How is Loss Mitigation Different from a Loan Modification?

If you’re having trouble paying off certain debts, you may have heard of loss mitigation and loan modifications, and are wondering if these programs may suit you. Please continue reading and reach out to our experienced Rockland County bankruptcy attorney to learn more about these programs and how our legal team can help. Here are some of the questions you may have:

What is the Loss Mitigation Program?

The Loss Mitigation Program is one of the best ways for a person to repair their financial situation when filing for bankruptcy. Essentially, some debtors can apply for the Loss Mitigation Program, wherein they, as well as their attorney, will work with lenders to reach a more favorable agreement. In turn, this may allow the debtor to save their house from foreclosure. Whether you’re filing for Chapter 7, 11, 12, or 13 bankruptcy, you may be eligible for the program. The Bankruptcy Couty will then ensure that once the debtor adjusts their payment plan to something that better suits their financial situation that they stick to it. Once accepted into the Loss Mitigation Program, they may then apply for a loan modification.

What is a loan modification?

Essentially, a loan modification allows a homeowner to adjust their loans to that they may make less expensive payments, typically over a longer period of time. Essentially, lenders will match the individual’s mortgage payments with their current financial circumstances, giving them the freedom to make payments at a more affordable pace. The two types of loan modification programs are bank-run and government-run. Using a bank-run loan modification can lower your interest rate, fix your adjustable rate, or waive the excess principal. On the other hand, using a government-run loan modification program will allow you to extend the period of your loan to a 40-year plan. This lowers the cost of your monthly payments and drops the interest rate of your loan to 2% for 5 years.

Though these are all great ways to help you pay off your loans, you should understand that if it’s determined you still won’t be able to pay off your loans, you most likely won’t qualify for these programs. Our experienced firm can help walk you through the process and get you to a financial situation that best suits you.

Contact our experienced New York firm

Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. We will have your back every step of the way.