Mortgage Modification or Bankruptcy First?

For individual looking to modify a mortgage and also considering a bankruptcy a common worry is that bankruptcy will disqualify them for the modification. The first and most important factor with the disqualification of a modification is whether a modification will be granted in the first place. In most instances the chance at modification of home mortgage are remote. Banks will review the information provided by individuals and often conclude that the same issues that caused late payments on the mortgage still exist. Those issues usually revolve around lack of income to afford the house and too much debt.

Often the best advise I can offer is to prioritize which is more important and do that first. If creditors have taken judgment and are going to garnish a bank account or wages you should file the bankruptcy first. If you are late on house payments and no unsecured creditor has judgment work on the modification.

If a bankruptcy is filed, one option is to file a chapter 13 bankruptcy. Individuals who are behind on house payments can both catch up on house payments and satisfy credit cards and medical debt. A second option in bankruptcy is to file a chapter 7. Many find it much easier to catch up on house payments and remain current when not burdened by unsecured debt. Contact me today to discuss how to keep your house.