Consumer bankruptcy lawyers have known that one solution to the foreclosure crisis is to amend the bankruptcy laws. As I reported previously, National Association of Consumer Bankruptcy Attorneys President Henry Sommer submitted to the House Judiciary Subcommittee on Commercial and Administrative Law a proposal recommending that the Bankruptcy Code be expanded to allow Chapter 13 debtors the ability to repay lenders only the current fair market value of their primary residence and to allow the debtor to repay the loan at a fixed rate of interest.
Since that day, absolutely no one has been talking about this sensible solution to this crisis that not only grips our economy but affects markets all over the world. . . until now.
In his recent article, Steve Lohr of the New York Times reports that Illinois Senator, Richard Durbin, the Democratic whip, says he’ll be proposing amendments to the bankruptcy code, in a bill called the Helping Families Avoid Foreclosure Act. It would do what I’ve proposed in my post, which is to allow the restructuring of home loans. This is an amendment that is overdue and would immediately stem the tide of foreclosures, which have doubled over the previous two years.
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