Wednesday, December 12, 2007

Modification of the Bankruptcy laws

H.R. 3609 would make some changes to the way the bankruptcy courts handle mortgages on a debtor's primary residence. Here are some of the changes and some comments:

Sec 2:
'While a case is pending, no fee, costs, or charges may be added to a debt that is provided for in a chapter 13 plan and is secured by the debtor's principal residence unless the holder of the secured claim gives timely notice of such fee, costs, or charge to the debtor and to the trustee.'.

Mortgage lenders are great for adding fees to mortgages in foreclosure, many servicers add fees to the mortgage account without listing them on statements during the bankruptcy. The result of this little slight of hand is debtors coming out of bankruptcy thinking everything has been solved only to find hundreds, sometimes thousands in fees had been accruing during the bankruptcy. Makes debtors awful pissed off at their attorneys.

SEC. 3.

Section 1322(b)(2) of title 11, United States Code, is amended by striking `, other than a claim secured only by a security interest in real property that is the debtor's principal residence,'.

This section makes mortgages on principal residences subject to the same rules as every other debt.

SEC. 5

Section 109(h) of title 11, United States Code, is amended by adding at the end the following:

`(5) The requirements of paragraph (1) shall not apply with respect to a debtor in a case under chapter 13 who submits to the court a certification that the holder of a claim secured by the debtor's principal residence has initiated a judicial or non-judicial foreclosure on the debtor's principal residence.'.

This is huge for people facing foreclosure and needing to file, NOW to prevent the loss of the home.

Generally speaking, I like this.

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