On October 17, 2005 President Bush’s sweeping bankruptcy reform law goes into impact permanently changing the guidelines of financial debt assortment in this natiion. Customer advocates and the public appear to be totally unaware of the total and victory of the creditors under the new legislation. This article opens the doorway to the Trogan Horse so that customers can prepare themselves for the worse.

The most essential facet of the bankruptcy code was the &quotautomatic stay&quot provision. This permitted customers to file for bankruptcy at whenever throughout the creditor’s assortment process putting an instant quit to all get in touch with and assortment activities from the creditor. The new law requires that a debtor obtain credit counseling from an approved non-profit credit counseling agency for 180 days prior to filing Chapter seven or Chapter 13 bankruptcy.

While this may sound benevolent, a much closer look at the sensible impact of this provision reveals the crafty peeling of the debtor’s rights. The 180 day necessity is to offer the credit counseling agency the chance to work out payment ideas with creditors. However, throughout this same period of time the creditor is not restrained from assortment efforts. For instance, Margaret is a homeowner in Jacksonville, Florida and is six months behind on her mortgage. As a rule, credit counseling agencies only work with credit card businesses and have small or no training with dealing with mortgage businesses.

Following getting foreclosure papers, Margaret goes to see her lawyer to file for bankruptcy and is told that she should first look for credit counseling before filing for bankruptcy protection. Meanwhile, the foreclosure proceeds on routine and a sale day is set 120 days later on. However, Margaret nonetheless has not finished her 180 day necessity. What will happen to Margaret’s home? That’s right! The home will be sold and she cannot quit the sale by filing bankruptcy.

This is the most sweeping shift in financial debt assortment in the past 50 many years. Margaret’s only wish will be to work out a repayment strategy or a loan restructure with her mortgage company. This is a process called loss mitigation and is explained in fantastic detail to customers in our new book, How to Save Your House, ISBN#09753754–seven, $19.95, SYH University, LLC, 2005 which is sold at Amazon.com.

Loss Mitigation works because loan companies shed an average of $28,000 to $50,000 per foreclosure nationwide. It is a myth that the loan company desires your home and makes a profit off of foreclosure. A loan company has to spend lawyer fees, court and assortment costs, maintain fire insurance, hire a real estate expert, repair structural and other harm to the home, and spend house taxes. The homeowner can work out an agreement with the loan company in more than 90% of cases. Our company has provided housing counseling service to thousands of homeowners and loss mitigation absolutely works.

In conclusion, it is up to the consumer to educate and prepare themselves for worse situation scenarios. How to Save Your House is an excellent training device and will educate homeowners how to protect themselves under the new bankruptcy law. Most Americans do not have health or disability insurance and are susceptible to job layoffs because of a stagnant economic climate. Who amongst us is immune to heart attacks, company failure, strokes, law fits, tax liens or other challenges that life occasionally presents. 1 spend check is literally what separates numerous families from home safety and despair and the new bankruptcy law will severly punish those who slip behind on their mortgage payments.

Herbert Addison, JD, CHC is a Licensed Housing Counselor and a member of the Virginia Association of Housing Counselors. Mr. Addison is co-author of the new book, How to Save Your House, and has helped thousands of families to save their homes from foreclosure product sales.