A loan modification is one of the options that are available to those that are looking to solve their debt problems. Our firm has dealt with many of these cases, walking our clients through the process step by step. It is our goal to find them a solution to regain their finances and move forward with their lives. Speak with a California debt relief attorney from our office if you are considering the option of a modification or which to seek another form of relief.
What is a loan modification?
This is a form of debt relief that is less severe than bankruptcy. Through it, a change is sought to the terms of the original loan. It allows for a more feasible payment to be set up, letting the debtor to pay their loan and the lender to receive payment. Because of this factor, lenders have become more inclined to allow for a modification since it gives them a greater chance of receiving payment, even if it is not in the original way that was intended. A loan modification will apply to a mortgage, while there are other options that are counted towards other types of debts.
Why would someone choose a loan modification over filing for bankruptcy?
Bankruptcy is a serious form of debt relief and this drastic of an option is not necessary for everyone. While it can be the best way out for some individuals, others have additional options that can be less extreme. Some may not pass the means test and would not be able to file under Chapter 7 anyway, making loan modification a greater possibility. Loan modification can allow you to not face the fear of losing some of your assets or taking as great a hit to your credit score as there would be with bankruptcy.
To seek a loan modification, do I have to have failed to make a few payments first?
It is common that a modification is pursued by those that have become late in their payments, but new laws are also offering more incentive to lenders that are willing to aid homeowners that have yet to miss payments. This is being proactive and providing assistance before the debtor faces further difficulty.
What are the requirements to be eligible for a loan modification?
It will be up to the lender for the most part to decide whether or not they will allow for a loan modification. There is some incentive given to them by the government, but the choice ultimately is theirs to make. They will mostly look at whether or not a debtor will be capable of making the payments for the new plan on a consistent basis. To convince them that this will be done, they will need to be provided with a comprehensive report of monthly income and various expenses. They will also want to see the reason for the modification being needed, such as a financial hardship, a high cost of living or a reduction in income. Other hardships can include the loss of a job, a divorce, a death in the family, property damage or a military service.
Will my past missed payments be included in the modification?
Yes, they can be accounted to the owed sum, allowing you further time to pay the money back. His can help get you up to date and back on track to financial control.
Can loan modification put a foreclosure on hold or will I need to file for bankruptcy?
While bankruptcy can be used to prevent against foreclosure, it is not the only option. Loan modifications can allow for the foreclosure process to be halted and it is important that you work with a professional who can help increase your chances of this endeavor ending successfully.
Do I need to work with an attorney during this process?
It is advised that you do seek the counsel and guidance of a professional. If you are looking for a modification you are already in a financially difficult place and you do not want to take any risks that could potentially put you in a worse off position. A California debt relief lawyer has worked in these types of cases before and recognizes what needs to be done in order to increase the chances of finding a successful outcome. The first step should be to speak with one and allow them to develop a plan to move forward with. Lenders are not always able to develop a proper loan modification plan on their own, but an attorney will be able to do this. They will also be looking out for their own interests and are not likely trying to find a solution that works in your best interests. This is where an attorney can be an advocate for you and make sure that you are not shorthanded.
Can late fees be charged?
Since the purpose of a loan modification is to have the debtor become up to date with their payments, the fees are to be waived so that there are not further costs on top of the payments.
Can a lender still take a home when seeking a modification?
There is still the potential for them to choose to remove a home, but in most cases this does not occur. With the representation of an attorney there may be an even greater chance of keeping your home.