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Local bankruptcy cases nearly double in a year: Filings mount
People facing the loss of their home are filing Chapter 13 when banks aren’t willing to modify their loans, according to Louis J. Esbin, president of the Central District Consumer Bankruptcy Attorneys Association.
“I think Congress thought the banks would be more cooperative in modifying loans and we found that they’re not,” Esbin said. “If a loan modification doesn’t work, the alternative to stay in a home is to file bankruptcy.”
Homeowners who have more than one mortgage can use a Chapter 13 bankruptcy to arrange to pay on the first mortgage and get junior mortgages treated as an unsecured loans.
“The benefit to that is people are able to … stay in their homes while paying only the first mortgage,” he said.
Looking ahead, Esbin and other bankruptcy attorneys are hoping Congress passes legislation amending the bankruptcy code to give judges authority to modify loans.
“Currently,” he said, “the courts cannot modify that first secured loan. The court has no authority to reduce the principal of the first down to the value. That’s what they’re trying to get before Congress.”
Excerpt from story in the Ventura County Star
Jan 20, 2009
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