The Senate rejected proposed legislation yesterday that would have given bankruptcy judges the power to reduce the balance due on some mortgages by a margin of 45-51. A version of the legislation passed the House in March, and President Obama saw this legislation as one of the key pieces of his efforts to save homes from foreclosure.
The proposal would have opened the door to mortgage “cramdowns” and likely would have caused the number of bankruptcy filings to skyrocket.
This legislation was extremely controversial among bankruptcy attorneys and courts across the political spectrum. The credit industry lobbied hard to stop it for fear that the underpinnings of contract law would be threatened if bankruptcy judges were given the power to rewrite contracts.
What you should know is that the legislation is dead–but the earlier Obama initiative to modify mortgage terms, or refinance at favorable rates, outside of bankruptcy is not. If your family is struggling struggling check out the programs supported by the government.
More information can be found at http://www.financialstability.gov/roadtostability/homeowner.html
Don’t fall for the soon-to-be-regulated-out-of-business come-ons by fly by night charlatans who claim they can reorganize your debt without filing bankruptcy.
If you qualify for the president’s plan, you don’t need to pay someone else to renegotiate the terms of your mortgage.
Talk to a bankruptcy attorney to find out if filing bankruptcy is a solution to help save your home and get your fresh start.