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 April 16, 2007

Borrowers Want to See Bankruptcy Laws Changed
Three separate nonprofit organizations told Congress on April 12 that current bankruptcy laws needs to be changed. The standing laws do not offer any assistance to persons on the verge of foreclosure to and in danger of losing their homes.
In 2005, changes in the laws limited or all together eliminated a home owner's ability to exclude their mortgages from bankruptcy protection.

Eric Stein, a senior vice president with the Center for Responsible Lending states that subprime loans have caused millions of households into default on their home loans. He feels that if current laws are not changed, that those people will face foreclosure and possible bankruptcy.

These changes in current bankruptcy laws have been proposed:

Eliminate credit counseling requirements.

Change Chapter 7 of the Bankruptcy Code to allow adjustments to high loan-to-value mortgages.

Cut back on the excessive fees charged during a bankruptcy.

Curtail the Bankruptcy Code's current special treatment of home loans. This prevents judges from providing home owners mortgage debt relief.

The creation of a minimum homestead exemption for the elderly; as these people are often turned down for refinancing due to their lower incomes.

Curtail mandatory arbitration. This can lead to unpredictable outcomes.

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