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Can a Loan Modification Stop Foreclosure in Virginia?

In Virginia, a homeowner who is behind on their mortgage payments may face the threat of foreclosure. Foreclosure is the process by which a lender takes possession of a property due to non-payment of a mortgage. However, a loan modification can be a way to stop foreclosure and allow the homeowner to keep their home. Let’s explore whether a loan modification can stop a foreclosure in Virginia and the Virginia foreclosure laws you should be aware of.

Loan Modification Explained

A loan modification is a change made to the terms of an existing mortgage by the lender. It is intended to help homeowners who are struggling to make their mortgage payments by making their payments more affordable. The lender may modify the loan by lowering the interest rate, extending the repayment term, or reducing the principal balance owed. The goal of a loan modification is to reduce the monthly mortgage payment to a level that the homeowner can afford.

Advantages and Disadvantages of Loan Modification

There are several advantages to obtaining a loan modification. Most importantly, it can stop a foreclosure. If a homeowner is behind on their mortgage payments and facing foreclosure, obtaining a loan modification can halt the foreclosure process. Second, a loan modification can make the monthly mortgage payment more affordable, allowing the homeowner to stay in their home. It can also help the homeowner avoid the negative impact of foreclosure on their credit score.

However, there are also some disadvantages to obtaining a loan modification. Firstly, the process can be time-consuming and complex. It may take several months to complete the loan modification process, and there is no guarantee that the lender will approve the modification. Secondly, a loan modification may not necessarily reduce the total amount owed on the mortgage, and may even increase the overall cost of the loan. Thirdly, a loan modification may result in a longer repayment term, which means that the homeowner will be paying off the mortgage for a longer period of time.

Mortgage Loan Modification Process and Procedure

The mortgage loan modification process and procedure may vary depending on the lender and the homeowner’s specific circumstances. However, there are some general steps that are typically involved in the loan modification process. Firstly, the homeowner will need to submit an application for a loan modification to their lender.

The application will typically require documentation of the homeowner’s income, expenses, and financial hardship. Second, the lender will review the application and may request additional documentation or information. Next, the lender will evaluate the homeowner’s financial situation and may propose a loan modification with new terms and conditions. Finally, if the homeowner accepts the loan modification, they will need to sign new loan documents and make payments according to the new terms.

How You Can Get a Loan Modification

If you are a homeowner in Virginia who is struggling to make your mortgage payments and facing the threat of foreclosure, you may be eligible for a loan modification, but there are several steps to go through first. To get a loan modification, you will need to follow the steps outlined by your lender and provide documentation of your financial hardship. It is also important to seek professional advice from a foreclosure attorney who can guide you through the loan modification process and help you understand your legal rights and options.

What Qualifies as Financial Hardship for an Effective Loan Modification Request

To qualify for a loan modification, you must demonstrate to your lender that you are experiencing financial hardship. Financial hardship refers to a situation where you are unable to make your monthly mortgage payments due to a significant and long-term change in your financial circumstances.

Some common examples of financial hardship that may qualify for a loan modification include:

● Loss of employment or reduction in income
● Illness or disability that results in a loss of income or increased expenses
● Divorce or separation that results in a loss of income or increased expenses
● Unexpected and significant expenses, such as medical bills or home repairs
● Death of a spouse or co-borrower resulting in a loss of income

It is important to note that not all financial hardship situations will automatically qualify for a loan modification. Each lender has their own criteria for evaluating hardship cases. However, if you can demonstrate that your financial hardship is significant and long-term, you may have a better chance of being approved for a loan modification. It is important to consult with a foreclosure attorney who can help you understand the lender’s requirements and increase your chances of success.

Frequently Asked Questions

Q: What is foreclosure?

A: Foreclosure is the legal process by which a lender takes possession of a property due to non-payment of a mortgage.

Q: Can a loan modification stop foreclosure?

A: Yes, a loan modification can be an effective way to stop the foreclosure by making the monthly mortgage payment more affordable.

Q: What are the advantages of a loan modification?

A: The advantages of a loan modification include stopping foreclosure, making the monthly mortgage payment more affordable, and avoiding the negative impact of foreclosure on credit score.

Get in Touch With the Law Offices of Robert S. Brandt to Learn More About Foreclosure Laws and Schedule a Consultation

If you are facing the threat of foreclosure in Virginia, it is important to understand your legal rights and options. The Law Offices of Robert S. Brandt can help you navigate the complex foreclosure laws and procedures in Virginia and provide guidance on how to stop foreclosure and keep your home. I offer a free consultation to discuss your situation and determine the best course of action. Contact me today to schedule a consultation and learn more about how I can help you.


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What Happens After Filing Chapter 7 Bankruptcy?

