How to Apply for a Loan Modification While in Bankruptcy

Homeowners may apply for a loan modification before, after, or during a bankruptcy. Not long ago the filing of bankruptcy put a pending loan modification on hold - at least temporarily. Now, the Bankruptcy Court for the District of New Jersey has implemented it own program to help encourage successful modification. In most cases the Bankruptcy Court cannot require a modification, but it can require the parties to speak to each other and set deadlines to exchange documents.

Many lenders have their own guidelines that may be used to evaluate whether a mortgage loan is eligible for modification and there is the government's Home Affordable Modification Program ("HAMP"). Most loans that are permanently modified are modified through the HAMP program. To apply for HAMP, a homeowner needs to complete a Request for Modification and an Affidavit, a Tax Authorization Form, and proof of income. Homeowners in bankruptcy, or considering bankruptcy, should discuss HAMP with their bankruptcy attorney before making an application for a loan modification.