Bankruptcy

Bankruptcy Law Network: “Congress Could Save Your Home”

My friends at the Bankruptcy Law Network have published a post recently on congressional attempts to respond to the foreclosure crisis. This post, entitled “Congress Could Save Your Home From Foreclosure,” discussed H.R. No. 3609, a bill that would make certain changes to the Bankruptcy Code which would make it easier for folks who file for bankruptcy protection in Chapter 13 to keep their houses.

Under current law, bankruptcy courts cannot approve a plan that proposes to make changes to a mortgage on a debtor’s primary residence. Under the new language, the courts would have more flexibility in working with debtors and mortgage companies to work out and approve plans designed to help keep debtors and their families in the home and to save their homes from foreclosure.

The rest of the post is really interesting as it looks at efforts by NACBA (the National Association of Consumer Bankruptcy Attorneys, of which Dana and I are both proud members) to lobby Congress for reform in this and other crucial areas in the Bankruptcy Code. It also links to a much-discussed editorial submitted by Jack Kemp, former HUD Secretary and conservative member of Congress, calling for bankruptcy reform in this area:

Bankruptcy law is wildly off-kilter in how it treats homeownership. Under current law, courts can lower unreasonably high interest rates on secured loans, reschedule secured loan payments to make them more affordable and adjust the secured portion of loans down to the fair market value of the underlying property — all secured loans, that is, except those secured by the debtor’s home. This gaping loophole threatens the most vulnerable with the loss of their most valuable assets — their homes — and leaves untouched their largest liabilities — their mortgages.

Take a look, and then submit your thoughts to your representatives in Congress to support HR 3609!

© 2008 SC Bankruptcy & Consumer Law Blog.