While Chapter 7 bankruptcy offers a fresh start and eliminates annoying phone calls from creditors, it can also create some complicated situations, particularly for people who still desire to keep their homes. For example, some Florida residents may be looking for loan modifications from their mortgage lenders but may be unable to receive any, particularly if their loan payments are in arrears.
It may be possible to keep a home after filing Chapter 7, but the individual would need to prove that he or she is financially able to continue with his or her current mortgage payments as well as catch up on back payments. It may be possible to file a Chapter 13 after filing a Chapter 7; however, anyone who does so might have to arrange a method by which payments can be made. Those choosing this option may have difficulty affording both the mortgage payments and the Chapter 13 plan.
Lenders tend not to want to work with their debtors if they are still within an active Chapter 13 bankruptcy; therefore, some lenders may be willing to work on an acceptable loan modification plan in order to get an individual out of bankruptcy. If the individual is able to set up workable and acceptable modification terms with his or her lender, he or she may be able to catch up with and continue with regular payments within a reasonable amount of time.
The process of bankruptcy can be confusing and overwhelming. Those struggling with debt and desiring a fresh start may have many questions. Fortunately, there are many resources to help those trying to decide whether bankruptcy could be an appropriate choice. A skilled bankruptcy attorney may be able to help guide interested Florida residents throughout the decision-making and filing process after assessing which form of bankruptcy may be most appropriate for their individual situations.
Source: Fox Business, “Will Bankruptcy Help Mortgage Modification?”, Justin Harelik, June 11, 2013