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Bankruptcy Law/Loan Modification

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Expert: - 2/22/2010


Question
i have 30 days until my BK is discharged. My auto loan is being reaffirmed next month.  Prior to filing BK i tried to modify my home loan because the interest only expired last month and payment was going up 600.00 a month.  I could not get a modification because I did not make enough money.  After filing BK my lender placed me on a 3 month trial modification. I did not have an attorney and they want a letter stating the court approves the modification. how can the court approve when lender wont send new terms until they get the letter. without the letter they are obligated to reaffirm loan at old terms which I Cant afford with the large increase.  I can certainly afford the modified terms. what do I do?

Answer

Leon Bayer
I have encountered this same problem on behalf of some of my own clients, with no good solution. I think that what the lender is asking for is ridiculous, exactly for the reason you gave: How can you ask the court to approve something that the lender will not disclose until after it is approved? Apparantly your lender did not feel they needed court approval for the trial mod program, so why do they need it now?

Anyway, I suggest that you ask your lender for a "letter of intent" spelling out the terms they intend to offer to you, conditioned upon approval before hand by the court. You can tell them that if they give you a letter of intent, you can use that to make a motion to the court for an Order saying that the court does not object to having you make a modification on those terms.

I don't know if the court would even approve such a thing, since you are asking for a ruling on something that is not a core matter under the Bankruptcy Code.

If they would just give you the actual loan mod agreement right now, then it could be included in a reaf and you could ask the court to approve it as a reaffirmation. Also, it sounds like you are running out of time to file a reaf, so i want you to know that here is a proceedure in which you can make a motion to the court to extend the time limit for filing a reaf.  

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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