The automatic stay provisions of the U.S. Bankruptcy Code are some of the most powerful and immediate protections for people who need to be shielded from their creditors. The stay, however, is not perfect nor permanent. In fact, there are limitations built into the automatic stay provisions that limit the effectiveness for people who have filed prior bankruptcy cases. In the old days (before the current law came into effect in 2005) people could file case after case in rapid succession, dismissing the ones that didn’t work out and filing new ones to stop their creditors. For most people, these “serial filings” (as they came to be known) were made in good faith and with the best of intentions; someone would file a Chapter 13 bankruptcy to stop a foreclosure, they’d miss a few post-petition payments and the mortgage lender to obtain relief from the automatic stay. Then the homeowner would get a better job and be able to make the payments. So rather than stay in a Chapter 13 without the benefit of the stay, they’d dismiss their case voluntarily and file a new one – and get a new automatic stay in place to protect them. Not so anymore. Under the 2005 amendments to the U.S. Bankruptcy Code, a case is presumptively filed in bad faith and subject to a limitation of the automatic stay if a prior case was filed and dismissed within the past year. If 1 previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was pending within the preceding 1-year period, then the automatic stay is in effect for only thirty days.

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Home loan modification programs are quickly becoming a key defense against foreclosure. With millions out of work or having their work hours cut, an increasing number of families are finding it hard to make ends meet. Another contributing factor is that in recent years, many homeowners chose to go with an adjustable rate mortgage. As interest rates went up, so did their payments. The huge spike in foreclosures has had a devastating effect on the banking industry, with some banks having to close their doors for good – some even being taken over by the government. Foreclosures have always been a part of the banking business, but with so many loans not being repaid according to schedule all at once, it has shaken the whole industry. In order to stem the tide of these unfortunate and very costly foreclosures, the Federal Government has taken measures to help more families stay in their homes by encouraging banks to consider adjusting the terms of the mortgages of those in need. Sometimes the terms of the current loan are altered, in other cases the loan is completely reworked. How can this help you? It means that for the person looking for a home loan modification program, things are much easier than they used to be. Let’s take a closer look at the process. The bank will want to get a good idea of your overall financial situation.

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