We have been able to stop or postpone foreclosure auctions or trustee sales for many of our clients, but many new clients ask us if a loan modification is possible to complete while the homeowner is under bankruptcy protection. It is possible to complete a loan modification during a bankruptcy. Usually, the bank or mortgage company will ask your bankruptcy attorney for an authorization to continue to communicate with the client to process the loan modification. After the authorization is obtained by the bank, the bank can continue to work together with the home owner to continue processing the loan modification. The bankruptcy will not make the loan modification easier to negotiate, but the bankruptcy may be required to stop the sale so that you still have possession of the home. The way the bankruptcy will make it easier is to relieve the home owner of any unsecured debts so that they can focus their funds on the home loan.
Some banks also do not work with home owners until the bankruptcy is over. This is an operational decision that the bank can make. There is no law that says the bank is required to execute a loan modification to resolve the mortgage issue. Banks are not required to renegotiate loans if they don’t want to do so. It is very difficult to predict the behavior of a bank in this type of negotiation because banks change their processes and guideliness all the time.
If you are trying to decide whether you need to file bankruptcy to stop your foreclosure sale and you are hesitant because you don’t want it to affect your loan modification, you need to realize that if your house gets sold in a foreclosure, there is no property left and no home mortgage left to modify. You need to stop the foreclosure sale before you can even think about applying for the loan modification or else you will not even give yourself the opportunity to have a loan modified.
If you are facing a foreclosure sale or trustee sale of your home, contact Bankruptcy Law Professionals to see how we can help you at 855 257-7671.