Homeowners all over the Sacramento area are taking stock of their finances to plan ahead for the New Year. Mortgage obligations can lead to financial stress when mortgage payments change or income fluctuates. Fortunately, Chapter 13 bankruptcy provides various opportunities for homeowners to delay or prevent foreclosure and pay off backed up payments on their mortgages. Chapter 13 bankruptcy can even help with home loan modifications.

The following scenario happens way too often: The homeowner wants to refinance or modify the mortgage to get a more favorable interest rate or payment and avoid foreclosure. So, the homeowner submits applications to the bank. Over and over the application is either denied or sent back multiple times requesting more information. Some people try several times and still end up without success in their modification attempts. What’s worse is that during this time that the bank has been stringing the homeowner along, more months of missed payments accrue.

After all these depressing procedures have been exhausted, many homeowners then contact a bankruptcy attorney for help. The problem is that it may be too late. If the amount of back mortgage payments is too high, it might not be possible to create a feasible Chapter 13 plan to save the home.

That is why it might be a good idea to talk to a bankruptcy attorney much earlier. Then the homeowner can pursue a loan modification while under the protection of the Bankruptcy Code. This means that the worry of foreclosure would be gone and the homeowner can catch up on past payments and stay current with ongoing payments while the application is pending. Nothing about a Chapter 13 bankruptcy specifically makes it so a homeowner is not allowed to go after a loan modification.

The many benefits of filing a Chapter 13 bankruptcy include: stopping foreclosure sales, forcing the mortgage company to accept repayment of past due amounts, eliminating unsecured debts like medical bills and credit cards, and the bankruptcy can be voluntarily dismissed if necessary. All the while, the homeowner can continue to pursue a loan modification to lower the regular monthly payments on the mortgage.

It is even possible that the loan modification could move along faster once the bankruptcy is filed. This is because a mortgage lender typically sends bankruptcy files to a different department with different staff people than those folks that were rejecting the homeowner’s application over and over again. So, filing Chapter 13 bankruptcy could actually improve the chances of receiving a beneficial loan modification.

It’s a great time to explore options to make 2016 a financial successful year. Contact a bankruptcy attorney to discuss options today.