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26

Apr 2010

If I file bankruptcy, can I still get a mortgage modification?

Posted by / in Weekly Posts / 2 comments

Important new regulations issued by the Obama administration say two very important things for people struggling with their debts and trying to save their homes.

First, filing bankruptcy does not affect your eligibility to apply for a mortgage loan mod.

Second, if you are in a trial modification, bankruptcy does not push you out of the trial and back to the end of the line.

Both of those are very good news.

Since the beginning of the crisis, I’ve told people to try to get their mortgage loan modification before we filed the bankruptcy.   For some people, that’s been a really long time.  (Last week we celebrated that a lady I’ve be working with since the middle of 2008 finally got a mod approved.)

Stalling the other creditors until the modification has been approved hasn’t always been easy.  Sometimes it hasn’t been possible.  So I’m glad we don’t have to do it any more.

I can also tell you that people who filed bankruptcy to fix their credit card problems back in 2008 are now telling me they are getting approved for modifications.  And I have a couple people who filed bankruptcy and moved out at the end of 2009 ask me why Bank of America sending them modification applications at their new address.   (They’d rather get some payment then foreclose.)

So how does it add up?  If you need a loan modification to save your house,  but also need protection from your credit cards or medical bills, it’s safe to file bankruptcy and still apply for the modification.

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Robert Weed has helped twelve thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

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2 comments
  • Michael

    April 26, 2010, pm30 1:51 PM
    01

    The interesting thing is that some banks will try to deceive homeowners who are in bankruptcy and claim that they can not negotiate because the automatic stay is in place. The truth of the matter is that in many states, such as Massachusetts there are standing orders that speak directly to this issue and do not require a motion to lift the stay to workout a mortgage.

  • Robert Weed

    August 8, 2011, pm31 4:08 PM
    02

    Here’s the link to the current regulations. https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahandbook_32.pdf

    Page 47 says they cannot ask you to waive a legal right. Page 48 says expressly you are eligible even if you have a discharge in bankruptcy.

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