The portion of the Wall Street Reform and Consumer Protection Act related to bankruptcy and mortgages, which I discussed in an earlier blog, did not pass last week. Responding to criticism from banks, the House rejected the part of the legislation that allowed bankruptcy judges to restructure mortgage payments, a plan that has passed in the House before but not in the Senate.

If it had passed, it would have permitted bankruptcy courts to adjust mortgage terms, extend the time for repayment, decrease interest rates and fees, and adjust the principal balance of mortgages in an attempt to protect homeowners from foreclosure. The effort would have been a logical extension of the current legislation, which currently gives bankruptcy judges the power to restructure any legally binding contract between two parties.

With bankruptcy rates on the rise, many loans would have come under the jurisdiction of bankruptcy judges. There are some who believe the measure failed due to the lobbying of powerful banks, since they are the group that would stand to lose the most if this measure had moved forward.

If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, or Golden, Colorado, please feel free to contact me.  

Kevin D. Heupel, Colorado Bankruptcy attorney, 303-955-7570, COBankruptcyHelp Email, free-consultation form.