Loan modfication in chapter 13

[bridget]

So, I've had some unexpected expenses come up with my car and home. This resulted in a late mortgage payment. The mortgage company sent me a packet for a loan modification. I figured, why not fill it out and see what happens. Quite honestly, Bankruptcy has been a challenge, but my husband and I have faired pretty well. We have secure, decent paying jobs and I have picked up an extra part time job to help. All trustee payments and most mortgage payments have been made on time. Our credit score has slowly improved. Just wondering if mortgage companies consider bankruptcy as a "hardship" reason to grant a modification. In our hardship letter, I stated that we managing mortgage, trustee, IRS and home/care repairs have been a struggle. Our reason for bk is honestly, being stupid and racking up too much debt from loans and cc. We have 18 months until discharge. I inquired about a refi, but we have a 2nd mortgage that will be lien stripped once we meet discharge. Very grateful for this forum, which has helped me navigate through this process.

[switch625]

We applied for a modification during our 13 and got approved. We completed trial payments several months ago and still waiting for the letter to sign and file the loan mod motion in court. Just prepare for a very long and paperwork driven process. The irony is that we applied for a mod with our lender before we filed BK and were denied. That was one factor that compelled us the file for BK.

[spidge]

I had a job related hardship and was granted a stellar modification in our last year of ch13. I was a bit surprised as to the new payment on ours. Hopefully you will be too.

[159515951]

You should chat with your attorney and make sure this doesn't require Trustee approval, as you're technically applying for credit and incurring debt (even though you already have the debt).

[switch625]

You should chat with your attorney and make sure this doesn't require Trustee approval, as you're technically applying for credit and incurring debt (even though you already have the debt).

To my understanding, the mortgage loan modification usually involves BK Court approval, so the Trustee will be notified of the loan mod motion and be in a position to object/not object to it. Since the mod involves extending the length of the mortgage and/or lowering the interest rate and/or reducing the principal owed, you are not incurring new debt. If there is a past due balance on your mortgage, pre-petition or post-petition, that may be folded into the modified loan.

From what I've seen (I've researched this on PACER) the Trustee does not usually object to the mortgage loan modification unless the money that is now considered to be additional disposable income as a result of the reduced mortgage payment is not committed to the unsecured creditors by the amended Chapter 13 Plan. That is usually fixed by another amended 13 plan with a higher plan payment and more $$ to the unsecureds.

[wobbly]

Unemployment, illness, took my wife mom in with cancer, predatory lending, and we where still denied. We were current though. I imagine if we missed payments they would have done it considering that our loans where way more than the house was worth.

[bridget]

Thanks everyone, my attorney let me know that he got trustee approval for a loan mod as soon as we filed, which was over three years ago. Just not sure if the mortgage company would consider BK itself as a hardship. There's been no job loss, divorce, illness or death (Thank God!). If anything, our income has increased since filing. (We are doing a complete pay back). Based on our income, we are not eligible for HAMP. Just hoping they will show us some mercy! Keeping my fingers crossed. Thanks again for all the support this forum has to offer.

[leonel9]

I received a HAMP modification from Wells Fargo in 2010, and it took 11 months to complete for the sole reason that Wells Fargo was dragging it out. I hope your modification request is processed faster.

Regarding what an acceptable hardship is can vary. You typically have to produce a budget along with your modification request. Have any of your expenses increased since your CH13 plan was approved? Is there anything you may have underestimated?

[bridget]

Denied! NationStar said we were not in eminent danger of losing our home and we had none of the big Ds. Divorce, Death or Disaster. SMH.... Thanks for sending the packet. Jerks.