Welcome to Just Answer! My name is Maverick. I very much enjoy what I do and I hope that you will benefit from this information.
I would suggest that you opt for the BK route now if you can as these modifications are full of problems. The banks have been known to string people along or lose the paper work or change the terms and leave you hanging. We get those scenarios everyday here.
If you file a chapter 13 bankruptcy, the court allow you 3-5 years to pay back the arrears but you have to have enough income to still make your monthly mortgage payments and cover your basic needs. If you can do this, this is usually a better option than a mod. What happens if you pay promptly and they refuse to cancel the foreclosure? You will have to be ready to file a chapter 13 just hours before the scheduled foreclosure.
If you file chapter 7, they will eventually foreclose on the house and the mod is off. Here you lose the house unless you reaffirm the debt. But then, they will not likely give you a mod.
If you can't afford a lawyer, you can try this link: http://usabankruptcyassociates.com/usabk/index.asp?OVRAW=bankruptcy%20preparation%20pap ers&OVKEY=bankruptcy%20preparation&OVMTC=advanced&OVADID=37666520022&OVKWID=164838369522&OVCAMPGID=65625022&OVADGRPID=8264781910&OVNDID=ND1
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