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So, if you're dealing with one of the mortgage servicers below, after your bankruptcy is filed you can call the corresponding phone number to try to get something worked out:
Bank of America(NNN) NNN-NNNN/p>
Wells Fargo(NNN) NNN-NNNN/p>
See also http://nationalmortgagesettlement.com/
Believe it or not, this does seem to be working. GMAC contacted me a few weeks ago (THEY contacted ME) and asked to reduce a Chapter 13 client's second mortgage balance from $94,000 to $67,000 principal and reduce the interest rate from 9.X% to 3.X% in a NON-strippable situation. I said "Uh... where do we sign?" We signed the "Non-HAMP Mortgage Modification" form they faxed me, and I filed a Motion to XXXXX with the court, seeking court approval of the agreement (which we got).
However, a drawback of filing the bankruptcy before modifying the mortgage is that your Chapter 13 Plan payment amount may go up. The Plan payment is based on how much you can afford, so you put in your take-home income from ALL sources (Schedule I) and reasonable monthly expenses (Schedule J), then your Plan payment is whatever the difference is (called your "disposable income"). So, if your take-home income is $3,000/mo and your monthly expenses are $2,500/mo, then your Plan payment will be $500/month.
So, let's say when you file your case you leave your second mortgage off of your expenses since you intend to strip it, and let's say your first mortgage is $450/month, and it is on your expense list since you have to keep the first mortgage to keep the home. Let's also say your disposable income is $500/mo, so your Plan payment is $500/month. If you modify the first mortgage after the case is filed, then let's say the first mortgage payments drops to $300/month as a result of the modification (a $150 drop from the original mortgage payment amount). Now, your disposable income will go up by $150 since your first mortgage payment dropped by $150, so your Chapter 13 Plan payment will go up from $500/month to $650/month. But, if you had modified before the case was filed, you might have been able to use that extra $150/month to go buy better health insurance (or get some other allowable expense) and then filed the bankruptcy and still only had a $500/month Chapter 13 Plan payment (if that makes sense).
So, modifying after bankruptcy may allow you to have access to much better modification programs, but modifying before lets the dust settle so you can better predict and control how much your Chapter 13 Plan payment will be.
When all the factors are weighed in, most of my clients file the bankruptcy first and then do the modification and let the chips fall where they may as far as the Chapter 13 Plan payment amount is concerned, but certainly both ways have advantages and disadvantages so you need to decide what works best for you.
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