Question Creditor mortgage modification outside of the plan

[Phipps8630]

If a person is going through chp 13 bankruptcy and the person in bankruptcy is seeking to pay a 2nd mortgage outside of the plan, can a modification of the 2nd mortgage be to where there is a deferred principal balance that is given?

[justbroke]

Welcome to BKForum.

I can't give any particulars, but there are people that have modified mortgages while in Chapter 13. In fact, my district specifically requires everyone that has arrears on their mortgage(s) to go through Mortgage Modification Mediation (MMM) through the bankruptcy court.

The only thing interesting is whether your payment is reduced, thereby freeing up more disposable monthly income for the unsecured creditors.

[flashoflight]

As JB mentions, it's only about making your payment barely "affordable" at 33% of your gross income. The lender (not you) will decide how to reduce your payment usually via extending the term and reducing the interest rate. You may be disappointed with how little you save per month after paying the $2k+ retainer fees for your lawyer to go through the court's loan mod program. In my district, you can resolve your arrears through the 5 year plan without going through the court loan mod. If eligible, I think the COVID forbearance programs are a lot better than the court's loan mod program because there are no fees and most people end up getting their arrears deferred.

I also concur with JB that any monthly savings is likely to be seized by the trustee and given to unsecured creditors unless your budget is already infeasible to the extent of the monthly savings.