Modification of Mortgage in Chapter 13 Bankruptcy
There are many mortgage borrowers struggling to make their monthly loan payments and falling behind in their payments. The Tampa Division of the Florida Middle District Bankruptcy Court has devised a mortgage bailout program formally named a mortgage modification mediation program under Chapter 13 bankruptcy. This program is intended to help borrowers to obtain a modification of their mortgage or home loan under Chapter 13 bankruptcy. So if you are behind in your mortgage and/or finding it difficult to make the monthly payment, you should consult with an experienced bankruptcy attorney as this may be beneficial to you.If so, the Chapter 13 Plan, which is either 36 or 60 months depending on the borrowers income as determined in the bankruptcy, includes a request to modify the monthly mortgage payment of a mortgage on real property owned by the borrowers. The borrowers will have to make a payment equal to 31% of their gross income each month as adequate protection payments to the mortgagee, which will include property taxes and property insurance. Therefore, if 31% of your gross income is more than your mortgage payment including taxes and insurance, then a modification would not be beneficial to you. That is unless
you are behind on your loan payment which will be cured in a modification and your total payment will be 31% of your gross income. Even if a modification would not be beneficial to you, if you are behind in your payments then a Chapter 13 bankruptcy will help you to catch up with your payments by the end of the plan period and to help you save your home and avoid foreclosure.A mediation must be scheduled with the lender within 6 months of filing the bankruptcy petition, as the automatic stay which protects a borrower from foreclosure is automatically terminated at the end of six month period. A neutral “mediator” attempts to negotiate an agreement between the parties. If an agreement can be reached, then the mediator will prepare the modification agreement.
Contact our office for more information on this procedure and we will be happy to discuss your options with you. Furthermore, if you decide that a mortgage modification through a Chapter 13 bankruptcy is to your benefit, we can provide an attorney to attend the mediation with you to make sure your interests are properly represented, as the lender will have its attorney(s) at the mediation.
August 29, 2012