Can You Get a Loan Modification Through the Bankruptcy Court? - Westgate Law

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Can You Get a Loan Modification Through the Bankruptcy Court?

The process of obtaining a loan modification can seem impossibly difficult. Many individuals who are interested in filing for bankruptcy or have recently filed for bankruptcy have either already attempted to obtain a loan modification or are hoping to get one. It’s one of the methods that consumers can make use of when trying to save their home during and after financial crisis. Since obtaining a loan modification is so difficult for so many, it’s no surprise that a common question is, “Can I get a loan modification through the bankruptcy court?”

When it comes to loan modifications – there isn’t a lot of great news. To apply for a loan modification, you have to be behind in your mortgage payments so it’s not surprising that many assume that it’s somehow connected to their bankruptcy and therefore the bankruptcy court. The truth is the bankruptcy court does not have the power to force your mortgage lender into offering you a loan modification.

A few years ago, in response to the mortgage crisis, there was a push to provide judges with the power to demand that lenders provide loan modifications or even loan principal reductions to coincide with current market value. Both attorneys and judges attempted to convince the state and federal legislatures to empower the bankruptcy court judges in relation to loan modifications and similar options.

You could consider contacting a lawyer to file a lawsuit against your lender if the loan paperwork is potentially faulty or if you feel you might be the victim of a predatory loan. It’s possible that this type of litigation could result in the provision of a loan modification. At the very least, this type of legal action could delay a foreclosure or eviction from the property.

Another option you could consider when attempting to get a loan modification is to hire a lawyer experienced in handling the application process. You don’t necessarily have to use an attorney to successfully manage the loan modification process, but it is a lot of very specific paperwork. You have to accumulate the necessary documents and submit them to the lender – complete and thorough. Hiring a lawyer is not going to change your chances. They don’t have some type of special relationship or inside contact that is going to give you a better chance for success, but the knowledge and experience of a professional could be useful if you aren’t used to handling the extensive amount of documentation and paperwork required for a loan modification application. A missing document could easily result in your loan modification being denied.

If you need assistance applying for a loan modification or if you need to discuss how bankruptcy could affect your loan modification application, contact the southern California bankruptcy lawyers at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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