House to vote on bankruptcy reform on 2/26

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

House to vote on bankruptcy reform

The House is set to vote on a measure to allow bankruptcy judges to modify mortgages for primary home residences on Thursday, 2/26.

American Bankers Association opposes giving bankruptcy judges cramdown powers on primary homes

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Bankers’ Association opposes giving judges loan adjustment power

The American Bankers Association certainly can oppose this measure, but how much power do banks have at this moment to dictate financial terms?

This provision would help the U.S. get out of the severe recession we are in much quicker.

But two other solutions should be passed:

1) Changing the 2005 Bankruptcy Law so that more people can file for Chapter 7 bankruptcy protection, instead of being forced into Chapter 13s.

2) Reducing the default rate on credit cards from 31% down to 15%.

Why these two ideas aren’t being discussed more is a bit of a mystery to me.

Big Lenders Show Support for Allowing Bankruptcy Judges to Re-write Mortgages to Prevent Home Foreclosure

by Sundeep Kothari

Atlanta Bankruptcy Attorney

Bankruptcy Primary Home Foreclosure Cramdowns Considered

Citi supports allowing bankruptcy judges to re-write primary home mortgages to prevent home foreclosures.

This is a massive shift by a major lender. Before, many lenders were against this proposal, with the thinking that people who signed these contracts should live up to them, regardless of their current circumstances. However, with the flood of foreclosures and people not paying, this would allow some people to remain in their homes.

This type of legislation would be helpful for certain individuals. An example would be this: someone has a house with a 150,000 mortgage. Now that house is worth 120,000. So that person has a negative equity of 30,000. That person may consider just surrendering their house and moving into an apartment, since it would take a long time to re-adjust the equity loss.

With the new legislation, it may be possible for bankruptcy judges to re-write the loan so that it is now a 120,000 mortgage as the house is worth 120,000.

The legislation has not even been introduced yet, so this is NOT an option right now.

But this topic is something that homeowners should be watching. The best advice is to contact your local U.S. Representative and U.S. Senator and let them know what where you stand on this issue.

Proposed new credit card rules

by Sundeep Kothari

Proposed new credit card rules

In May of 2008, the Federal Reserve Board proposed new rules for credit card companies. These include:

1. Banning banks from raising interest rates until a minimum payment is at least 30 days late, a promotional rate is expiring or the customer has a variable rate.

2. Encouraging banks to send statements at least 21 days before the due date.

3. Banning the widespread practice of applying payments to low or no interest balances first, then higher balances.

4. Banning banks from charging over-limit fees if the limit is exceeded because of a hold placed on the account.

These new rules are certainly good, but are not enough. Here is another rule that I support: Reducing the default rate from 31% down to 20% on credit cards. This would have the effect of allowing people to pay down their debts at a faster rate. In addition, individuals will have more money to pay their mortgage payments, which will reduce foreclosures. Also, people will have more money to pay down their student loans, and other personal loans. Instead, when the interest rate is jacked up to the default rate, then many people go ahead and file for bankruptcy. And then banks get nothing in return. By reducing the default rate, banks will have more liquid cash, gain more stability, and the credit market will have some thawing.

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by Sundeep Kothari

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By Sundeep Kothari

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Why creditors may be willing to negotiate with you

by Sundeep Kothari

This article discusses why creditors may be willing to negotiate with you on credit cards, mortgages, student loans, home loans.

Banks defend spending of bailout money

by Sundeep Kothari

Banks have come under intense scrutiny for not helping out homeowners with their mortgages from the bailout money they received.

Hope for Homeowners program sees few applicants

by Sundeep Kothari

This program was started on October 1, 2008, but so far very few applicants have applied. This bailout program was started to help reduce foreclosures and help homeowners re-work their mortgages, but so far it hasn’t been working out well.

Kothari Law Firm

http://www.klfpc.com