Overview of Loan Modification Law
A San Jose bankruptcy attorney provides an Overview of Loan Modification Law
A loan modification is a new agreement between the lender and borrower with respect to the monthly mortgage payments. Generally a loan modification will either decrease the monthly payments, forgive any missed monthly payments, or provide some other form of relief to an otherwise struggling homeowner. Loan modifications help prevent foreclosure by allowing the borrower a second chance at remaining current with the monthly payments.
Most homeowners who file for bankruptcy often wonder whether they can also apply for a loan modification. Loan modification law does not specifically bar the application from being processed because of a bankruptcy. This is especially important in a chapter 13 proceeding because often the borrower filed chapter 13 to prevent a foreclosure and catch up on past due payments. If the lenders application is process and accepted by the bank, there generally are no more arrears to pay through the chapter 13 plan and the homeowner does not have to worry about that aspect of the chapter 13 plan.
Applying for a home loan modification can also help alleviate financial strain placed on a lender if the monthly payments are too high. Having a loan modification approved in chapter 7 bankruptcy can benefit the homeowner in the sense that not only will they not be obligated to repay any unsecured debt, but the monthly mortgage payments can also be reduced, freeing up some additional money to be applied to necessary expenses.
Loan modifications, while difficult to obtain final approval on from your lender, can greatly help ease financial struggles facing many home owners. Even if you loan modification application is denied, it is helpful to keep applying, as the lender may approve the application the second or third time around.
If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys. After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs. Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.
