If you find yourself facing a similar dilemma, know the facts about bankruptcy and loan modification before you make a final decision. The possible solution to your situation will depend greatly on what your future goals are.
Should You File Chapter 7 Or Chapter 13?
Filing Chapter 7 bankruptcy will allow you to discharge your mortgage debt. Discharge means you are free to walk away from your mortgage debt free and clear. You are no longer obligated to pay money to your lender. This also means the lender can now begin the foreclosure process. Your discharge removes your obligation to pay…but it also means you will eventually have to leave your home once the foreclosure is complete.
Chapter 13 on the other hand does not discharge your mortgage debt. However, you get to keep your home provided you continue to make your mortgage payments on time. Also while under Chapter 13 your payments will be lowered.
Can You Get A Loan Modification After Bankruptcy…Is This Possible?
Yes it is possible to get a loan modification after your bankruptcy. In fact you can get a loan modification before and during the bankruptcy process as well. However the outcomes will differ depending on when you do so and whether or not you file under Chapter 7 or Chapter 13.
If you choose to reaffirm your loan which means you agree to pay the same mortgage debt you were already released from via a Chapter 7 bankruptcy, you will need the approval of the bankruptcy court. Most bankruptcy attorneys will advise against reaffirming your loan.
Take as much time as possible to think about your options. The legalities of bankruptcy and loan modification can be overwhelming. For most homeowners, bankruptcy is seen only as a last resort. A “band aid” to temporarily solve the problem, especially if you are facing foreclosure. It is not a permanent solution in most cases, so the money spent may not be worth the results. If you can do anything to avoid filing bankruptcy
Consult with a bankruptcy attorney to understand the details and discuss your best options.
For assistance, you can visit loan modification reviews to learn about top companies or call 888-766-3693 to speak with someone who can help!