Senator Suggests Bankruptcy As A Better Alternative To Mortgage Modification
It looks like Uncle Sam might be learning from his mistakes when it comes to helping struggling homeowners, say Atlanta bankruptcy attorneys.
With the Home Affordable Modification Plan enacted during the recession a seemingly multi-billion dollar flop, the federal government may be turning to a method that's actually been proven to work - bankruptcy. In a bill proposed by Sen. Sheldon Whitehouse, bankruptcy is being explored as an alternative for homeowners in need of modified mortgage terms. And with U.S. foreclosures expected to surpass 12 million next year, it couldn't come too soon.
The loan modification program may have been a good idea in theory, but in practice, it's proven disastrous. Only one-eighth of homeowners that qualified for the program received any assistance, and even less actually received a modified mortgage. Most homeowners were either charged outrageous fees, buried in paperwork or ignored (or all three), and eventually gave up.
Bankruptcy, on the other hand, has proven a viable option for many homeowners. And if this new bill passes, it could get even better. Currently, troubled homeowners who file for Chapter 13 bankruptcy find the power to stop foreclosure, eliminate harassment from creditors and develop a repayment plan for non-mortgage debts. Now, it looks as if bankruptcy might soon be used to help lower mortgage payments as well.
Every year, millions of Americans find relief from credit card debts, medical bills and IRS obligations with bankruptcy. Whether or not the bill makes it into law, bankruptcy can still make a mortgage more affordable by lowering other debts - and unlike with loan modification, you don't have to jump through bureaucratic hoops to qualify. At DebtStoppers, it's free to learn more about bankruptcy when you try a complimentary one-on-one debt analysis with a professional Atlanta bankruptcy attorney.