Legal Question in Bankruptcy in Illinois

filed bankruptcy november 2011, discharged feb 2012. Bk included mortgage. Had planned on letting house go, as i lost my job of 30 years, and separated from my husband. Recently my husband and I worked things out, and we would like to save the house if possible, in hopes the market will eventually come back. We put almost 60,000 down payment on the house about 7 years ago, and now we would lose if we tried to sell it. I am still unemployed, but want to apply for the unemployment forbearance plan and then possibly a permanent modification provided I find employment. My question is this: If our mortgage company sets this up, and we start making the reduced payments, will that cancel out the bankruptcy in terms of the mortgage?? Will we be on the hook for any deficiency if we are unable to handle payments and end up in foreclosure anyway? Will we be responsible for any missed payments or anything else? I'm confused because when I talked to mortgage company they said we are 15000 behind on payments and then we would also have to pay their lawyers fees, but I thought that any amounts owed previously would have been included in bankruptcy. We live in Illinois if that makes any difference.


Asked on 4/29/12, 9:43 pm

2 Answer from Attorneys
Henry Repay Law Offices of Henry Repay

You would be committing yourselves to the terms of the modified loan. So, you will need to exercise tremendous caution.

The discussion about including the default balance and legal fees may or may not be appropriate. The lender will be considering the full balance as a starting point for modification, but the end terms may depend on the program that is used. I'm wondering whether a modification that does not follow any of the government programs may be a consideration. Have you considered hiring a reputable coordinator?

The most important thing I recommend for you in what I see from your question is to ignore entirely the background of what you put down and what you have invested or paid. When evaluating your options, look primarily at today's data: What is the house worth and what would the loan balance be under the terms of a modification. Are there future costs to factor, such as likely repairs, perhaps a roof, furnace or water heater? How long do you estimate before you can sell and afford all closing costs including commission? What is your risk going forward? What if there are unexpected issues in a year or two such as another loss or reduction of income.

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Answered on 4/30/12, 3:42 am


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