Bankruptcy

Can Bankruptcy Help a Mortgage Modification Gone Bad?

By Susanne Robicsek, North Carolina Bankruptcy Attorn

Sigh.  I hate loan modifications.  I just got off the phone with a potential bankruptcy client.  This call was from yet another borrower who has been working on a loan modification for months, but now is looking for a attorney to file an emergency Chapter 13 to try to save her house.  In this case, the borrower was told she was approved for a loan modification but then the lender lost the paperwork.  Since lenders usually proceed with filing for foreclosure at the same time they are supposedly working with the homeowner, they sold her house at foreclosure!

Now this poor woman is trying to find a lawyer who can file an emergency Chapter 13 to stop the foreclosure and allow her to either catch up her payments or finish the modification that she had been promised.  And she is trying to find a lawyer the day before a holiday weekend, making it that much harder to get help in the few days she might have to save her home.

I assume that there may be some loans that are being modified, but in my world all I see are people who were told to stop paying their mortgage or to pay a lower trial amount while they were in the modification process, only to find out that they are not going to get any help and they owe months and months of back mortgage payments or they will lose their home.

Another couple came to see me that I was able to help, but delaying seeing me cost them thousands of dollars.   You see, they were seeking a modification because the husband had lost his job and they couldn’t pay their mortgage and their credit cards too.  So the mortgage company told them to make a reduced payment while seeking modification, and naturally the couple used the “saved” money to make payments on their credit cards.  After many months of working with the mortgage company their modification was denied, and they were told they had to make up the difference between what their regular payment amount and what they had been told to pay … over $15,000.00! 

This couple has no way to come up with that much money so their best option appears to be filing a Chapter 13  and catching up the missed payments over time.  They had spent money that should have gone to their mortgage on minimum payments on their credit cards (so they barely touched the debt balances) and they are filing for bankruptcy anyway.    Had they come to see me in the beginning, I would have shown them how they could afford to pay the mortgage because they were eligible to reorganize the credit cards in bankruptcy, and they would have been 9 months into repayment rather than being $15,000.00 further in the hole.   Not to mention saving them many sleepless nights worried about the unanswered modification.

See also:

Does Working On A Mortgage Modification Stop Foreclosure? by Susanne Robicsek, North Carolina Bankruptcy Attorney

Consider Non Bankruptcy Alternatives For Debts by Susanne Robicsek, North Carolina Bankruptcy Attorney

Mortgage Mod Band-Aid on Gaping Wound, Need Bankruptcy Mod by Jill Michaux, Bankruptcy Kansas Attorney

Foreclosure, HAMP & Chapter 13 Bankruptcy by Kevin Gipson, New Orleans Bankruptcy Attorney

Debt Settlement Companies Come Under Increasing Scrutiny from Regulators by Jonathan Ginsberg, Atlanta Bankruptcy Attorney

Considering Debt Settlement? Perhaps Bankruptcy Is Cheaper And More Efficient by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney

No Modification For You!  by Carmen Dellutri, Southwest Florida Bankruptcy Attorney

Can Bankruptcy Help Save Your Home From Foreclosure? by Susanne Robicsek, North Carolina Bankruptcy Attorney

Are ?Debt Management? Programs a Scam? by Brett Weiss, Maryland Bankruptcy Attorney

Many People Keep Their Homes When They File For Bankruptcy by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

Full post as published by Bankruptcy Law Network on September 02, 2010 (boomark / email).