Dear Attorney,

I’ve heard that Congress is all set to pass a new law that will allow bankruptcy judges to modify home loans. Is this true?

Nicole, French Valley

Dear Nicole,

Congress is considering passage of S61, a new law that will indeed allow bankruptcy judges to modify home loans.

It makes sense. Many feel this kind of judicial modification will have more success than the voluntary modifications homeowners have been attempting to negotiate, but it isn’t for everyone.

As it stands now, the new law will only apply to people who are in Chapter 13, which is a debt reorganization plan administered by a Chapter 13 trustee and overseen by the bankruptcy court.

The debtor makes a monthly plan payment which is distributed among the creditors in order of priority.

A Chapter 13 plan lasts as long as five years, depending on the amount of money the debtor owes. The plans are tough to complete and not everyone qualifies.

I would like to see the bill pass and I am fairly certain it will, but it only offers relief to Chapter 13 debtors.

To really make an impact, the law would have to include Chapter 7 debtors as well. That would bring relief to a much wider range of homeowners.

Not everyone in foreclosure is in bankruptcy, though, and these people will not benefit at all from the new law.

For them (as well as debtors who filed bankruptcy) there are some interesting strategies bankruptcy and other attorneys have been using to help people save their homes.

Mortgage litigation is one of them and it’s on the rise, primarily because traditional home loan modifications are not being seriously negotiated between borrowers and lenders but also due to a shocking number of violations found in a shocking number of home loans through the process of loan auditing.

Lenders go through the motions of accepting requests for modifications from homeowners who are not represented by attorneys, but they rarely complete the process. They simply don’t care.

Countrywide, for example, recently admitted in a New Hampshire lawsuit that their ads claiming they can help homeowners by modifying their loans are mere "puffery."

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[ Berry-Bell and Hall Mortuary ] have been handy information about six months ago, but this revelation comes a little too late for many homeowners.

In any event, lenders who pay little attention to the borrower’s informal request for a modification usually find the same borrower’s request a little more compelling if it’s accompanied by a Summons and Complaint.

Where do you sign up? Go see a qualified bankruptcy attorney who handles these cases. If you really want to save your home, do it today.

Dear Attorney,

I’m trying to get out of debt so I decided to transfer the balance of one of my credit card accounts to another who enticed me by promising zero-percent interest on the balance transferred for six months.

Sounds great, right? Well, it’s not!

It was great not having to pay that high interest rate for six months, but at the end of the six-month period the bank hit me with a huge finance charge. Now I think I’m in worse shape.

Can they do that?

Sandy, Lake Elsinore

Dear Sandy,

Unfortunately, they can do that – and they do.

The finance charge you were hit with is basically interest for the six months you paid none, which pretty much debunks the myth that you can save money by doing a balance transfer.

You could have avoided that charge by paying off the entire balance before the end of the six months.

Most folks can’t do that, though, and that’s exactly what the banks are counting on. You could say they’re banking on it.

All that is expected to change, though, when pending legislation goes through sometime in 2010. The new law governing credit card companies will rein in those finance charges.

If the new law is passed, credit card companies will be prohibited from charging interest for that six-month introductory period.

Interest charges will accrue, however, from that point on for the remaining balance.

I, for one, won’t be holding my breath waiting for that law to pass, because 2010 is a long time away. Obviously, that provides no immediate relief.

In the meantime, it would be wise to avoid balance transfers like the plague, especially if you are considering filing bankruptcy.