Please take some time to call your Senators and Representatives and urge them to support The Helping Families Save their Homes in Bankruptcy Act of 2009 (H.R. 200). The bill has already been approved by the House Judiciary Committee along a string party-line vote (with all Democrats voting yes and all Republicans, of course, voting no), and will soon be voted on by the full House and Senate. This legislation has the support of the National Association of Consumer Bankruptcy Attorneys. You can read the full text of it for yourself here, or you can read the CRS summary here.
This bill will, in essence, do the following:
First, it will make it easier for homeowners with lots of mortgage debt to be eligible for Chapter 13 Bankruptcy. Chapter 13 allows debtors, in many cases, to save their homes by paying back over 3-5 years any arrears they have accumulated.
Second, it relieves the debtor from having to fulfill the credit counseling requirement if they have received notice that their home will be foreclosed on. This will make it easier and less expensive to file for Bankruptcy.
Third, it will require a bankruptcy court to disallow claims against debtors by predatory lenders who violate the Truth in Lending Act (TILA).
Fourth, and probably most important, it allows the bankruptcy court to modify the debtor's mortgage if their home is in foreclosure. It appears that the judge can, for example, adjust the interest rate of ARMs and/or extend the repayment schedule for the loan, making it easier to pay. This is one of the few (perhaps only) ways in which these subprime mortgages can be modified, despite what the financial industry often claims.
Fifth, it will curb debtor's liability for excessive fees resulting from foreclosure of their principle dwelling.
That is my reading of the bill, at any rate, and please note that I haven't covered everything that's in there. But this is an important piece of legislation that will help people stay in their homes, and it appears the Republicans will oppose it vigorously.
Please call your Members of Congress over the next couple of weeks and let them know that you support this important change to the bankruptcy laws.