Can An Attorney Help Me Modify the Terms of a Loan?

Can a Lawyer Help You Obtain a Loan Modification?

You may be experiencing financial difficulties and considering a bankruptcy filing to get a fresh start. However, your problem may be limited to one or a couple of loans that you simply can’t afford to pay. Can an attorney help you renegotiate the terms of those obligations such that they become affordable and you don’t have to seek protection in bankruptcy?

The answer is yes. Furthermore, most lenders would prefer to restructure your loan than have you file for protection in bankruptcy. Once you file for bankruptcy protection, your lender is prohibited from calling, writing or taking any legal action outside of the bankruptcy proceeding to attempt to collect on the loan. During the period of the bankruptcy, you generally don’t have to make payments and cannot be subject to legal action. In addition, if you file a bankruptcy petition, your creditors (including your lender) will likely incur legal fees to protect their interests.

An experienced bankruptcy lawyer will know how to work directly with your lender to work out new payment arrangements that lower the interest rate or extend the repayment period, or both. In many instances, your attorney can get late fees and penalties waived, and may be able to get any past due amounts folded into the new principal balance.

You can, of course, try to work directly with your lender. Your lender, however, doesn’t have your best interests at heart, but is only trying to protect his or her organization’s best interests. An attorney is duty bound to zealously represent you, and will make certain that you understand all your legal rights. Your lender may limit discussions to a single option, one that is best for the lender. A lawyer will make certain you understand all your options, and will fight to get the best outcome for you.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).

Exceptions to the Automatic Stay Afforded by the Bankruptcy Laws

When you file a petition in bankruptcy, you are immediately entitled to certain protections provided by the automatic stay established by federal law. This prohibits creditors from calling, writing or taking any legal action outside of the bankruptcy court to collect the debt. There are, however, certain obligations that are exempt from the automatic stay. These include:

  • Certain family law/divorce payments or arrearages—All payments of child support or spousal support ordered by a court are typically unaffected by the automatic stay. This includes any efforts by a court or state administrator to collect payments due for alimony or child support.
  • Repayment of a pension loan—If you borrowed funds from an ERISA-qualified pension plan, including a 401k or an IRA, the automatic stay does not prevent withholding from your income to repay that loan.
  • Debts related to real property—Because the automatic stay suspends legal proceedings, it will typically prohibit any attempt to evict you from rental property. However, if your landlord obtained a judgment of possession of the premises before you filed for bankruptcy protection, you will not be able to forestall the eviction through your bankruptcy filing. If, however, you can show that the eviction stemmed from your failure to pay rent, you may be able to successfully reinstate the automatic stay. An automatic stay will also not be valid in an eviction proceeding where your landlord can show that you are engaged in the illegal sale, manufacture or use of controlled substances, or that you are taking actions that will lead to the destruction of the property.

Losing the Protection of the Automatic Stay

There are also a couple ways to lose the automatic stay, once it is in place. If you fail to meet deadlines set by the bankruptcy laws, you can have the automatic stay revoked. In addition, if you filed one other bankruptcy proceeding within a year prior to the current petition, the automatic stay only goes into place for 30 days (although it may be extended by asking the court to extend it). If you have filed two other bankruptcy proceedings in the year prior to the current petition, the automatic stay does not go into effect unless the court orders that you be protected by the automatic stay.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).

Can You Prevent the Loss of Your Home or Car by Filing for Bankruptcy Protection?

If you have fallen behind on your mortgage or car payments because of the loss of your job, medical expenses, a divorce, or for any other reason, you may live in daily fear that you will lose your home or your vehicle. You may have considered filing for bankruptcy, but heard conflicting stories about whether or not you can protect real property or a car through a bankruptcy petition. Here’s what you need to know.

The Automatic Stay Provided by the Bankruptcy Laws

When you file for bankruptcy, an automatic stay immediately goes into effect, suspending all legal action related to any debt that is part of the bankruptcy. This means that your creditors cannot call or write you in an effort to collect on a debt. It also means that they cannot initiate or continue any legal action (outside of the bankruptcy proceeding) and that all legal efforts to collect from you, or to foreclose on or repossess your property must immediately stop. In order to take advantage of the automatic stay, however, you must file for bankruptcy protection before the foreclosure sale, or before your vehicle has been repossessed. It may be possible, with respect to a car, to get the vehicle back if you file for bankruptcy after it has been repossessed, but before it has been sold at an auction.

Discharge vs. Reorganization of Your Debts

Some creditors, such as credit card creditors and medical creditors, are unsecured creditors. This means that there is no specific piece of property that their debts are attached to. On the other hand, some creditors are secured creditors. The most common secured creditors are automobile lenders, who hold a lien on the car, and mortgage companies, who hold a mortgage on a home. Both Chapter 7 and Chapter 13 bankruptcy let you discharge most of your debts. However, if you want to keep the property which is subject to a secured creditor’s lien or mortgage, you need to keep paying that secured creditor.

A Chapter 13 bankruptcy provides a unique opportunity to have your unsecured debts discharged and to restructure your secured debts. While it is typically not feasible to change the terms of mortgage loans in a Chapter 13 bankruptcy without the cooperation of the lender, it is often times possible to change the terms of car loans. For example, in a Chapter 13 bankruptcy many individuals are able to reduce the total amount they need to pay to their auto lender by lowering the effective principal balance owed and interest rate to be paid to the auto lender. In addition, these payments can be stretched out over 5 years, so if you have a car payment that is too high, but only two years left on payments, then you can lower your monthly payment so that it is instead paid out over 5 years.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-759-6022 (toll free at 866-662-3191).