Tell Congress to Amend Chapter 13 of the Bankruptcy Code

06 Jan Tell Congress to Amend Chapter 13 of the Bankruptcy Code

Today was the first day of the new Congress in Washington.  And bankruptcy is on the front burner.  A new law to amend the Bankruptcy Code, designed to fight foreclosures by allowing bankruptcy judges to erase some mortgage debt in chapter 13, was proposed today.  Congressman Brad Miller, (D- N.C.) who introduced the bill says, “Economic conditions have only worsened since we last debated this plan.  Until we stop the slide in foreclosures and falling home prices, the economy will get worse still.”

What does this mean for you, the homeowner?  If this law should pass, you would be able to use Chapter 13 of the Bankruptcy Code to reduce your mortgage balance to the current value of your house.  The rest of your mortgage would be treated just like your credit card debts – unsecured – and paid to the extent that you can do so under a Chapter 13 plan.  You might even be able to reduce the interest rate you pay on your mortgage in Chapter 13. 

This bill is very important to you.  So write your Congressman and Senators.  Tell them you want chapter 13 amended so that it can help you and all of the other suffering homeowners throughout America. 

In the meantime, if you are facing a mortgage foreclosure, you might be better off trying to fight it in state court for a while.  Changes to Chapter 13 of the Bankruptcy Code might be on the way and if they come, they will help you a great deal.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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