I am Thinking of Filing for Bankruptcy in Florida, How will Bankruptcy Impact my Mortgage Modification?

If you are considering filing for bankruptcy in Florida and at the same time trying or are in the process of a mortgage modification there are certain things that you should know BEFORE you file for bankruptcy.

Trial Period – If you file for bankruptcy while you are in a trial period with your mortgage company then there is a good likelihood that your mortgage would revert back to its original terms.   What this means is that you will basically start over with a trial period.   The bankruptcy won’t preclude you from reapplying for a new modification with the bank.  Therefore if you are more than a few months into a trial period and believe that the modification is about to become permanent then it might be a good idea to wait until the modification becomes permanent before filing for bankruptcy.

Permanent Modification – If you file for bankruptcy after obtaining a permanent modification then your mortgage will remain exactly the same.  The bankruptcy will not affect the permanent modification and the modification will continue to be permanent as long as you continue to make payments on your mortgage.

Permanent Modification but behind on payments – If you have obtained a permanent modification but again fall behind on payments then you may be able to file a Chapter 13 bankruptcy to play catch up on the delinquent payments.  A Chapter 13 bankruptcy will allow you create a repayment plan that can payback your delinquencies over time and allow you to keep your home.   Keep in mind that a Chapter 13 bankruptcy will only work if the debtor has disposable income (income at the end of the month) that will allow him/her to use to payback delinquencies on their mortgage debts.

File Bankruptcy first then modify – A debtor can file for a mortgage modification after/while the debtor is in bankruptcy.  A modification can be negotiated at the same time the debtor is in bankruptcy.

In conclusion it is vital for the debtor to know whether or not they are in a trial period or a permanent period of their mortgage modification, in order to determine when to file for bankruptcy.  If you are thinking of getting modification or are currently in a modification and would like to discuss your bankruptcy options with a Miami bankruptcy attorney then please contact Shmucher Law, PL at 305.741.5553 or 943.309.5559.  We offer free consultations at the following office locations:  Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

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