Mortgage bankruptcy filings are on the rise as homeowners continue to struggle financially. Mortgage bankruptcy is also referred to as the Conyers Bill; a controversial bill enacted by legislation in 2007. Controversy stems from the fact the Conyers Bill grants bankruptcy courts authorization to alter existing mortgage terms to benefit borrowers. The mortgage bankruptcy bill offers protection to homeowners who obtained subprime or non-conventional mortgage loans after January 1, 2000 and later filed forchapter 13 bankruptcy . Since Chapter 13 provides financial relief by restructuring debt and extending payment terms, bankruptcy courts can control payment terms to ensure creditors and debtors are protected.
If debtors do not adhere to their repayment plan, creditors can petition the court and seek dismissal of the bankruptcy petition.
When mortgage bankruptcy petitions are dismissed, debtors lose all protection from the court. Homeowners considering mortgage bankruptcy should obtain legal counsel from a qualified bankruptcy attorney.
