Effect Of New Bankruptcy Law s On Foreclosure
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Impact of New Bankruptcy Laws on Foreclosure
Summary
The bankruptcy reforms introduced by President Bush's administration in October 2005 significantly altered the debt collection landscape, favoring creditors and complicating matters for consumers. This article explores the impact of these changes on foreclosure.
Article
In October 2005, bankruptcy reforms under President Bush's administration reshaped the debt collection system in the United States, tipping the balance in favor of creditors. Consequently, consumers are finding themselves in increasingly difficult financial situations.
A key element of the new legislation is the "automatic stay" provision, which allows consumers to halt all collection activities, including contact from creditors, by filing for bankruptcy. However, this can be initiated by the creditor at any time. To apply for Chapter 7 or Chapter 13 bankruptcy, debtors must have received credit counseling from an approved non-profit agency for 180 days.
This provision can negatively impact debtors, as during the 180-day counseling period, creditors can continue to collect payments, leaving debtors with limited options. If a foreclosure date falls within this period, homeowners may need to restructure their mortgage through "loss mitigation."
Lenders prefer homeowners to retain their properties, as each foreclosure costs lenders between $28,000 and $50,000 due to attorney fees, insurance, real estate services, repairs, and taxes. This is why loss mitigation is often successful, with negotiation success rates around 90%.
Several resources are available to help consumers navigate these challenges. For instance, a book like "How to Save Your Home" offers valuable insights to protect against new bankruptcy laws. Such information is crucial, as a single delayed paycheck in America?"a nation where health issues are common?"could cost someone their home.
By understanding these new laws and available strategies, consumers can better safeguard their homes and financial futures.
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