When bankruptcy is the only option available, many consumers fear losing their homes as well. If you need to do a mortgage modification after filing for bankruptcy, there are a few things you should know.
Use your Bankruptcy Schedule
Under the HAMP ( Home Affordable Mortgage Program) you may still be eligible for a loan modification of your mortgage. There is actually a minor advantage to this. Instead of filling out the additional lengthy application that goes along with the HAMP, in most cases, you are able to use your bankruptcy schedule in lieu of. This will get the process started and completed faster. You may also be able to take advantage of mediation programs.
The Bankruptcy Effect
If you have attempted to do a mortgage modification in the past, but were turned down due to excessive debt, home equity loans, or other financial burdens, the bankruptcy could potentially help make the approval of a modification possible. Once the bankruptcy has been decided and you are no longer heavily indebted, the bank may be willing to provide you with the modification you need.
Already In A Trial Modification
You may have attempted to save your home by doing a modification prior to filing for bankruptcy, but have now found yourself going through the process while in the trial period. Should this be the case in your situation; your mortgage company or bank must attempt to help you with securing approval from the court in order to have the modification approved. You may even be allowed an extension on the trial modification. This extension is provided in order to ensure the court has time to review and approve you maintaining ownership of your home.
Most consumers believe if they are in a Chapter 7 bankruptcy, they will automatically lose their homes. This is not correct. Regardless of whether or not you reaffirmed your mortgage, the bank or lender must still give you the opportunity do a mortgage modification. The best part about not reaffirming for you is that if you should lose the house after the modification, the lender cannot come after you for the deficiency balance.
Although bankruptcy may be a difficult process for you to go through, in the end, it could be just what you need to stay in the home you love.