Bankruptcy Laws Contributing to Foreclosure Epidemic

April 13, 2007
Bankruptcy Laws Contributing to Foreclosure Epidemic
Bankruptcy law changes are needed if hundreds of thousands of American families struggling with abusive subprime mortgages are going to escape foreclosure and the loss of up to $164 billion in home-based wealth, according to a joint call for Congressional action issued by the National Association of Consumer Bankruptcy Attorneys (NACBA), the Consumer Federation of America (CFA) and the Center for Responsible Lending (CRL).

The joint statement recommends a wide range of specific bankruptcy law changes, including the following:

• End the Bankruptcy Code's special treatment of home mortgage loans.
• Remove time-consuming credit counseling requirements.
• Curb excessive fees during bankruptcy.
• End mandatory arbitration in bankruptcy.
• Create a minimum homestead exemption for the elderly.
• Amend chapter 7 of the Bankruptcy Code.