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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2822
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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IN CHAPTER 13 BANKRUPTCY, WHEN A JUDGE MODIFIES THE TERMS OF

Resolved Question:

IN CHAPTER 13 BANKRUPTCY, WHEN A JUDGE MODIFIES THE TERMS OF A MORTGAGE ON AN INCOME PROPERTY, IS THE MODIFICATION GOOD FOR THE FULL TERM OF THE LOAN, I.E., UNTIL IT IS REPAID?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
Unfortunately that bill failed in the Senate last week. The only modification would be towards the arrearage on the case, the delinquent amount paid thru the plan. As long as the lender has no objection to the plan modification, then there is no problem, and would last during the case only, until they pass a new mortgage/bankruptcy bill.
Terry L. and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 7 years ago.
I am not referring to mortgages on principal residences, those cannot be modified in chapter 13. But terms on mortgages on vacation homes, rental properties, etc. can be. If you did not know that, please refer my question to another attorney.
Expert:  Terry L. replied 7 years ago.
The answer is still true. The only options I've seen are if you are bringing a motion to strip off an unsecured loan (mortgage, line of credit) it pays that off at the unsecured debt rate of your plan, and ends with the case, since it is discharged. If you give me your case # XXXXX state and district you filed in, I can read the order you are referring to, and might be able to provide you further details, based on your fact patterns in your specific case.
Customer: replied 7 years ago.
I don't have a case yet, I am deciding whether to file chapter 13 to try to get my loan modified by a bankruptcy judge. Your answer confuses me - how can a mortgage be unsecured? I have a first and heloc against a property that earns income as a vacation rental. I understand that debts secured by this type of property (as opposed to primary residences which the "cramdown" bill that failed last week intended to include in chap 13) may be modified. Can I get a lower interest rate on my income property through chap 13?
Expert:  Terry L. replied 7 years ago.
The only power to change the mortgage in a chapter 13, would be if the rental property was worth 100k lets say. First mortgage balance is $110k and say a home equity line is $15k . The plan can propose to strip off the equity line as wholly unsecured, since there is no equity to attach to. Then that can be paid at your chapter 13 plan unsecured rate (normally from 10% to 100% depending on the income and assets in your case). I've never seen a court order the payment amount changed. The only thing I've seen is the court putting the arrears into the ch13 consolidation. Debtor's are still required to make the contractual monthly payments (whether paying directly, or paid as part of the chapter 13 monthly payment).
Terry L. and 3 other Bankruptcy Law Specialists are ready to help you