It's always nice to be recognized by one's professional peers, and I felt very privileged at the end of last month.  I was asked to lead a study session at the annual convention of the National Association of Consumer Bankruptcy Attorneys in Chicago. 

My topic was Advanced Chapter 13 Bankruptcy.  You might remember from former blog posts that Chapter 13 is a debt repayment plan when the debtor has enough income to make regular payments over a three to five year period. Chapter 13 is often filed specifically to save a home from foreclosure.  That's because when some other debts, including a second mortgage are reduced or discharged in the bankruptcy, the homeowner often can manage to make the first mortgage payments and keep the home.

In my session, I discussed legal issues having to do with the Chapter 13 bankruptcy process,  including pre-payment terms, hardship discharges, modifications, and other legal challenges that attorneys deal with when Chapter 13 bankruptcy is involved.

Needless to say, at the convention there was a lot of discussion about the mortgage modification bill that failed to pass in the Senate.  That measure would have allowed bankruptcy judges to modify mortgages in order to keep homeowners in their homes. Since the 5,000 or so attorneys had come from all parts of the country, each was dealing with a different level of problems having to do with rising foreclosure rates. I shared the fact that in Indiana, close to 10% of homeowners have missed at least one mortgage payment since the beginning of 2009 (compared to an 8.2% average rate nationwide.

We also discussed the government "rescue plan" (see makinghomesaffordable.gov) that calls for lenders to reduce mortgage loan payments (for qualified borrowers) to 31% of the borrower's income.

Back home in Indiana after the conference, I continue to see the effect of the housing downturn has had on families' finances, forcing greater numbers of people to turn to the bankruptcy court for help.

Even if the bankruptcy process was not given the power to govern mortgages, I will continue to help my Indiana bankruptcy clients explore all their options.