Can you get a loan modification while you are in an open bankruptcy case?

  • Definitely yes.  Bankruptcy is often just a bandaid you put over the foreclosure sale until you get a loan mod approved.  

  • Today I was in Judge Thurman’s court on a Motion to Approve Loan Modification and Motion to Modify Chapter 13 Plan.  The debtors had finally obtained a loan mod.  This took about a year of phone calls, re-sending faxes, and constant quasi-harrassment of the mortgage company by the debtors until it was approved.

  • The loan mod took approximately $25,000 in mortgage arrears and put them at the end of the mortgage.  The debtors didn’t have to make additional payments to catch up on the $25k, and now they didn’t have to pay that $25k back as a part of their chapter 13 plan.  This meant that I could drop their chapter 13 plan payment from $791 a month to $150 a month, which was a welcome change to their budget.

    We had originally filed their chapter 13 plan because there was a pending foreclosure, and they needed to stop that foreclosure sale and propose a way to catch up on those missed payments.  In the bankruptcy, our 5 year plan provided for $25,000 of catch up payments to the mortgage company in addition to making regular mortgage payments.  It was a tough plan, but they stuck with it for over a year until the loan mod came through.

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