|
A loan modification occurs when an individual modifies or changes the terms and regulations of a current loan with the lender or creditor. In most cases, such modifications can be accepted by a lender. Some times, the debtor will have to refinance the loan if the original lender cancels such modifications requests. Loan modification is a retooling of your loan by adjusting the interest rate, the loan’s duration and some other factors. It is done to make the monthly payable amount low so that you can afford the repayment. It is important to know the laws pertaining to this, especially while filing bankruptcy. This article answers some of the most frequently asked questions on issues related to loan modification laws while filing for bankruptcy. Is filing bankruptcy under chapter 13 going to affect an individual’s payment if he / she has already applied for a loan modification?
If the court approves bankruptcy, it is not likely to have an impact on the individual’s payment if he / she has already applied for a loan modification. What should be the next course of action if somebody’s loan modification request gets cancelled?
Generally, individuals are informed about their request being cancelled through letters. The letter would also have reasons for the denial. Then the person needs to find out whether the lender is a party to the Home Affordable Modification Program (HAMP). If so, then the person can request for HAMP modification. This would lead the lender to stop the foreclosure process and come up with a new plan. If at all the lender cancels the HAMP modification request being a party to the program, the person can send a letter to the foreclosing attorney disputing the foreclosure. This might stop the lender from initiating the foreclosure till the dispute is solved. Can an individual request for a loan modification even after filing bankruptcy under chapter 7?
As per the rules, an individual can not apply / request for a modification after filing under chapter 7. The lenders will not agree to such requests as they can not proceed to collect the debt once the bankruptcy case goes into trial. The individual may have to renegotiate the loan modification request with the lender once the bankruptcy is discharged by the court. Can an individual refuse to accept a loan modification after filing bankruptcy under chapter 13?
According to the laws, an individual may accept or reject a modification plan after filing bankruptcy under chapter 13. He / she can continue to repay the loan according to the original plan. But, the lender may take foreclosure action once the bankruptcy is discharged by the court if the individual fails to repay the loan in the given time frame. The process of loan modification can be daunting. Loan modification will only work if you are able to make the payments as per the modified terms. You need to furnish complete budget worksheet listing total monthly income and expenses along with the current value of your home along with a letter of hardship explaining your situation. Therefore, it is important to know what you can afford and show the lender you are willing to make concessions. Not having answers to the various questions regarding the loan modification laws and how they apply in the event of a bankruptcy can make it even more difficult for the individual. Understanding the different rules and their affects can help individuals who are considering it. One should always ask a bankruptcy lawyer to deal with such matters.
Related Articles -
loan modification, loan modification help, loan modification laws, loan modification rules, bankruptcy loan modification, loan modification after bank,
| 
