Modifying Your Mortgage While in Chapter 13 Bankruptcy

A question that comes up with some of our clients is whether the client can modify his or her mortgage while they are in Chapter 13 bankruptcy.  The answer is yes.

After you file for a Chapter 13 bankruptcy, the automatic stay goes into effect.  One result of the automatic stay is that your mortgage lender will not be able to pursue collection activities, including foreclosure, against you while your bankruptcy case is active.  Generally, you will pay the payments that you missed before filing bankruptcy through your bankruptcy plan, and will continue to make your current mortgage payment as normal straight to the lender after you file.

You can work directly with your mortgage lender while you are in bankruptcy to try to work out a modification of your mortgage.  A mortgage modification can lower the interest rate and the payment that you pay to your lender every month, and can be a great help while you are struggling financially.  Getting a mortgage modification can be a long process, and the mortgage lender does not always approve the modification.  If you do work out a mortgage modification while in bankruptcy, immediately contact your attorney.  Your modification must be approved by the bankruptcy court before it can take effect.  Your attorney will file a motion with the bankruptcy court in order to get the modification approved.  Getting court approval for your modification is generally a pretty quick process, so let your attorney know as soon as you can so we can get the process started.  It is important to remember that you need to keep current with both your mortgage payment and your payment to the Trustee during this process.  If you get behind on your Trustee payments your case may get dismissed.

If you have questions regarding bankruptcy and your mortgage, contact one of our offices and set up a free consultation with an attorney.

 

Related Information

• Using Bankruptcy to Stop Foreclosure
• Beware of Companies Offering Free Mortgage Modifications
• Loan Forbearance or Modification While in Foreclosure