More than two years ago, the federal government promised to help end the foreclosure crisis but time has shown that the federal government’s response to the crisis was too slow and has not succeeded in providing homeowners with necessary relief. In its May 6, 2010 issue, Consumer Bankruptcy News reported that is has “been more than one year since President Obama announced the establishment of the Making Home Affordable initiative that included the Home Affordable Modification Plan.” The HAMP plan was supposed to help between 7 and 9 million families restructure their mortgages and save their homes from foreclosure. The reality has been far short of that lofty goal. In fact, as of April 2011, Consumer Bankruptcy News reports that only 685,574 homeowners are being assisted by the federal government’s foreclosure prevention programs. The vast majority of people who applied for help from the federal government never received it.
While a Chapter 13 filing will stop the foreclosure process, without a modification of the existing mortgage note, many homeowners still cannot afford to stay in their homes. The federal government has been sitting on a Mortgage Modification bill that would give bankruptcy judges the power to modify mortgages and lower future mortgage payments based the current market value of the debtor’s house. If congress passed the Mortgage Modification bill it would provide real and necessary assistance to Chapter 13 debtors because debtors would be able to stay in their homes with lower mortgage payments. Moreover, passage of the Mortgage Modification bill would provide this necessary relief to debtors without costing the American taxpayer a dime.
Even without the Mortgage Modification bill, a Chapter 13 bankruptcy can help the many consumers that are able to make future mortgage payments without a modification. By filing a Chapter 13 bankruptcy, we can help distressed individuals and families with regular income eliminate, among other things, credit card debt and medical debt. In addition, past due mortgage payments can be put into a plan and spread out over five years. Relieved of the burden of these past due debts, consumers that are able to make their future mortgage payments, save their homes from foreclosure and return stability to their lives.
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