Loan Modification

If you are trying to avoid foreclosure on your California home, loan modifications may be one way for you to get your mortgage payments under control. If you have run into a temporary hardship, or if you qualify for some of the mortgage relief programs, you may be able to work with your lender directly in order to get a loan modification for your mortgage. Generally speaking, loan modifications can encompass any of the following:

·          A reduction in interest rate

·          A reduction in the monthly payments

·          A reduction to the principal balance (uncommon)

·          Renegotiation of payment due dates

·          Adjustment for past due payments (moving payments to the end of the loan)

·          Temporary forbearance

·          Payment forgiveness for one or more missed payments (uncommon)

Even if you cannot work with your mortgage lender directly, you may still be able to get loan modifications on other loans if you file for Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, the bankruptcy judge has the option to modify the terms on many types of loans, including second and third mortgages. If your home's value has diminished, you may even be able to get the second and/or third mortgage stripped from the property, freeing you of that financial obligation. Additionally, if you own a car, you may be able to get the payments reduced, or the amount left on the loan itself reduced to reflect the current value of the vehicle. This is very useful when you are "upside down" on a purchase and owe more than the car is worth.

Regardless of the method you use when attempting a loan modification, you must be certain that the modified terms will work for you in the months and years ahead. Because loan modifications can cost creditors a significant amount of money, they are often reluctant to modify their terms. While the bankruptcy judge can modify the terms at will, this is usually a one-time process. So be certain that once the modifications are complete, you will have ample income to pay these revised obligations.

Loan modifications aren't for everyone. If you don't have a steady source of income, it may be difficult to get any type of loan modified. Likewise, if you fall behind on the payments after the modifications have been made, you may run the risk of repossession or other types of collection activity. If you are thinking of applying for a loan modification for your home, or if you are thinking of requesting a loan modification as a part of your potential Chapter 13 bankruptcy filing, talk to us. Our Orange County Bankruptcy Law Firm has handled cases throughout the  State of California, and we understand how best to approach loan modifications in differing circumstances. Contact us today and arrange for your free, no-risk initial case evaluation. The sooner you contact us, the more we may be able to help, so don't delay.