Bankruptcy Code Revision to Fight Foreclosure in the Works?
Word on the street (and in the New York Times) is that Senator Richard Durbin (D-IL) will soon propose legislation to amend the Bankruptcy Code in order to better protect American homeowners facing foreclosure.
We don't yet know much about the "Helping Families Avoid Foreclosure Act" and it's provisions, except that it's slated to be proposed in September. Let's hope it incorporates many of the suggestions set forth in the Joint Memo for Proposed Bankruptcy Law Reform: Solutions to Preserve Homeownership published by the National Consumer Law Center, the National Association of Consumer Bankruptcy Attorneys, the Consumer Federation of America, the National Association of Consumer Advocates, and the Center for Responsible Lending in April.
If you haven't yet read the proposal, it includes (among others) suggested amendments to:
- Eliminate the Chapter 13 prohibition on modification of loans secured by the debtor's primary residence;
- Extend the time allowed for repayment of claims secured by the debtor's residence;
- Allow for balloon payments to pay off home mortgages at the end of the plan; and
- Waive the credit counseling requirement when a foreclosure proceeding is in progress
Atty Chern,
Thanks for bringing the joint memo to my attention. Have you found out any more about the extent to which the propsed legislation will adopt the salient suggestions in the memo?
The climate has never been better for revising sec. 1322(b)(2) once and for all. Do you have any sense of what kind of battle may be in store?
I have a quick question: I am planning to file Ch. 13 and would like to know if I am able to select the 5 year repayment plan regardles of what the formula dictates. I think my income will be under the mean for my state, but most of my debt is secure (home mortgage). Thanks,
LAmadeo
Unfortunately the example given in the example regarding exploding ARMs is pretty much what I foresee happening to me during my chapter 13 plan. The payment will increase 3% in interest rate but actually 44% in payment increase. For someone who is having problems due to spouse becoming unemployed, the increased payment will mean a loss of the home chapter 13 was intended to protect.
HR 3609 and any other provision needs put into law or we are going to suffer extremely high plan failures and possibly a lot of homeless individuals. Working would be not worth the effort since it is hopeless to try to make a go of living and repaying debt to the best able to complete.
Its about time some relief is put into action. Great blog!
Thank you for a great post on bankruptcy code revision and for including the suggested amendments which will be helpful and worthy. Surely this blog helps people to find their cases to be solved easier.