In some situations, a mortgage lender will get in touch with a homeowner years after they filed for Chapter 13 bankruptcy suggesting that they “work a deal.” Is it possible to work a deal with your mortgage lender post-bankruptcy?
The quick answer is yes! It sounds like an appropriate time to apply for a loan modification. Since your Chapter 13 filing, it sounds as though you have shown a history of on-time payments, which would help your case. Mortgage lenders DO prefer to work with homeowners outside of bankruptcy, so it could prove very worthwhile for you to attempt to get a loan modification approved at this point.
1st Step: Contact Your Lender
If you are currently working with a bankruptcy attorney, get in touch with your attorney for consent to talk directly to the lender. Give the attorney the name of the lender, the account number, contact name if you have one, fax number, etc. Your attorney should be able to accommodate you by sending over an authorization letter.
2nd Step: Complete the Loan Modification Paperwork
This is the time consuming part of applying for a loan modification. Paperwork will need to be sent in to the lender a number of times before the process is completed. If possible, attempt to work with one, single person at the lending institution. This will make the process a lot less complicated and more streamlined. Always call to confirm that documents you sent were received as expected, request info on any missing documents and then send those (or resend them) as soon as possible.
3rd Step: Court Approval
Once the loan modification application process is complete, the lender may require court approval. Some judges refuse to sign the requests for loan modification – because a loan modification does not actually require approval from the bankruptcy court. Lenders simply don’t want to violate any bankruptcy laws so they request approval even though it’s not technically required.
4th Step: Chapter 13 Case Review
After the modification is finalized and you’ve received the court’s approval, you could have the opportunity to dismiss your Chapter 13 bankruptcy and convert to a Chapter 7 bankruptcy. Don’t skip this review process, you may have options that you haven’t considered that would be beneficial.
Good luck with your loan modification process! If you have other questions relating to filing for bankruptcy or recovering post-bankruptcy, get in touch with southern California’s Westgate Law.