What Happens After Filing Chapter 7 Bankruptcy
What Happens After Filing Chapter 7 Bankruptcy

Filing for bankruptcy can be a difficult decision to make, but sometimes it is the best way to start anew and regain control of your finances. If you have decided to file for Chapter 7 bankruptcy, it’s important to understand what happens next. Let’s discuss the things that happen after you file for Chapter 7 bankruptcy and how to get help from a Chapter 7 bankruptcy attorney.

An Automatic Stay Will Take Effect

As soon as you file for Chapter 7 bankruptcy, an automatic stay will take effect. This means that creditors are no longer allowed to pursue collection actions against you, such as wage garnishment, foreclosure, or repossession. The automatic stay will remain in effect until your bankruptcy case is discharged, dismissed, or closed.

A Bankruptcy Trustee Will be Assigned to Your Case

When you file for Chapter 7 bankruptcy, a bankruptcy trustee will be assigned to your case. The trustee’s role is to review your assets and debts and ensure that your creditors are paid as much as possible. The trustee will also oversee your bankruptcy case and can take action if they believe there are any discrepancies or fraud.

Any Liens Against Your Property Go Into Effect

If there are any liens against your property, they will go into effect when you file for Chapter 7 bankruptcy. This means that the creditor with the lien will have a secured interest in your property, and if you want to keep the property, you will need to pay the creditor the amount of the lien.

Legal Proceedings Will Continue or Begin for Your Case

Filing for Chapter 7 bankruptcy does not mean that all legal proceedings will come to a halt. If you have any ongoing legal proceedings, they will continue as usual. Additionally, if any new legal proceedings are initiated against you, they will continue as well. However, creditors will not be able to take any collection actions against you during the automatic stay period.

Request a Consultation With Chapter 7 Bankruptcy Attorney The Law Offices of Robert S. Brandt

Navigating the bankruptcy process can be complicated and overwhelming. That’s why it’s important to work with a skilled and experienced bankruptcy attorney like The Law Offices of Robert S. Brandt. I will guide you through the bankruptcy process, explain your options, and help you make informed decisions. If you are considering filing for Chapter 7 bankruptcy in Virginia, don’t hesitate to request a consultation with me today.


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I thought my mortgage and car payment was not part of the bankruptcy?!

I THOUGHT MY MORTGAGE AND CAR PAYMENT WAS NOT PART OF THE BANKRUPTCY?!

One of the most difficult and annoying things for people to understand when they file a chapter 7 bankruptcy case is that while they may be filing bankruptcy on the credit card debt, medical debt or some other personal loan, and not the mortgage or car loan, the bankruptcy law does not make that distinction. In other words, if you are filing a chapter 7 bankruptcy case your discharge will wipe out not just the credit card and medical debt, but also the mortgage and car loan. And that’s a good thing just so you know! When your case concludes virtually all of your debt on your credit report (exception being student loans) will state the words “included/discharged in bankruptcy” and will show a zero balance. That includes the mortgage and the car loan(s).

Does that mean that you can keep your house or car without paying the mortgage or making the car payments? No, of course not. Otherwise, I would be filing for bankruptcy myself tomorrow morning. If you want to keep your car or house you have to keep making the payments after bankruptcy. However, if for whatever reason you do not want to keep the house/car then at any time you can choose –so long as you do not sign a Reaffirmation Agreement- to stop paying for the house and/or car. At that point the bank can foreclose on the house or repossess the car, but they cannot come after you personally. This is an advantage that people outside of bankruptcy do not have. Another huge advantage is the fact that your $300,000 mortgage or $20,000 car loan is now being reported on your credit report as zero debt being owed. That does wonders for your debt to income ratio and ultimately your credit score. Nothing will make your credit score ascend faster than having 0 debt! That means you get to eat your cake and keep it too. As in, you get to keep the house or car even though the debt is not reported any longer on the credit report as would be the case had you not filed for bankruptcy.

As far as why the mortgage/car loan is showing “bankruptcy status” and why your statements are indicating zero owed the moment you file your bankruptcy case? The answer is as follows:  When you file your bankruptcy case all creditors are entitled to receive notice of your bankruptcy filing- whether you want to bankruptcy them or not, and whether you are behind or not on your payments is irrelevant.  Every bank that you owe money to is entitled to get notice of your filing. Moreover, in light of the automatic stay (the legal principle that states “I am in bankruptcy so do not even think about trying to collect money from me”) the creditors/banks send statements in such fashion and take the position that you “technically” do not owe them any money. Again, the reality is that if you want to keep the property you have to continue paying for it after you file your case. In this sense the bankruptcy has changed nothing. You pay you keep, you do not they take!


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Do I have to include all my debts in bankruptcy?

