bankruptcy amendment act
Bankruptcy Reform Can Assist Homeowners From Foreclosure
Chapter 13 bankruptcy reform is what is truly needed to stem the time of the current foreclosure crisis. Even if the code were modified for a short period of time, it would give homeowners the opportunity to restructure loans that are subject to or already in foreclosure. As the law currently stands, a homeowner in Chapter 13 cannot alter the contractual terms of their loan. A homeowner can repay mortgage arrears over three to five years, however, the post-petition mortgage payment must be made pursuant to the original terms of the contract. Under several proposals to modify Chapter 13 bankruptcy, a homeowner would be permitted to restructure the loan.
For example, the loan can be reduced with regard to principal, the rate of interest can be converted to a fixed-rate, and the duration of the loan can be extended to thirty years. This would effectively alter the loan so that the homeowner has the opportunity to stay in the home. Although the banking industry would vehemently object to such restructuring, it is the banking industry that helped create the current crisis. Under a revised Chapter 13 case, the mortgage company would receive the same of type status as that of a conforming loan. The interest rate would be no less than that of a conforming loan. The length of the loan would be no less than that of a conforming loan. In essence, the mortgage company would have to bear some of the burden of the current crisis by allowing homeowners to amend their loans.
Now this may seem like a drastic measure to force upon the already decimated mortgage industry. However, if Chapter 13 cases could be modified, all parties will benefit in the long run. First, homeowners would be permitted to save and keep their homes. Second, the mortgage companies would be paid an amount greater than what they would lose sho7uld the property fall into foreclosure and subsequent sale. Lastly, the communities would be protected against blight and falling home prices if homeowners were allowed to restructure loans through Chapter 13 bankruptcy.
It will be interesting to see if the proposed changes to the bankruptcy code make it out of committee. There will be a huge opposition from the banking industry. That same industry spent over 8 years lobbying for the bankruptcy reform act of 2005. I doubt that they will be willing to give back one inch of the reform measures that they fought so long and hard to obtain. It is also possible that the big reform push may occur after the upcoming election. If the Democrats retake the white house, more liberal reforms will surely follow. I hope that homeowners can hang on no matter who is elected.
About the Author
David M. Siegel is the author of Chapter 7 Success: The Complete Guide to Surviving Personal Bankruptcy. He is a member of the American Bankruptcy Institute and currently practices bankruptcy law in Chicago and its surrounding suburbs. Additional information is available at http://www.chapter7success.com .
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A code of federal procedure. (Superseding Detsy’s Federal procedure.) Embodying enactments of Congress, constitutional provisions, established principles, and court rules, in force December 1, 1906, and the Bankruptcy act of 1898, with amendments and orde. 1 This book, “A code of federal procedure. (Superseding Detsy’s Federal procedure.) Embodying enactments of Congress, constitutional provisions, established principles, and court rules, in force December 1, 1906, and the Bankruptcy act of 1898, with amendments and orde. 1″, by Rose, Walter Malins, 1872-1908,Detsy, Robert, 1827-1895, is a replication of a book originally published before 1907. It has… |
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A short statement of the history of the enactment of section 75 and 75-s of the Bankruptcy act: The establishment of these acts as valid legislation and suggestions for amendment … |
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MUNICIPAL BANKRUPTCY ACT 48 Stat. 798 (1934): An entry from Macmillan Reference USA’s Encyclopedia of the American Constitution $1.90 This digital document is an article from Encyclopedia of the American Constitution, brought to you by Gale®, a part of Cengage Learning, a world leader in e-research and educational publishing for libraries, schools and businesses. The length of the article is 211 words. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You c… |
