Could Bankruptcy Reform Help Homeowners?

Article Written By: jimknight

Under the newly designed bankruptcy reform guidelines, homeowners can file for bankruptcy to get out of debt and in certain cases, allowed to retain some parts of their property. Cases filed under the original Chapter 7 bankruptcy law allow them to get rid of all their debts, but it does not allow them to keep their homes unless all the payments are made in total and in accordance with the original conditions of the preset mortgage agreement.

An additional workable alternative is opting and filing for Chapter 13 bankruptcy. In this situation, the payment plans, as specified by the bankruptcy court, allow them to repay all their debts over a period of several years. However, in order to keep their property, all the payments must be made in full and on time. If the sum that needs to be paid every month is exceeding the amount that the debtor is to afford, the property still remains vulnerable to foreclosure.

One more for homeowners who are facing or can face foreclosure is a plan designed by the Federal Housing Administration department, known as Hope for Homeowners. This program has been specially created for the assistance of people and homeowners who are filing to bankruptcy.

If all the qualifying aspects are met and complied with, the applicants are given a 30-year fixed mortgage rate, characteristically at lower interest rates which are spread over longer periods of time. This normally tends to lower the monthly mortgage payment rate. The Hope for Homeowners program is a defined volunteer program for both the borrowers and lenders, and all the parties must fully agree to the terms and conditions of the program in order to be considered as qualified.

The Hope for Homeowners program, included in the Bankruptcy Reform, has been since September 30, 2010 to all those homeowners who commenced their mortgages prior to January 1, 2008, have been living in the property, consider it as their primary place of residence and have paid all their monthly payments. The factors for qualification specifies that the mortgage payment must be 31 percent of the monthly income and the applicants must not have defaulted on any debts in the past.

There is no single winning solution for every homeowner s bankruptcy woes. However, with the reforms promulgated by the federal government, the options to an average homeowner have considerably increased. Most importantly, in many cases, he is able to retain his or her property, something that would not have been without the aforementioned reforms.

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