Here is the tragic story of clients #8938. This lovely couple had filed Chapter 13 bankruptcy since January 2009. They had successfully paid every month for about 16 months while they were working on a loan modification for their first mortgage.
"Finally!" they thought as the bank offered them a modification. The final step was to get the Trustee's permission (an Authority to Incur New Debt must be signed off by the Trustee in order to get a loan modification). The Law Offices of Chang & Diamond, APC looked at all of the numbers and noticed that this was not in the best interests of our clients.
By taking this offered Loan Modification Clients #8938 were losing 3 ways.
1. Their Chapter 13 plan was curing (paying off) all of the money that they were behind before the bankruptcy. By adding that amount to the end of the loan, as proposed, they would spend the next 30 years paying interest on that amount. Not good!
2. When their monthly mortgage payment would be lower as proposed in the Loan Modification the Trustee would see that they had more disposable income every month. Our clients thought that they could keep this money. That is not the case. All disposable income is dedicated to your creditors while in a Chapter 13 bankruptcy. They were saving nearly $1,000 every month. This money now went to the creditors that were not going to get anything before that money was available. Their monthly plan payment (the payment that is paid to the Trustee every month while in a Chapter 13 bankruptcy) went up --not good!
3. Lastly, when we took the mortgage arrears (the past due) out of the Plan Payment they now had EVEN MORE money to pay to creditors that were previously not receiving any money. Not good!
The Attorney's at Chang & Diamond stressed to our clients not to sign the Loan Modification paperwork, unfortunately our clients signed anyways. Months later though our clients agree that the loan modification was not the best idea. What had started out as a manageable plan payment had become a burden.
We estimated the total loss for clients #8938 at over $75,000 by taking the offered loan modification. Sadly, our clients had worked for over 16 months to get a loan modification and were not willing to let it go. They signed the loan documents and we were forced to amend their plan.
I wish there was a happier ending to this story. Please talk to an Attorney about the possible negative effects of filing bankruptcy.
Please call Chang & Diamond, APC for information on Chapter 13 bankruptcy and how that can help you save your home --even without a loan modification.
No comments:
Post a Comment