Loan Modification during Chapter 13

[Rubitout]

Is it possible to start or continue a Loan Modification during a Chapter 13 Bankruptcy? If so, do we need to file a petition with the bankruptcy court to ask them for permission, or is permission of the debtor's attorney enough? Does the Bankruptcy Court have the power to order the lender to do a loan modification?

[lrprn]

Is it possible to start or continue a Loan Modification during a Chapter 13 Bankruptcy?

Yes.

If so, do we need to file a petition with the bankruptcy court to ask them for permission, or is permission of the debtor's attorney enough?

You must have your trustee's prior permission to pursue a mortgage modification. Your lawyer approaches the trustee to request it.

Does the Bankruptcy Court have the power to order the lender to do a loan modification?

No.

And here's one more thing to consider...let's say you get your trustee's permission and then go after the loan modification and get it. By reducing your mortgage payment you've likely just increased your disposable income. You could save the money on your monthly mortgage payment only to only have your trustee ask the court to amend your plan to take what you saved and give it to your creditors.

You need to sit down with your lawyer and work this through very carefully. Unless you are in a 100% payback 13 plan now, you could jump out of the frying pan right into the fire in this situation.

[Rubitout]

Thank you. A most useful answer.