Many Arizona homeowners have applied to their mortgage lenders to reduce interest payments through loan modifications to achieve manageable payments each month, but not all lenders have been cooperative or responsive to borrowers. Consequently, some homeowners have filed for Chapter 13 bankruptcy to stop foreclosure and force lenders to work on their modification requests.

The automatic stay granted by the bankruptcy court when a consumer files a Chapter 13 bankruptcy will stop foreclosure, prevent creditors from continuing with debt collection actions and stop creditor harassment. For the consumer in search of a fresh financial start, filing for Chapter 13 bankruptcy could bring the lead to the debt relief the person is seeking. One thing it cannot accomplish, however, is compelling a mortgage lender to grant a loan modification.

A lender holding the mortgage on real property is a secured creditor in a Chapter 13 and has the right to ask the bankruptcy court to release the home from the protection of the automatic stay. Once the home is released, a lender is free to move ahead with the foreclosure. It is up to the lender to decide if he or she wants to take the home or work with the homeowner on a loan modification.

A Phoenix bankruptcy attorney might be able to help a person whose financial challenges include being unable to make a monthly mortgage payment. The debt repayment plan of a Chapter 13 bankruptcy might reduce the burden of credit card debt, debts incurred through business ownership and other financial obligations to provide a consumer with manageable payments on non-mortgage debts. The reduced debt achieved through a Chapter 13 might help a consumer in the loan modification process by showing lower overall debt ratios in comparison to income.

Source: Fox Business, “Can bankruptcy court force home loan modification,” Justin Harelik, Feb. 5, 2013

Read more about our bankruptcy services…

Receive a FREE Consultation

Use the form below or call us at 602-456-6085 today. We’re here to help.

    Our Locations

    • Phoenix Office – New Wright Law Offices  2999 N. 44th St., Ste 600 Phoenix AZ 85018  Telephone: 602-456-6085 / 866-703-3287 Phoenix Law Office
    • Phoenix Office – Old Wright Law Offices  668 N. 44th St., Ste 320 Phoenix AZ 85008  Telephone: 602-456-6085 / 866-703-3287 Phoenix Law Office
    • Scottsdale Office  Wright Law Offices  7135 East Camelback Road, Ste 230 Scottsdale AZ 85251  Telephone: 480-845-0145 / 866-703-3287 Scottsdale Law Office
    • Tempe Office  Wright Law Offices  2238 S. McClintock Dr. Tempe AZ 85258  Telephone: 480-845-0145 / 866-703-3287 Tempe Law Office
    • Avondale Office Wright Law Offices  12725 W Indian School Rd, Suite E-101 Avondale AZ 85392  Telephone: 623-258-4480 / 866-703-3287 Avondale Law Office
    • Mesa Office Wright Law Offices  4856 E. Baseline Rd. Suite #104 Mesa, AZ 85206 Telephone: 480-845-0145 / 866-703-3287 Mesa Law Office
    • Glendale Office  Wright Law Offices  20325 N. 51st Ave., Suite 134 Glendale, AZ 85308 Telephone: 623-258-4480 / 866-703-3287 Glendale Law Office

    What our clients are saying…

    Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.
    I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!
    Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.
    Ben is a kind and down to earth attorney. He worked around my busy schedule as a single mom (school, full-time job, and daycare pick up and drop off times). He explained absolutely everything to me and was good about e-mailing. I am writing this review as a THANK YOU.
    I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.