The Mortgage bankruptcy bill also referred to as “Conyers Bill” was enacted in the year 2007 by legislation. The Conyers Bill is controversial because it has brought about modification in the new federal bankruptcy laws that were introduced on 17th October 2005. The mortgage bankruptcy bill aims at helping homeowners retain their home ownership in the event they file bankruptcy.
The bill is applicable for homeowners who availed mortgage loans after January 1st 2000 and thereafter filed Chapter 13 bankruptcy. You have to provide evidence that your finances don’t permit you to make mortgage payments. As such, you are not in a position to pay your arrears. The main reason why homeowners file Chapter 13 bankruptcy is to save their homes from foreclosure. Chapter 13 bankruptcy allows you to enjoy debt relief by restructuring your debts. As such the bankruptcy courts can change terms of your existing mortgage.
The Conyers bill permits bankruptcy courts to lower the rate of interest, do away with excess fees. It also allows courts to modify the principal mortgage balance. By modifying the mortgage loan terms, you get an opportunity to get your finances back on track. And if you adhere to the new repayment plan, the lenders get back their cash in due course and do not initiate foreclosure proceedings.
The mortgage bankruptcy bill extends protection to the financially stranded homeowners. However, if you fail to abide by the payment plan worked out in Chapter 13 bankruptcy, the lender can take help of the bankruptcy courts. Under such circumstances, you can request the court to switch over to Chapter 7 bankruptcy. Once you revert to Chapter 7 bankruptcy, the foreclosure proceedings may begin. The mortgage bankruptcy bill protects homeowners but not all can avail the benefit. If you are not being able to decide what is best for you if you “fail out of bankruptcy”, consult a bankruptcy attorney who can suggest options that suits your needs best.