Can You Get a Loan Modification with a Chapter 7 Bk?

By: Timothy McFarlin | Published: November 5th, 2010 | Category: Bankruptcy, Foreclosure Issues, Loan Modification

As a loan modification attorney and bankruptcy lawyer, many clients ask me: Can you get a loan modification with a chapter 7 bk? A bk chapter 7 (Chapter 7 Bankruptcy), will typically slow down the loan modification process, and often improves a borrowers chances of getting approved for a loan modification.

Chapter 7 Bk and Loan Modification

Frequently, clients who are considering a loan modification also need a chapter 7 bankruptcy. Borrowers struggling with mortgage payments are often struggling with the burden of other debt as well. The same problems which cause clients to fall behind on mortgage payments, often cause them to fall behind with other creditors making matters worse. Additionally,  many clients who come to discuss loan modification have already filed a chapter 7 bk, or are in the process of filing chapter 7.  Loan modification and chapter 7 bk is a very common, and often very beneficial, combination.

Benefits of Chapter 7 Bk on Loan Modification

Chapter 7 Bk provides two significant benefits to the loan modification process: it gives the borrower more time in the property to continue negotiating with their lender (and stops foreclosure), and it eliminates the borrowers debt which enhances their ability to make payments on their loan modification.

More Time to Negotiate the Loan Modification

Chapter 7 Bk immediately stops the foreclosure process, not just in California, but in all states.  The lender may not continue with a scheduled foreclosure sale at the Santa Ana, Orange County auction location or anywhere else, once receiving notice of bankruptcy. Stopping the foreclosure process with chapter 7 bk, gives clients, or their attorney, breathing room to submit additional documents and continue negotiating with their lender. Often more time and patience is all that is needed to secure a loan modification.

Chapter 7 Bk Can Improve Loan Modification Chances

Although most people would think it’s the opposite, a chapter 7 bk often can improve your chances of securing a loan modification because it eliminates unsecured and other debt so after the loan modification is in place, the borrower only has that one debt to pay (the mortgage). Lenders frequently pull borrowers credit reports to see how much other debt they have to evaluate how much of a burden the mortgage will be. If all other debt has been discharged, the borrower’s ability to make future payments on the mortgage is much improved.

California Loan Modification Attorneys

McFarlin LLP handles all aspects of loan modification and Bankruptcy for California borrowers. Our Orange County, Los Angeles, attorneys are available to speak with prospective clients and give you honest advice. With a matter as important as the loan modification on your home or a bankruptcy, it is a very good idea to hire a qualified loan modification and bankruptcy lawyer to represent you and protect your interests. Call us today at (888) 728-0044.

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