15 Mar Judicial Power And Mortgages.
I am asked on a weekly basis: Can’t the judge make the mortgage company change the loan in bankruptcy? The basic answer is a resounding NO! It is important to note that the bankruptcy law is in a constant state flux and at some point in the future the law may change. However as of today in Kansas City, Missouri and Kansas the judges cannot force the mortgage company to change the terms of the contract if the mortgage is secured solely by the home. The judge can only force the mortgage company to follow the terms of the contract.
The other question I am asked is: Can the judge force the mortgage company to foreclose on my home? No continues to be the answer even though attorneys are still attempting to change the law. Foreclosures are becoming a very volatile situation due to the economy and some people are even being arrested. But the fact remains that the judge will not force a foreclosure as of today. In fact Judge Federman from the Western District of Missouri stated in In re Kathy Kay Tyler, Case No. 09-60916, Although section 1325 authorizes a debtor to surrender property, a debtor cannot force the creditor to take ownership or possession of such property; debtor remains liable for postpetition taxes and hazards on the property until creditor accepts ownership by deed or foreclosure.
So as of today’s date judges cannot modify loans secured solely by the primary homestead and they cannot force the mortgage company to foreclose. Believe or not you can help to make a change. Pick up the phone or the pen, okay maybe it is the keyboard, and write your representative today. Tell them that we need the law to change. They will listen if and only if there are enough people that raise their voice.
Remember that knowledge is power and the more knowledge you have about the bankruptcy process the more power you will have over deciding whether or not bankruptcy is going to accomplish the goal you have in mind.