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JP, Attorney
Category: Bankruptcy Law
Satisfied Customers: 109
Experience:  Represented creditors and individuals in bankruptcy and consumer matters.
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Will the bail out have nay effect on a Chapter 13 case Can

Customer Question

Will the bail out have nay effect on a Chapter 13 case? Can a judge lower interest rates or the underlying amount of a mortgage? I read the full version and it gives the right to do so in the case the government has the mortgage. Does this mean any bank that is insured by the bank system.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  JP replied 8 years ago.

This is a two part answer.


1. If your mortgage company adjusts the terms of your loan (ie changes the mortgage payment, changes the interest rate, places your pre-petition arrears at the end of the note, etc) then the mortgage company will need to file an amended proof of claim to reflect the changes to your loan and your plan will either need to be amended or modified to reflect the changes in the amended proof of claim filed by the mortgage company. Therefore, the bail out plan could have an indirect effect on your chapter 13 case.


2. However, the bail out plan will not directly effect your chapter 13 case. There was a proposal, at one point, that would allow a person to modify the mortgage loan while in a bankruptcy case, similar to the way a vehicle loan can be modified in a chapter 13 case. However, that proposal was defeated and is not a part of the bail out plan. Therefore, the terms of your current plan will not be directly effected by the bail out plan.


Also, the bail out plan will only affect those mortgages that have an investor (or investment bank) that is a part of the bail out plan. This does not mean that any bank in the banking system will be covered or a part of the bail out plan.


I hope you found this information helpful.


Best Regards.