Bankruptcy and Loan Modification?

[MikeAng]

My husband and I bought our home in May 2005. This is our first home and we were so nieve regarding the ARM that we signed on for. After a little more than a year of owning our "American Dream" we fell into some serious debt with credit cards, etc. Our ARM increased and we found ourselves unable to catch up. We struggled, begged the mortgage companies(we have an 80/20) but there was no help. At that time no one offered any loan modification. As a last resort we filed Chapter 13 bankruptcy. Now a year after filing we are behind again. Our chapter 13 payment is $500 a month and since we filed our mortgage has adjusted 3 times increasing our payment an add'l $400 a month. It will increase again in June and we are just drowning. Our mortgage company, Carrington Mortgage isn't very helpful and we don't know where to turn. Can we be considered for a loan modification or are we destined to lose our home?

Maxed out in Maine!!!!

Welcome and thank you for joining the forum....

I am not an attorney, however I do know that the BK rules and regs as they were changed recently in 2005 or 06 caused the BK courts in Chpt 13 to be unable to modify the loan in the body of the BK. The lender/servicers can not modify while you are in BK Chapter 13 as they court only has control over your financial affairs. Now I came up with a novel idea....but you need to go to your BK attorney for this, not us, we are not attorneys. You could ask your attorney to petition the court in the middle of the plan to give you permission to modify..thereby allowing the Lender/Servicer to have the court's permission to do so...will it work...who knows, I am at a loss on these situations as is everyone. When they changed the rules the old ones went out and now when you enter a Chapter 13 you are generally stuck with the mortgage as it was when you went into the Chapter 13. The courts can not control the issues, they are not allowed to any more on primary residences and the Lenders can not change your financial picture as the courts control those issues in the Chapter 13...Catch 22.

So, I am not a BK attorney, you need to get a hold of your BK attorney and find out if he/she has any tricks up their sleeve...so far we have not seen any that have been effective for the borrower in this situation sorry to say.

Believe me there was a bill in front of President Bush that he says he is vetoing that would have changed this problem....he refuses to approve it...we are not happy with that. It would have solved that problem, now as far as I know we are back to square one with that situation. So, please contact your BK attorney on Monday and see if they have some nifty ideas for you.