More and more, lenders are willing to negotiate with homeowners in order to minimize their losses. When your loan modification is protected by Chapter 13 bankruptcy, temporary payment terms can become sustainable debt relief.
When Chapter 13 is a viable option, we may be able to lock in a lower monthly payment while working to strip other portions off your mortgage debt.
Types of Loan Modification
Loan modification is voluntary on the part of the lender. During the negotiation, you may encounter two types:
- Trial modification: A trial run for a new payment schedule. Generally lasting two or three months, the trial period commonly features terms beneficial to the homeowner.
- Permanent modification: The payment schedule has been restructured until the debt is paid or other circumstances interrupt monthly payments.
Chapter 13 and Permanent Loan Modification
Chapter 13 bankruptcy can often be paired with your loan modification. After the trial modification terms have been agreed upon, we can help you file. If the loan modification is built into your bankruptcy filing, the lender may be forced to accept the new mortgage payments as part of your three to five year payment plan. Foreclosure eliminates the opportunity to negotiate for any loan modification.