Article written by bankruptcy Greenville attorney Daniel Stone
Have you ever applied for a loan modification only to give up after countless letters from your lender asking for the same document that you had sent multiple times? If this sounds familiar and you are experiencing mortgage problems, you may want to consider Chapter 13 bankruptcy. Why bankruptcy to help obtain a loan modification? In some areas of South Carolina, individual filers for Chapter 13 bankruptcy can also seek an expedited loan modification through a computer portal (officially called the Default Mitigation Management Portal) that most major mortgage lenders participate in. In addition, if approved by the Bankruptcy Court, you have a extra layer of protection while your loan modification is being processed on the portal. The joint Chapter 13 bankruptcy/loan modification filings first started in bankruptcy courts in Florida. Florida bankruptcy attorneys are reporting a success as high as 70-80% for loan modifications processed through the portal.
What are the benefits to filing through the portal? First, if you are filing through the portal, you are most likely in an active Chapter 13 and you have obtained a court Order from a bankruptcy judge that allows certain protections while your loan modification is being processed. It also sets up mandatory deadlines for the modification to be executed. Finally, it ends the “he said/she said” game that thousands of Americans have experienced when applying for loan modifications because the lender either loses the documents or offer some other excuse for denying you modification.
Let me be clear – if you do not have to file for bankruptcy protection, I am not advocating you file solely to obtain a loan modification. However, if you are falling behind on your mortgage, have unpaid credit card/medical/tax debts, or other debt issues, you may want to look into the joint Chapter 13 bankruptcy/loan modification portal. If it works, most loan modifications will bring your mortgage current, lower your interest rate, and most likely your monthly payment. Combined with your Chapter 13 bankruptcy that can resolve your credit card bills, medical debts, and tax problems, this could possibly be a plan that provides a permanent answer to your debt issues.
Some final notes on the combined loan modification/Chapter 13 bankruptcy. Currently, not all of the South Carolina bankruptcy judges are granting Orders allowing loan modifications to be processed through the portal. In addition,only a handful of bankruptcy attorneys in South Carolina have training or are willing to do the extra work. If you are interested in learning more about this exciting new program, please feel free to call or email me to set up a free consultation.