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Using Chapter 13 in Memphis to prevent blight

With the continuing housing market problems in Memphis, a lot of homes and businesses have gone vacant. This can create blight in a neighborhood, leading to an increase in crime and lower housing prices. To avoid losing houses individuals and their neighbors could turn to Chapter 13 bankruptcy.

Recently, the Memphis city council passed an ordinance that requires all properties facing foreclosure to register with the city. The city is looking to prevent urban blight by charging a $500 fine for those who foreclose on properties. The city wants to use those fines to redevelop blighted neighborhoods. The city has also applied for federal and local grants to help with this goal.

The city recently began demolition of the Cleaborn Housing project to reform the area into a new mixed-use development. The city will also be demolishing the Midwest Dairy plant and constructing a children's center in its place.

Many people who are facing foreclosure often turn to alternative means when facing these difficult financial challenges. Some people turn to Chapter 13 bankruptcy to stop foreclosure. Chapter 13 is of great benefit to those facing foreclosure, because it allows for the homeowner to remain in their home. Under Chapter 13, the homeowner works with the court and the creditor to find a way to make manageable payments and rearrange their debt, but allows the homeowner to remain in the home. Those who opt to file for Chapter 7 bankruptcy instead still face the possibility of losing their home.

While sometimes bankruptcy is viewed in a negative light, it can be the first step toward getting finances in order. When it prevents foreclosure, it can even be good for a whole community.

Source: Memphis Daily News, "Council to Vote on Cleaborn Homes," Bill Dries, Oct. 2, 2012

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