Many people go through difficult financial periods in their lives. Sometimes, these situations can grow out of control and it can be hard for people to manage their financial state and stay up to date with their payments. When this happens, it can create an overwhelming and stressful time but can be helpful to know that there are options that can help those struggling with finances to regain control of their situation. When facing these problems, assistance such as loan modifications or loss mitigation can help a person. It is important to know the difference between the two before moving forward.
Loss Mitigation
When debt payments begin to consume a person, it may be time to find options that can help. The Loss Mitigation Program is available to debtors so that they can work with lenders to reach an agreement. This can allow the debtor to save their house from foreclosure. A debtor can become eligible for the Loss Mitigation Program when they file for Chapter 7, 11, 12, or 13 bankruptcy. During this time, the Bankruptcy Court will watch over the process and provide assistance when it is needed.
With this agreement, debtors can figure out a situation to adjust their loans in a way that works better for them than their current payment plan. It is during this time that the debtor may be able to apply for a loan modification. After they apply, the bank will determine whether or not the individual is eligible for the modification.
Loan Modification
There are some cases in which homeowners have a difficult time handling their mortgage payments and ensuring those payments are made on time. Loan modifications can be beneficial for homeowners during this time, as it allows them to adjust their loans so that their payment plan better suits their financial state and situation. This is done by matching the individual’s mortgage payments with their current financial state. This lets them begin to make payments again at a pace that is comfortable for them.
There are two types of loan modification programs:
- Bank-Run: this may lower a person’s interest rate, fix their adjustable rate, or not require them to pay the excess principal
- Government-Run: This allows a person to lengthen their loan to a 40-year plan to lower the cost of their monthly payments and drop the interest rate of a loan to 2% for 5 years
It is important to know that an individual will not be approved for a loan modification if it is believed they will not be able to pay their debts on time.
Contact our Firm
If you are facing bankruptcy and seek options to restructure your debt, contact the Law Offices of Allen A. Kobler, Esq. today.
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.
