In challenging economic landscapes, mortgage foreclosures increase. If you file for a Chapter 13 bankruptcy, a court-supervised process known as loan mitigation can allow you to seek a loan modification from your lender. The program can help homeowners keep their home by implementing a feasible repayment plan.
A Chapter 13 bankruptcy can stop foreclosure actions in their tracks and give you time to figure out what to do next. A reliable bankruptcy attorney can explain the Chapter 13 loan mitigation program for someone in Toms River, along with all solutions to stop foreclosure and protect your real estate holdings.
Bankruptcy can be a difficult and overwhelming process, but it can also provide a way to eliminate or restructure debt. Individuals who are overwhelmed by debts but want to keep their assets can find numerous benefits from a Chapter 13 bankruptcy filing. A Chapter 13 bankruptcy enables debtors to create a repayment plan to pay off their debts over a set period, which can be anywhere from three to five years, while keeping valuable assets, such as their home.
A Chapter 13 bankruptcy can also protect debtors from creditor harassment, giving them a chance to reorganize their finances and avoid the liquidation of their property that might occur in a Chapter 7 bankruptcy. For Toms River homeowners filing for a Chapter 13 bankruptcy who are unable to pay off their mortgage arrears over the traditional three to five year repayment plan, the state’s loss mitigation program could be a useful tool to modify or refinance the loan.
The United States Bankruptcy Court for New Jersey’s loss mitigation program provides a way for debtors and lenders to explore mutually beneficial alternatives to foreclosure. You can apply to this program after you file for a Chapter 13 bankruptcy and have submitted your bankruptcy petition and plan.
After a Toms River debtor has filed for a Chapter 13 bankruptcy and requests to enter the state’s loss mitigation program with a particular creditor, such as the mortgage lender, the bankruptcy court will issue its loss mitigation order. Loan modification is a common option in the loss mitigation program, which would enable the debtor and the lender to modify the terms of the loan to make it more affordable for the debtor.
The loss mitigation order will provide a deadline by which the debtor should submit their application for a loan modification for the lender’s review. The notice of request for loss mitigation is the official document that the debtor sends the lender. The document notifies the lender of the debtor’s request to explore options like loan modification to avoid foreclosure, and asks for permission to make adequate protection payments to the lender during the negotiation process.
Adequate protection payments should be equivalent to, at minimum, 60% of the monthly principal and interest payment, along with 100% of any required escrow payment. The debtor will need to provide extensive documentation to the lender to determine whether a loan modification should be offered. If the lender is not satisfied with the adequate protection payment amount, the court will hold a hearing.
The loan mitigation process following a Chapter 13 bankruptcy filing can offer numerous advantages to Toms River homeowners struggling with overwhelming debt. The automatic stay that occurs after a bankruptcy filing will bar the lender from initiating foreclosure proceedings during the loan modification negotiation process. The program can also enable debtors to continue making mortgage payments while the lender is reviewing the proposed loan modification.
There may be numerous opportunities to protect your house through a Chapter 13 loan mitigation program in Toms River. The program could allow you to potentially renegotiate your loan terms with the mortgage lender to make payments more manageable.
The goal of loan mitigation is to secure an agreement that is beneficial both to the borrower and the creditor. An attorney can help you navigate the complex and often frustrating process of working with your lender.
Gillman Capone can work tirelessly to safeguard your financial future and help you get the best result possible. Contact us today for more information about loan mitigation programs and filing for a Chapter 13 bankruptcy.
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