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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17248
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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A debtor filed Chapter 13 bankruptcy for the main purpose of

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A debtor filed Chapter 13 bankruptcy for the main purpose of halting the foreclosure process that had started on his home. The debtor had been trying to get a loan modification approved with the mortgage company, but finally gave when the loan modification had not yet been approved just a week before the scheduled sheriff's sale. One day after the Chapter 13 filing, the bank finally sent the debtor notice of approval of the loan modification. Now that the Chapter 13 has been filed, how should the debtor handle this? Should he convert the Chapter 13 to a Chapter 7 (he still has about $12,000 in unsecured debt)? Or is there a better suggestion?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on

WALLSTREETESQ :

He may want to withdraw his chapter 13, and start with the modification, as some lenders do not provide modifications when the debtor is in a bankruptcy, if that is not the case, a chapter 7 may be a good option but it is risky unless he lists the mortgage debt as well,

WALLSTREETESQ :

If he lists the mortgage as discharged he can still modify, but the bank has to agree to let him do this, if he does not list the mortgage in a chapter 7, and he later does not receive the modification,

WALLSTREETESQ :

he is stuck with any balance he owes, and cannot discharge it.

WALLSTREETESQ :

If the modification is final and has started, he may wish to list the debt in a chapter 7

WALLSTREETESQ :

and make payments to the lender, and discharge the liability of the mortgage, so if in the future he cannot make payments, the balance is discharged

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