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Feb 19, 2009 11:33 pm US/Eastern
Bankruptcy Filing May End Foreclosures
MIAMI (CBS4) ―
We are taking a look inside President Obama's proposal to keep families in their homes. One provision in his plan may give people who file for bankruptcy and option to lower their rates. The details to the plan may have bankruptcy attorneys in town working over time.
Everyone wants to change the signs they are used to seeing in their neighborhoods: the Foreclosure Signs.
"People are worried about their jobs but you need to have a roof over your head," said Rashida Ivy to
CBS4's Jorge Estevez. Ivy was caught at a cross road like many Americans.
"When your house is worth less than what you bought it for, it's harder to bite that off and chew it," said Ivy.
But there's something inside President Obama's new housing proposal that can help those who need to file for Chapter 13 Bankruptcy which is considered a personal reorganization.
"By bringing down the foreclosure rate, it will help shore up housing prices for everybody," said President Obama in Arizona earlier this week when he unveiled his Housing Plan.
The president hopes with his plan he can keep south Floridians and other Americans in their homes. "We need to stop the bleeding," said Bankruptcy Attorney Mary Reyes, who has been helping south Floridians for more than 10 years.
If the law passes so may the bankruptcy portion which according to Bankruptcy attorney Mary Reyes would flood her office with clients looking to at least stay in their homes while they deal with the economy.
"They would allow a judge in a bankruptcy case to reduce the amount of that loan to the value of the home," said Reyes.
Here is an example. If you owe $300,000 and it's worth $200,000, a judge can now step in between you and the bank to come up with a new number.
However, consumers need to remember, a bankruptcy filing stays on your credit for 7 to 10 years.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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