Is the prospect of bankruptcy reform dead? Will bankruptcy judges ever be given the power to help the masses of distressed homeowners lining their courtrooms?

President Barack Obama promised the introduction of Main-Street-centered legislation intended to help distressed homeowners. But it seems as though every time President Obama has a brilliant plan, the bank lobby groups refute with their own brilliant plans.

And their brilliant plans often involve large dollar figures and extreme lobbying- all directed at the legislators.

Last May, the Senate blocked a piece of legislation that many San Diego bankruptcy attorneys were anticipating. As one Senator said:

"The banks--hard to believe in a time when we're facing a banking crisis that many of the banks created--are still the most powerful lobby on Capitol Hill. And they frankly own the place."

So, it would seem, the Senate is blocking the legislation aimed at allowing bankruptcy court judges the power to change the terms of a loan. The passage of this bill would have been great news for San Diego bankruptcy attorneys, who often find themselves dealing with clients driven to bankruptcy due to unscrupulous home loans. This bill could have brought some light into debt negotiation, as it would have opened the doors to lenders and borrowers coming together.

You see, no lender would want the terms of their loan to fall under the discretion of a bankruptcy judge. Thus, lenders would be more willing to negotiate the debt and modify loans on their own terms, if they knew that the inverse effect could be a debt negotiation on the court's terms.

And the court could very well allow for the principal of a loan to be reduced, which would send panic alarms ringing in the banking industry.

Unfortunately for many distressed homeowners and bankruptcy petitioners, their only two choices remain either debt negotiation of bankruptcy. Debt negotiation is not always the most optimistic choice, since banks are being frugal and often, just reducing the interest rate by a few percentage points.

So, as it stands now, times are still tough for the distressed homeowner and bankruptcy is the solution of choice for many.