Bankruptcy bill modifications going before the House!!!

We all complained about the new bankruptcy bill and how it screwed the debtor. Okay, here’s a change that may help those abused by the sub-prime lenders. Pay attention here folks, it’s a chance to make a difference.

Yesterday, 12/11/17, the House Judiciary Committee voted to approve the Emergency Home Ownership and Mortgage Equity Protection Act of 2007 – (H.R. 3609) It amends federal bankruptcy law governing a chapter 13 debtor. Chapter 13 requires a debtor to repay at least a part of his/her debts over a three to five year period.

This bill prohibits creditors holding debt secured by a principal residence from adding fees, costs and other charges to the debt while the bankruptcy is pending. Bankruptcies take months to approve; as soon as a debtor files it “freezes” the amount owed.

It allows the bankruptcy court to modify the rights of creditors holding debt secured by a principal residence. It gives the trustee flexibility in determining how much of the debt must be repaid to achieve discharge.

Authorizes a chapter 13 bankruptcy plan to provide for payment of claims secured by a principal residence over a longer period than the three to five years of a traditional Chapter 13. This will allow a debtor to lower payments and help them retain their home.

Eliminates the pre-petition credit-counseling requirement for a chapter 13 debtor facing foreclosure. Current law requires weeks of credit counseling before a debtor can file by which time foreclosure may have already taken place.

Allows a creditor to retain a lien against a principal residence until the claim is paid. This offers the creditor protection.

Excludes from final discharge any debts secured by the debtor's principal residence until such claim is paid. This is another protection for the creditor; if the payment period exceeds the traditional five years, i.e. all other debts paid at the end of five years, the bankruptcy will not be discharged until the last creditor is paid.

Other provisions of the bill are:

1. Covers existing loans only, and only loans made after 1/1/2000. As such, it
will have no effect on the market for loans going forward.

2. Covers nontraditional loans and sub prime loans only, i,e, loans where abuses
were prevalent.

3. Applies only to loans where there is a notice of foreclosure.

4. Sunsets after 7 years.

5. Provides guidance to judges so they cannot cramdown value below fair market
value and cannot reduce interest rate below conventional mortgage rates.

There is a similar bill in the Senate Judiciary Committee, S. 2136, that does all this plus effectively converts Chapter 13 mortgages to 30 year fixed loans, denies claims by creditors using the home for collateral if there is evidence of violation of the Truth in Lending Act or any state consumer protection law.

If both bills pass they will go to reconciliation to iron out any differences.

Time to pick up the phones people!

lobby is it will be an uphill battle. Pick up the phone!!!

Bush doesn't even have to veto this.

on edit: This is great legislation. It is desperately needed and may even provide some needed sanity in the housing market -- which helps lenders, although they were too dumb to realize it with the last bankruptcy bill. I totally support this. That said, getting past both Biden and Bush is a daunting challenge.

such a bill?

He won't do anything that hurts their profits. The bankruptcy "reform" of 2005 was moved through his committee and the senate because he wanted it. His son works for MBNA.

He sold his soul.

who are beholden to big banking.