Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question. I'll be glad to help you today!
Hi Kirk Thanks
If a bankruptcy is filed during the application process, the lender is USUALLY going to deny the modification because of the collateral affects this has to the applicant's credit and possibly his/her ability to repay the loan even with the modification.
The reason that lenders stop the process is because (1) it's a violation of the automatic stay to continue after bankruptcy is filed, and (2) there could be claims of preferential treatment of the mortgage lender, which could cause trouble for the trustee and from other creditors.
However, it is possible to RESUME the loan modification after filing via what is called a reaffirmation agreement.
How long does it take to get to the step of reaffirmation agreement?
The reaffirmation agreement is when the lender and mortgage company agree that the borrower/debtor will continue to pay the mortgage loan, and in exchange, the borrower/debtor will be allowed to keep the property.
Your friend can attempt to resume discussions and try to reach a reaffirmation agreement any time after filing.
He has gone to court so does that mean ho is done with that part?
But, the lender is not under an obligation to agree to the reaffirmation, BUT if they were close on a loan modification, it may be that your friend and the lender can reach an accord and work this out through a reaffirmation.
By saying court I am referring to bankruptcy court
If they reach an agreement on the reaffirmation, he would have to go back to court for the judge to approve it.
okay...i will pass it on. Thank you so very much. It is hard to watch this happen to a family we have known for 20 years. It must be heart wrenching at times doing what you do for an occupation. I appreciate your help with this.
Yes it makes me wish I was a billionaire to help with this but I have daughters and a home and horses on my plate and that's all i can do.
Enjoy the rest of your day and I will finish by rating our chat. Thanks again