What happens if my spouse files for a loan modification? 10 Answers as of August 01, 2011

My ex husband wants to file chapter 7. I have been working with my mortgage company and naca for a loan modification. If he files bankruptcy before loan mod approved., will I not be able to get one and go straight to foreclosure. He wants nothing to do with the house and did a quit claim deed. He wants us to be able to stay in it. If they do not come up with a solution, would I be able to do a hort sle or deed in lieu of foreclosure if he in fact does file chapter 7.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You can get a loan modification and file for Chapter 7 at the same time.
Answer Applies to: California
Replied: 8/1/2011
Theodore N. Stapleton, PC
Theodore N. Stapleton, PC | Theodore N. Stapleton
It depends upon how much equity is in the house.
Answer Applies to: Georgia
Replied: 7/25/2011
Mauritz Van Niekerk, Attorneys at Law
Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
You have a complicated matter and need to see a lawyer with more information to get a accurate answer
Answer Applies to: New York
Replied: 7/22/2011
The Law Offices of Mark Wm. Hofgard, Esq.
The Law Offices of Mark Wm. Hofgard, Esq. | Mark Hofgard
I'm assuming that both of you signed both the promissory note and deed of trust. Even if your ex quit-claimed his interest in the property to you, he is still responsible under the terms of the loan. When he files Chapt 7, there is an automatic stay of execution and the lender may not foreclose until it receives permission from the bankruptcy court (by motion to lift automatic stay). Also, the bankruptcy court may inquire as to whether the home should be subject to the bankruptcy estate even though the property was deed prior to filing Chapt 7. It gets complicated. Is the loan eligible for a Home Affordable Mortgage Program modification? Ask your NACA representative. Generally these are loans under $729k, you have a hardship, and it is not a federally insured loan (FHA).
Answer Applies to: Colorado
Replied: 7/22/2011
Colorado Legal Solutions
Colorado Legal Solutions | Stephen Harkess
You ex-husband's bankruptcy will not prevent you from pursuing a loan modification. Because his name is still on the loan, it is possible that his filing bankruptcy before a modification is finalized may result in a setback. This is because the bank will often transfer the file from the loss mitigation to the bankruptcy department when they receive notice of a bankruptcy filing. It is rare that the new department is able to pick up where the old one left off. Usually, if this happens, you will have to start fresh with the new department and resubmit all your paperwork seeking modification. It is still possible, however, and often somewhat easier, to get a loan modificaiton approved after a bankruptcy filing.
Answer Applies to: Colorado
Replied: 7/22/2011
    Financial Relief Law Center
    Financial Relief Law Center | Mark Alonso
    If you file for chapter 7 while you are in the middle of trying to obtain a loan modification, the lender may not offer you a permanent loan modification solution. Filing bankruptcy can sometimes jeopardize the process, but it depends on who your investor is and what type of loan workout program you are being reviewed for. Most of the time, I would almost always say try to get the loan modification approved BEFORE you file for bankruptcy. If you file for bankruptcy ch. 7 before you the modification is approved, and you are already behind on your payments, then the ch. 7 will not do anything to protect your property and the lender will eventually move your file into foreclosure if the loan modification is not ultimately approved. The ch. 7 may delay a foreclosure process temporarily, but it will not delay it forever. A ch. 13 is a different chapter of bankruptcy that would allow you to keep your home, despite the lender trying to foreclose, and allow you the opportunity to repay the mortgage arrearages over 3- 5 years. This may be a better solution for you if you want to actually keep your home, but be aware that the ch. 13 would not have the effect of altering your mortgage type or payment, it would just give you a repayment plan for the past due amounts. If you end up not wanting to keep your home, or if your loan modification is not approved, and you file chapter 7, you can try for deed in lieu of foreclosure or a short sale with your lender. These are subject to lender approval, and may also have the effect of delaying a foreclosure sale. If you've been trying to modify and are not getting the results you want, you may do well to contact an attorney who is experienced in loan workouts. There are sometimes negative connotations associated with companies who offer these services, but I can tell you that there are some law firms who are achieving real results for clients so if you do want to try and keep your home it may be worth it to give it a shot.
    Answer Applies to: California
    Replied: 7/22/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    To avoid foreclosure you can pursue a loan modification. If you choose to give up the house and want to avoid a foreclosure on your record there are choices. You could do a short sale. If the lender agrees, you could do a deed in lieu of foreclosure.
    Answer Applies to: California
    Replied: 7/22/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Your husband screwed up royally, and I mean screwed up. Deeding the house to you means he had probably can't file bankruptcy for many years. That is likely to be deemed a fraudulent transaction to defraud creditors which can result in denial of his discharge, and will possibly drag you into his case when the Trustee sues you. This is great evidence for why people need lawyers. Your husband, who may have been able to allow the house to be retained had he seen a lawyer first, probably has cost both of you a home. See a lawyer to see if his mistake of a lifetime has any silver lining, but he has messed up really badly. (Do not deed it back without legal advice).
    Answer Applies to: Georgia
    Replied: 7/22/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    It's your ex-husband who may file BK, who filed a quit-claim, wants nothing to do with the house, but wants to stay there? I think a fact or two is missing. Please clarify and resubmit your question. I
    Answer Applies to: Virginia
    Replied: 7/22/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    The best advice is to have the loan mod agreement signed and concluded before you file bankruptcy. However, this is usually not possible as the home loan mod process can take a long time. There really is no reason why the loan mod process can't be done before, during and after you file bankruptcy. It can be done and many of my clients have been sucessful in getting the loan mod during and after bankruptcy. The problem is that once you file the bank will most likely place you into the bk dept which can create an additional layer of difficulty to an already difficult process. It shouldn't make it more difficult but it sometimes does. I could go on and on about this but I will conclude by saying that if you otherwise qualify for a loan mod and you don't give up, you will get your mod even after you file bk.
    Answer Applies to: California
    Replied: 7/22/2011
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