On October 17, 2005 President Bush’s sweeping bankruptcy reform law goes into
effect forever changing the rules of debt collection in this natiion. Consumer
advocates and the public appear to be completely unaware of the total and
complete victory of the creditors under the new legislation. This article opens
the door to the Trogan Horse so that consumers can prepare themselves for the
worse.
The most important aspect of the bankruptcy code was the “automatic stay”
provision. This allowed consumers to file for bankruptcy at anytime during the
creditor’s collection process putting an immediate stop to all contact and
collection activities from the creditor. The new law requires that a debtor
receive credit counseling from an approved non-profit credit counseling agency
for 180 days prior to filing Chapter 7 or Chapter 13 bankruptcy.
While this may sound benevolent, a much closer look at the practical effect
of this provision reveals the crafty peeling of the debtor’s rights. The 180 day
requirement is to provide the credit counseling agency the opportunity to work
out payment plans with creditors. However, during this same period of time the
creditor is not restrained from collection efforts. For example, Margaret is a
homeowner in Jacksonville, Florida and is six months behind on her mortgage. As
a rule, credit counseling agencies only work with credit card companies and have
little or no training with dealing with mortgage companies.
After receiving foreclosure papers, Margaret goes to see her attorney to file
for bankruptcy and is told that she must first seek credit counseling before
filing for bankruptcy protection. Meanwhile, the foreclosure proceeds on
schedule and a sale date is set 120 days later. However, Margaret still has not
completed her 180 day requirement. What will happen to Margaret’s home? That’s
right! The home will be sold and she cannot stop the sale by filing
bankruptcy.
This is the most sweeping shift in debt collection in the past 50 years.
Margaret’s only hope will be to work out a repayment plan or a loan restructure
with her mortgage company. This is a process called loss mitigation and is
explained in great detail to consumers in our new book, How to Save Your Home,
ISBN#09753754-0-7, $19.95, SYH University, LLC, 2005 which is sold at
Amazon.com.
Loss Mitigation works because lenders lose an average of $28,000 to $50,000
per foreclosure nationwide. It is a myth that the lender wants your home and
makes a profit off of foreclosure. A lender has to pay attorney fees, court and
collection costs, maintain fire insurance, hire a real estate professional,
repair structural and other damage to the home, and pay property taxes. The
homeowner can work out an agreement with the lender in over 90% of cases. Our
company has provided housing counseling service to thousands of homeowners and
loss mitigation absolutely works.
In conclusion, it is up to the consumer to educate and prepare themselves for
worse case scenarios. How to Save Your Home is an excellent training tool and
will teach homeowners how to protect themselves under the new bankruptcy law.
Most Americans do not have health or disability insurance and are vulnerable to
job layoffs because of a stagnant economy. Who amongst us is immune to heart
attacks, business failure, strokes, law suits, tax liens or other challenges
that life sometimes presents. One pay check is literally what separates many
families from home security and despair and the new bankruptcy law will severly
punish those who slip behind on their mortgage payments.
Herbert Addison, JD, CHC is a Certified Housing Counselor and a member of the
Virginia Association of Housing Counselors. Mr. Addison is co-author of the new
book, How to Save Your Home, and has helped thousands of families to save their
homes from foreclosure sales.
Article Source: http://EzineArticles.com/?expert=Herbert_Addison
