4 Ways how Bankruptcy can help you modify your Mortgage Loan

I was recently in Bankruptcy Court in Pittsburgh on a Chapter 13 case. It was a difficult case, in which the client was over $20,000 behind on his primary mortgage. My client could afford to make his regular mortgage payment, but to pay that in addition to such a high percentage of arrears was too difficult for him.

He really needed a loan modification from his mortgage company, but they weren’t cooperating. I knew that the Bankruptcy Judge couldn’t force the mortgage company to modify the loan, but lo and behold, in the middle of our hearing, I caught the mortgage company’s lawyer in a whopper of a lie. Mind you, I don’t think that the lawyer lied, but he was merely misinformed by his client. He had been told that my client had NEVER contacted them to speak about a mortgage modification.

At that point, I merely pointed out to the Judge that my client had been keeping a log of all of his phone and fax communications with the mortgage company and he was averaging 2 to 3 phone calls per week over the past 3 months. (Hint: if you’re not calling your mortgage company that often, you probably won’t get anybody’s attention for a modification!).

What happened next was a nice victory. The Judge got mad at the mortgage lawyer and told him that an actual representative of the mortgage company, a-hem, Chase, had to appear at the next person, and never mind if he had to fly in from California.

So here are four ways that the supervision of a Bankruptcy Judge can help in getting your loan modified:

1) the Judge can order the mortgage company to provide records and to actually communicate with your client;

2) your lawyer can communicate with the mortgage company’s lawyer and help you in getting necessary information;

3) the Judge can approve the final loan modification pursuant to a court order, and

4) being in a Chapter 13 case forces you to make regular payments to the Trustee. This prevents you from falling even further behind on your mortgage loan. This helps you in a long run!

So, what happened in my case? Well, we’re still fighting with the mortgage company, trying to get a loan modification. Loan mods do happen, either through HAMP or traditional means, but they’re tough to get! Good luck to you if you’re trying! Keep up the fight.

One Comment on “4 Ways how Bankruptcy can help you modify your Mortgage Loan”

  1. Nice article, thanks for posting this. This will help a lot people getting out of the financial situation, at least some ways to turn things arround.  
    Nice blog though!

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