is how life is supposed to pan out- especially for college graduates. Unfortunately, the economic crisis has stalled many of these hard working adults from being successful and starting their professional lives.

For adults aged 20-29, they unemployment rate is staggering: 11% in 2008! Worst yet, adults aged 20-29 carry very high debt of student loans, car loans and credit cards. Most of them don’t own a house, and these days, they can’t even apply for a mortgage if they wanted to because of their debt. While many young adults resort of credit cards to pay rent, utilities and groceries, more and more of them are forced to move back home or even become homeless when they have no family.

Ten years ago, it was unheard of for a college graduate to be unemployed and homeless. Ten years ago, it was also much cheaper for students to pay for college. So, what has changed?

Most business owners are firing employees right now, not hiring. The businesses that are hiring are going to hire employees they can maximize profit from since the economy is so tough. Many businesses have pre-conceptions about young workers in America. They think that 20-somethings will receive training and quit a few months down the road. They also fear the inexperience of Generation Y. Businesses feel that Generation Y has too much education and no practical life experience.

Unfortunately, the discrimination against Generation Y workers creates a double edged sword. The trend for Generation Y isn’t looking good for the next five years:

• Young adults need work experience to progress, but if they can’t get hired, they won’t gain experience. As a result, they will enter their 30s unprepared, ill-equipped and with poor credit

• There are very few programs available to young adults older than 21. If they do not have a family (i.e. former foster care) they don’t have the option of “going home” to parents. They end up homeless

• Student loans are not discharged in bankruptcy and carry high interest (7% in some cases prior to 2007). As Generation Y adults can’t pay, they lose tax refunds, ability to purchase a home and can even land in jail

For Generation Y, the economy has created an environment that’s guaranteeing poverty, homelessness and struggle. As jobs dry up, the hardest hit may not be families with older adults as originally thought. It may be the young adults who are cut off from success before they even have a chance to begin.

For more information, see MSNBC

The National Coalition on Health Care found in 2008 that 50% of all bankruptcy had health care costs as a major cause of financial distress. 68% of those who filed bankruptcy for health care costs had health insurance at the time of their catastrophe. Yet, America is the richest country in the world with one of the highest quality of life ratings. So why are so many people forced to financial ruin and poverty due to health problems? And how is the new government under President Obama going to help reduce health-care related poverty?

For many Americans, they are most vulnerable when they purchase health care plans from private insurance companies outside of their employer. Private insurance companies like Anthem Blue Cross and Aetna are free to deny health care charges as they see fit. Furthermore, many private insurance companies will deny payment altogether under the guise of “previous existing medical condition”.

When this happens, patients are held liable by the doctors and hospitals to pay bills. Often, patients can write an appeal but this can take months. In the meantime they must pay their bills or face serious financial recourse. If they cannot pay, hospitals and doctors can put a lean on their house, garnish wages and even take their tax returns.

Before the presidential election, President Barack Obama made a plea to the American people: more protections for Americans using private insurance, stronger employer insurance, stronger preventative care and the establishment of a National Health Insurance Exchange. Now, a day after his Inauguration, President Obama has a chance to change the way America gets healthy.

Such reforms could prevent well over a million bankruptcies a year and ensure every American gets the health care they need- regardless of their ability to pay.

For more information, visit: The National Coalition of Health Care and The White House