Can Chapter 13 bankruptcy help with a mortgage modification?


Attorney Jim Monroe discusses how a Chapter 13 bankruptcy can help with a mortgage modification.


Attorney Tom Olsen: Mary, you're on News 96.5, go ahead.

Mary: Yes. I have a $500,000 mortgage on my house. I've tried a couple of times with Bank of America to modify it they've denied me. I own property free and clear which is just like 310-acre parcels with double wires and some watch. My question is if Bank of America denies me for a third time, am I able to go to chapter 13 and maybe help me get this thing? Where I can afford it. The payments are going to jump in June to $5,000 a month from 1,700. My interest only loan ends after 10 years and that's my question. I'm kind of having a hard time here.

Attorney Tom Olsen: Mary, you need to modify your mortgage so that your payments are less. Your question is can bankruptcy help you with that? What do you think, Jim?

Attorney Jim Monroe: Well--

Mary: Chapter 13, yes.

Attorney Jim Monroe: Chapter 13 bankruptcy. Well, I can tell you that Congress, when they amended the code, decided that you can't really modify mortgage loans on personal residences. However, there are independent programs that allow you to modify. When you get inside of a chapter 13, all of the sudden Bank of America, whoever holds the mortgage has to become serious because the bankruptcy judges, when they order a mediation, they tell them that they have to come to the table.

In addition to that, we have learned that sometimes banks lose the information that you send them over and over again trying to modify your mortgage. In bankruptcy, we have a system where we upload it into a Dropbox. They cannot say that they haven't received it and they've been deemed to have received it. Then you go to a mediation and like I said before they've got to have somebody there with the settlement Authority.

Although we can't impose a modification because the way the Bankruptcy Code is written for a personal residence. I want to distinguish that because any rental property we can impose some differences. Modify the mortgages, adjust the mortgage down to fit the value of the property. Adjust the terms of the mortgage and some other things but on somebody's home, we're not allowed to.

As I said before, there are some programs out there where Congress has instituted some modification programs for you. I would encourage you probably to call the office and come in and just chat with us. Cynthia Lewis who is an attorney and my partner and also an accountant and also deals a lot with these modification programs.

Attorney Tom Olsen: Right, Jim, tell listeners how they can reach your office in Orlando?

Attorney Jim Monroe: You can call my law firm at 407 872 7447. Again, that's 407 872 7447. You can also call Tom Olsen's office. He knows where my office is.

Attorney Tom Olsen: Yes. We know how to reach you.