Massachusetts church uses bankruptcy laws to stave off foreclosure

The congregation of Roxbury’s Charles Street African Methodist Episcopal Church has authorized its leaders to file a Chapter 11 bankruptcy petition in order to stop foreclosure proceedings scheduled for later in the week.

One of the leading churches in Boston’s black community, they need to use the bankruptcy law to try to restructure a balloon note mortgage that came due in December 2011.

The 194 year old church has been sparring with its lender OneUnited Bank for several years over the terms of several rebuilding projects. When OneUnited refused to restructure the main loan on the church building, church leaders opted for bankruptcy court.

This story is notable on several fronts: first, it underscores how the recession has hurt religious organizations of all stripes, as contributions and tithes plunged with the economy. Next, it shows how effective bankruptcy can be in stopping an imminent foreclosure. And it also shows how negotiating the terms of a mortgage gone bad can be helped by the bankruptcy process, which gives debtors leverage they don’t usually have outside of bankruptcy court.


By Doug Beaton

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