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Our Offices

  • Vernon Office

    Address

    244 State Hwy 94
    Vernon, New Jersey 07462

  • Wayne Office

    Address

    73 Mountainview Blvd
    Wayne, New Jersey 07470

    Phone

    973-764-1633

  • Pompton Lakes Office

    Address

    58 Colfax Avenue #1
    Pompton Lakes, New Jersey 07442

  • Hackensack Office

    Address

    41 Main Street
    Suite 2
    Hackensack, New Jersey 07601

    Phone

    973-764-1633

  • Nutley Office

    Address

    345 Centre Street
    Suite 2
    Nutley, New Jersey 07110

    Phone

    973-764-1633

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  • Blog >
  • How the Bankruptcy Court Can Assist Debtors in Modifying Their Mortgages

How the Bankruptcy Court Can Assist Debtors in Modifying Their Mortgages

Many people file for Chapter 13 bankruptcy to stop foreclosure on their homes due to mortgage delinquencies. Chapter 13 initiates an automatic stay that halts foreclosure proceedings while the case is pending. It also allows homeowners to pay off mortgage arrears over an extended period of time as part of their Chapter 13 debt repayment plan. However, another important benefit of Chapter 13 is that it can provide an opportunity for modifying the mortgage on more favorable terms.

Obtaining a mortgage modification during a Chapter 13 requires negotiation with the lender, who may be willing to make adjustments in order to prevent a default on the loan. You'll need to prove that the modification is in the lender’s best interest and that it will help you repay your debt. It may be in the lender’s interest, for example, when the home’s equity value is not sufficient to cover a substantial portion of the loan balance, so that foreclosure would not result in full recovery of the amount due.

Working out the loan modification details with your lender may include lowering your interest rate, extending the term of your loan or reducing the amount you owe. You'll also need to show that you're able to make the modified payments and/or to observe the modified schedule. The modified loan agreement must be presented to the bankruptcy court for approval.

When modifying your mortgage during Chapter 13, one of the questions you may face is whether or not to continue with the bankruptcy after the modification is complete. The financed loan and the end of foreclosure proceedings may solve the homeowner’s principal debt problems. On the other hand, continuing with the bankruptcy may provide tangible benefits, such as wiping out certain debts. Ultimately, the decision of whether or not to pursue the Chapter 13 will depend on a variety of different factors, and the decision should be made with the guidance of a skilled New Jersey bankruptcy attorney. Your lawyer also can provide assistance during the modification process by negotiating with the lender, helping come up with a refinanced loan agreement and presenting the agreement it to the bankruptcy judge.

The Law Offices of James C. Zimmermann has wide experience helping clients throughout New Jersey with bankruptcy and debt relief issues, including Chapter 13 mortgage modifications. To set up a consultation at one of our offices in Vernon, Wayne, Pompton Lakes, Hackensack, or Nutley, call 973-764-1633 or contact us online today.