The bankruptcy court system does not have any programs that would force a lender to modify a loan. They do not have the jurisdiction to do so. That being said, if you are behind on payments, then a Chapter 13 can be used to address the real estate arrears and help you stay in the home.
No lender I am aware of will discuss a loan modification until your Chapter 7 is completed. In fact, the automatic stay prohibits the lender from even contacting you until your case has been discharged or there has been a lift stay order. May have been a big mistake to go Chapter 7 if you are in arrears on your mortgage and wish to keep it. So why was this tagged as a Chapter 13 question? Hope this perspective helps!
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You can pursue modification during Chapter 7 provided proper consent is provided so as to protect the creditor from allegations of violations of the automatic stay under the HAMP guidelines. HAMP is expired but a lender may still be willing to review your application. Under HAMP, lenders could use your BK budget as a basis to make a decision; be aware that your representations regarding income and expenses should be consistent throughout. That said, there is no right to receive a modification and lenders will decide based on their own best financial interest...not yours. If the mod is denied, Chapter 13 may be an option.
Hire a lawyer to review the possibilities and discuss your options..
No, there are no bankruptcy court programs during chapter 7 cases for home loan modification.
You can ALWAYS request "loss mitigation" or modifications from your secured lender, before, during or after a chapter 7 bankruptcy case has been filed. Also, after your chapter 7 has completed, if you need help with your curing arrears (past due amounts) owed on the home, filing chapter 13 may also be an option.
Best of luck
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There is a Loan Modification Pilot Program that just started a few months ago in the Central Division. Based on your location, I assume you filed your case is Los Angeles so this would apply to you. However, only the following Judges are participating in the program. (Judge Bason and Judge Brand). Therefore, if your Chapter 7 case is assigned to one of these Judges you could speak to your attorney about this pilot program. You can pursue the matter without counsel but of course, it is recommended that you seek counsel. Also, the program is best suited for Chapter 13 and Chapter 11 cases, however, I have not heard of any restrictions to attempt the program while in a Chapter 7 case.
I have included a link below from the court website with more information about the program and also a list of Judges that are participation in the program.
If the loan modification is not an option, you could consider filing a Chapter 13 case after your Chapter 7 case is discharged. The Chapter 13 case would allow you to cure the mortgage arrears and keep your home, assuming you can afford to repay the arrears over a 60-month plan.
If your attorney is unfamiliar with this Pilot Program and/or Chapter 13 cases, it is recommended that you seek the assistance of another attorney that is.
Please note: I am a licensed attorney in California. This response is intended only as general commentary. This response is not legal advice and does not create an attorney client relationship. You are not my client and I am not your attorney. Law Offices of Anthony B. Vigil, APC | 949-432-4808 | [email protected]
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