Many potential bankruptcy debtors’ question whether or not filing bankruptcy is the right option for them because they wish to save their property and modify their loan.  If you have been faced with this question, the answer is yes, you may still modify your loan even after you have filed bankruptcy. When filing bankruptcy a debtor has the option of reaffirming the debt or surrendering the property. Many times, even though you chose to surrender the property, you may still attempt to enter into a loan modification
agreement with your mortgage lender. A borrower and a lender can enter into a post-Bankruptcy Loan Modification Agreement, which would be the best option for a borrower/debtor who is interested in saving their property. The borrower would need to execute a Loan Modification Agreement along with a reaffirmation agreement which would make the borrower once again, liable for the debt. However, if you find that the lender will not modify you, even though you have attempted to do so, you will still not be liable for the debt owed, as it has been discharged in the bankruptcy filing.

If in fact you are in the middle of the loan modification process, for example in a trial payment period, you may wish to file after you have entered into the loan modification agreement, as the lender may require that you restart the loan modification process. Many Clients’ have worked for a long time to obtain a loan modification, and filing a chapter 7 bankruptcy may affect your ability to finalize the process.  The automatic stay you receive from a bankruptcy will make the lender stop the negotiation process until they have authorization to move forward with the process.

Ray Garcia, Esq.

Board Certified in Real Estate Law

By the Florida Bar

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Law Office of Ray Garcia, P.A.

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