TAMPA - Today, Jane and Enrico Parsons prepare to sit at a table in their attorney's office and sign a document that could keep their lives from crumbling.

In order to do it, though, they will have to ignore a core value: Bankruptcy, they have always believed, is wrong.

"This goes against my grain," said Jane Parsons, 54, manager of a pediatric medical office. "I cry every time I think about it. But I feel I have no choice."

That's because the Parsons' mortgage lender is set to auction off their three-bedroom Riverview home Thursday at the federal courthouse in Tampa. At this point, filing for Chapter 13 bankruptcy, which allows people to reorganize their debt, is the only way the couple can stop the sale.

The Parsons are among a growing number of homeowners in foreclosure turning to this kind of bankruptcy as a last resort to save their homes.

As Florida's foreclosure rate has soared to the second highest in the nation, Chapter 13 bankruptcies have followed, on pace to double last year's results.

The industry professionals who handle these bankruptcy cases say more people are filing solely to avoid foreclosure and don't have as much traditional debt, such as credit card and auto loans, as used to be typical.

Still, the vast majority of those in trouble with their mortgage lenders don't qualify for Chapter 13 because of financing deals in which mortgage payments adjust upward, beyond what they can afford even through bankruptcy.

A controversial bill now in Congress could change that and, if passed, would particularly help Florida homeowners.

Proponents say the bill, which would allow bankruptcy judges to modify the terms of mortgage loans, would open the door to Chapter 13 for roughly 600,000 more homeowners.

But critics say the bill would drastically change the lending industry and raise interest rates by as much as 2 percent on home loans for all future borrowers.

Even if lawmakers approve the bill, it could be too late for thousands of Florida residents whose adjustable rate loans are about to ratchet higher.

State's High Foreclosure Rate

Florida's troubled real estate market has pushed the state's foreclosure rate to among the highest. Lenders have filed more than 20,000 foreclosure filings in Hillsborough, Pasco and Pinellas counties through September. That's up nearly 131 percent when compared to the same period last year.

During the first nine months this year, 7,348 homeowners in the Middle District of Florida, which includes the Tampa Bay area, have filed for Chapter 13, court records show, 68 percent more than 4,361 who filed during the same period last year.

As more and more people fall behind on their mortgage payments, lenders are pushing homeowners to call early if they're in trouble.

Kurt Pfotenhauer, senior vice president for the Mortgage Bankers Association, said some lenders even call borrowers with adjustable rate mortgages before payments are scheduled to rise to make sure they can afford the new amount. There are things lenders can do to help homeowners from slipping into foreclosure, Pfotenhauer said.

But many homeowners say calls to their lenders have fallen on deaf ears.

The Parsons bought their Riverview home in March 2006. But that was when the real estate market was slowing, and they had trouble finding a buyer for their Atlanta home. They juggled two house payments for five months and then ran out of money.

The Parsons say they called months before they missed their first payment. They say their lender said nothing could be done until they missed three mortgage payments.

Enrico Parsons, a chef, got a new job in Florida and moved to the Riverview home in September 2006. Jane Parsons followed in October. They say the lender wouldn't accept any mortgage payments until April, when the lender offered a repayment plan.

That plan included their regular monthly mortgage payment of $1,600, plus $1,100 a month for a year to cover the late payments and fees.

They made the payments on time through July. On June 30, Enrico collapsed because of a blood clot on the brain. He has been out of work since then but expects to get a new job soon.

With one income, Jane said she could no longer make the extra $1,100 payments. She said she tried to continue making her regular mortgage payments, but the lender stopped accepting them, saying she violated their agreement. The lender again filed to foreclosure on the home.

"It just doesn't make sense," Parsons said. "It's going to take longer for the bank to get its money in foreclosure than it would if they'd just work something out with us."

Chapter 13 Stops Proceedings

Chapter 13 is attractive to those in foreclosure because it stops the proceedings immediately and requires lenders to accept mortgage payments.

The biggest incentive: It gives homeowners five years to pay their debt.

But Chapter 13, under the current bankruptcy code, won't help everyone in foreclosure. It's designed for people, such as the Parsons, who fell on hard times temporarily but can now make their regular monthly mortgage payments, said Catherine Peek McEwen, a U.S. bankruptcy judge in Tampa.

"This is a good fit if you're not making the same kind of money you used to," McEwen said.

Under Chapter 13, a person's monthly bills are consolidated into one payment. Payments on unsecured debt, such as credit cards, and automobile loans can be adjusted by the judge.

But many in foreclosure are in trouble because adjustable rates have pushed their payments out of reach. Those people don't qualify under the current Chapter 13 bankruptcy code.

Under the pending legislation, judges could modify mortgage terms.

For example, a judge could determine a home that sold for $250,000 is worth only $200,000 in today's market and require the homeowner to pay only the lower amount. Or a judge could lower a person's interest rate in order to come up with a new mortgage payment the homeowner could afford.

Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys, said the pending legislation would open the door to Chapter 13 for more than 600,000 homeowners who currently don't qualify.

"This legislation is really needed," Sommer said. "If it doesn't pass, so many more people will lose their homes."

The new rules could affect homeowners everywhere, but particularly those in states such as Florida, Nevada and California, where foreclosure rates are highest.

Home prices in Florida, Sommer said, shot up too high, and many people paid more for homes than they were worth.

The unusual financing that was readily available during the boom allowed many to buy homes they couldn't afford.

"Many were tricked into taking these loans by mortgage brokers who were making so much money on these types of loans," Sommer said. "A lot of these loans should have never been made."

But not everyone thinks the legislation is a good idea.

The Mortgage Bankers Association strongly opposes the bill and says it would end up causing rates for all future borrowers to shoot up.

"Lenders will no longer be able to count on quick recourse to secure a home loan," said Pfotenhauer, senior vice president at the association. "And lenders won't be able to count on the value of a home, because a judge will be able to change it later."

The Parsons came close to going through Chapter 13 bankruptcy once before, and Jane Parsons said she's humiliated that this time she can't work out of debt herself.

"I'm so embarrassed," she said. "I don't want to have to do this, but my lender left me no choice."

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.