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Proposal could help underwater bankrupt homeowners

While nothing is definite at this point, the Federal Housing Finance Agency is considering a proposal that would help underwater homeowners who have filed for Chapter 13 bankruptcy.

As of now the regulator for Fannie Mae and Freddie Mac is considering the proposal. Under the plan, struggling homeowners who owe more on their mortgages than the home is worth, and have already filed for Chapter 13 bankruptcy, would be able to pay no interest for five years.

However, the plan would not necessarily be for anyone who files for Chapter 13, and the debt reduction program would first need to be approved by bankruptcy judges overseeing those cases.

According to Reuters, a spokeswoman for the FHFA has confirmed that there is such a proposal. It was also reported by the Financial Times that a letter detailing the plan was sent to Congress on Monday. However, the White House is reportedly not currently considering the proposal.

Looking to the future, if this proposal -- or something similar -- is ever passed, thousands of homeowners who are trying to get their finances back in order could possibly also have the chance to hold on to their home.

However, even if the proposal is not approved, it is important for any Florida homeowner who is worried about keeping up with their payments to realize that there are a number of debt relief options still available. For example, even just filing for bankruptcy could help to free up money that could then go toward mortgage payments. Or maybe a loan modification is the best choice?

Overall, the message is that it's best to look into all the different debt relief options that may be available, and then make a decision based on what your current financial situation is, and what your future goals are.

Source: Reuters, "Regulators considers mortgage debt reduction for bankrupt: report," JoAnne Allen, Dec. 20, 2011

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