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Craig D. Robins, Esq. New York Bankruptcy Attorney, Longisland bankruptcy attorney

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Bankruptcy Cram-Down Measure Appears to be Doomed

Posted on Wednesday (May 6, 2009) at 4:58 pm to Bankruptcy Legislation

Proposed bankruptcy cram-down bill would have helped struggling homeowners in Chapter 13 Bankruptcy.  Long Island consumers will suffer without this law.Written by Craig D. Robins, Esq.


Proposed bill would have helped struggling homeowners in Chapter 13 Bankruptcy.  Long Island consumers will suffer without this law.


 In what will certainly be upsetting news to consumers and homeowners, House Speaker Nancy Pelosi, (D-Calif.), gave a strong indication today that House lawmakers will not try to put the Chapter 13 bankruptcy cram-down provision back into a housing bill that the Senate had taken out in their version of the bill.

As I had written about at length previously, (Will the Senate Approve Cram-Down Legislation to Enable Mortgage Modification in Chapter 13 Bankruptcy Cases?), the proposed law would have made it easier for bankruptcy judges to alter the terms of an individual consumer’s mortgage in a bankruptcy proceeding.  It would have been a great help to the many struggling homeowners here on Long Island.
One of the legislature’s objectives was that if bankruptcy judges were given greater authority, mortgage companies would be more willing to work with troubled homeowners to alter the terms of their loans before they were forced into bankruptcy.  Many Long Island bankruptcy attorneys such as myself had hoped to utilize this measure to help our clients whose homes were underwater.
This proposed legislation had been a key plank of President Barack Obama and congressional Democrats’ attempts to help stabilize the housing market and provide assistance to individual homeowners struggling to make their repayments.
“It’s clear that the votes are not there in the Senate,” Pelosi said. “It’s really a major disappointment that homeowners will not have the ability to declare bankruptcy on their primary residence while wealthier people can declare bankruptcy on their second, third and fourth homes.”
The provision, commonly referred to as a cram-down or strip-down, was defeated in a vote in the Senate last week.
The House had previously passed a bill that included the cram-down provision. (See House Approves Cram-Down Bankruptcy Bill ).
Given Pelosi’s comments, the House would either have to take up the Senate version of the bill with the cramdown provision stripped out, or House negotiators would have to abandon any attempts to add the measure back in when House and Senate lawmakers meet to iron out differences between the two versions of the bill.
Apparently the financial services industry, which had strongly lobbied against the measure, successfully scored a victory for banks, arguing that it would raise the costs of borrowing for all homeowners.
Durbin was unable to reach a deal with the financial industry, despite having managed to get Citigroup Inc., one of the nation’s largest lenders, on board.
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Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »


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