Lists of stupid laws are lots of fun, when they don’t really touch your life.
But the law that gags secured lenders after bankruptcy isn’t funny.
Preventing lenders from sending mortgage statements to homeowners after bankruptcy just sets families up for foreclosure and rewards servicers with the fees that follow default.
It’s just a stupid result that no one has fixed.
Bankruptcy laws collide
Two clients this week weren’t laughing when two different bankruptcy laws collided:
One law says that the lender’s lien on your home remains enforceable after bankruptcy.
The second law prohibits efforts to collect a debt after bankruptcy.
The survival of the lien after bankruptcy protects the secured lender; the injunction against post bankruptcy collection protects the debtor.
But what if the debtor wants, and needs, to continuing paying? The intersection of these two provisions thwarts both. [Read more…]