How to Get a Loan Modification with Filing for Bankruptcy
Many people believe that filing for bankruptcy will automatically stop a foreclosure; but this is wrong, as it is only delaying it. There is only a single mean to stop the foreclosure and this is the paying off the loan. This paying off can be done by either selling the house or getting a loan modification.
So, the first thing that home owners do is to hire a bankruptcy lawyer in order to file for bankruptcy and as such to save their home from being dragged into a foreclosure procedure.
As you must have probably guessed, these lawyers will simply adopt this case as a bankruptcy fitted one without even trying to explain the home owners what other options they have. There are however cases that can not be saved from bankruptcy, as well, but not all the cases are the same. Therefore as a client who runs to the lawyer for filing bankruptcy you could be advised first to resort to a loan modification before considering the bankruptcy.
Thus when you as a home owner file for bankruptcy, you should know that this one limits you to some specific loan modification programs, and when you face a foreclosure you would definitely need as many options that are there possible for your situation, considering that a size do not fit all the measures.
You should find out that these loan modification programs have started to be available very recently as solutions for the home owners who have filed for bankruptcy. This option is considered the last one, and as such home owners should see it a s their last resort.
The latest reforms made on bankruptcy situations have determined these files to get a more difficult facility to fit under Chapter 7 Bankruptcy - which would have wiped out the client's debts. Therefore more and more home owners are forced into the Chapter 13 Bankruptcy position which means that they are introduced to a repayment plan.
According to the last surveys, it is stated that home owners around 66 - 75% that are filed under Chapter 13 Bankruptcy are not able to follow the plan, and as such they end up into the foreclosure not being protected anymore by the bankruptcy status and as such their credit report will have a black mark on it. The foreclosure will still be valid until the home owner will be forced to give up and just walk away.
Some bankruptcy lawyers would advise to go directly for the Chapter 13 Bankruptcy because it is a process that takes more time and they will be paid along the way, then to advise filing for Chapter 7 when there is a short process and it is a one payment case.