How will bankruptcy affect my loan modification?
If you are currently in a loan modification, it would not be affected by your bankruptcy proceeding. If you are behind on your mortgage payments, its best to have a plan of action when your case is filed, with the direction you want to take.
One option is to try work something out directly with the lender to see if they will allow you time to get your payments caught up, modify the loan, defer payment temporarily, or put what you owe on the back end of the loan. I will usually caution people to set a deadline because with each passing month of you not paying your mortgage, the amount of late fees, potentially attorney’s fees, and arrears continues to grow.
Unfortunately, the lenders do not always timely respond and if you want too long for a result then you might find yourself unable to keep your home. If the lender isn’t working with you, some other options would be to sell the home if it has equity or surrender the home if it has no equity. With inflation being so high currently, most people living in the Tampa area do have equity in their homes.
If you want to stay in your house, a Chapter 13 will afford you two options. You can pay back the arrears over a 60-month period. This is helpful because instead of coming up with say $15,000 within 3 months, you would have 60 months to get the payment current and spread it over a longer period of time. You also have a guarantee that the lender cannot foreclose on you while you are in an active bankruptcy. Another option would be to attempt a loan modification in a Chapter 13 case.
It is often more helpful to do so within the jurisdiction of the bankruptcy court because the lenders have time deadlines to respond so it ensures a result. We would need to look at your debt to income ratio and if you have done a loan modification the past to determine if you are a good candidate.