Do you have to include your house in bankruptcy? How about your car, does the car loan have to be included in the bankruptcy? The answers are yes on both counts. The bankruptcy law, in this regard, is pretty straight forward. Any debt that you have on the day of the filing of your bankruptcy case must be included in your bankruptcy petition.

So, while you may want to bankrupt only your credit card debt and leave the house and car out of it, the bankruptcy law says otherwise; all debt must be listed.  BUT, just because you have to list the creditors that you do not want to bankrupt like your mortgage and car loan that should not cause you any alarm.  Putting aside the issue of Reaffirmation Agreements (to be discussed in different blog) and assuming that the car/home does not have a ton of equity that cannot be exempted as part of your bankruptcy case, then the fact that the mortgage/car loan were included will not have any negative consequence.  At the end of the day, as long as you continue to make your car/mortgage payments, then you will be able to retain your car/home. The filing of your bankruptcy case will not change that.

Same goes for student loans. While they are almost always non-dischargeable –meaning, you are stuck with them despite the bankruptcy filing- they still have to be listed in your bankruptcy case.

As for money owed to friends or family members, believe it or not, they are considered creditors just like everyone else and must be listed in your bankruptcy petition. If on the other hand, the money given to you by that person was considered by them to be a gift, then there is no loan, they are not a creditor, and they need not be listed.

Also keep in mind that just because you listed your cousin as a creditor because you owe him some money, does not mean that you cannot pay him back. After your bankruptcy case has concluded you are free to pay back any creditor you like, including your cousin.

You should NOT however try to pay back money owed to family members prior to the filing of your bankruptcy case!

Finally, bear in mind that at the meeting of creditors the trustee will ask you if you have listed all of your debts and all of your assets? By debts he means creditors. Can you lie to him at that point? Sure you can. Is it advisable? Absolutely not!  If you get caught in that lie then your bankruptcy case can get dismissed with prejudice and you are now stuck with all that debt. In addition, if the US Attorney’s Office has some free time on their hands, you may also be prosecuted for bankruptcy fraud.

The morale of the story: regardless of what type of debt it is or who it is owed to, each creditor is entitled to notice and must be listed in your bankruptcy petition.


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Why People Declare Bankruptcy?

There are many misconceptions as to why people declare bankruptcy.  For starters, filing for bankruptcy is anything but an easy decision for folks. As just about any bankruptcy lawyer will tell you, the vast majority of people dread declaring bankruptcy. This is not a decision people choose to make, but rather one they have resigned themselves to make.  How do I know this to be true? Because my clients have repeatedly told me this. When they recount their stories and what has led them to their financial difficulties, I see the pain and shame in their faces and hear the heartbreak in their voices. Declaring bankruptcy is a very difficult decision to make for them.

Another misconception that you frequently encounter is that “these people are working the system,” as if they have planned their bankruptcy filing for months, if not years.  My clients have desperately tried everything in their power to avoid filing for bankruptcy. They have called their credit card companies to try to work out a payment plan, they have tried credit counseling with Money Management or some other company, they have cleaned out their retirement accounts, they have moved in with their parents or some other relative.  In short, my clients have done everything under the sun to avoid having to sit in my office chair and declare bankruptcy.

Finally, as for the assertion that “these people” simply do not know how to mange their money and live within their means, I can assure you, trips to Europe or shopping sprees is not what is leading the vast majority of my clients to file for bankruptcy. Yes, of course, there is always the “rotten apple,” the individual who takes advantage of the system, but for the other 90%, the following are the real reasons that push people into declaring bankruptcy.

Illness or disability – If you have managed to make it through your entire career without being seriously injured for a prolonged period of time or permanently disabled to the point that you can no longer perform most jobs, then consider yourself lucky.  By the time your Social Security disability income finally kicks in, you will be fortunate to receive half of your previous salary, making it nearly impossible to survive.

Unemployment –  Unless you have been living under a rock, you know that the unemployment rate is pretty darn high these days. Been out of work for 1.5 years like my father was a couple of decades ago, and well, it becomes pretty hard to pay your bills. And even then, people will usually avoid filing for bankruptcy, will rejoin the workforce and will try to climb out of the hole. Problem is, at some point, it becomes the point of no return.  It becomes nearly impossible to pay off $30,000 in credit card debt at 20% APR when all you are making is $60,000 per year.

Divorce – I would say that about one third of my clients have divorced within five years prior to arriving in my office or are in the midst of divorcing. The ramifications of divorce are not always instantly felt. However, the fact of the matter is, for most people (women in particular), the writing is already on the wall.  With no alimony, kids to raise, and a merely a decent pay check, these newly divorced folks become more and more dependent on credit cards, pay day loans, car title loans, and personal loans. Eventually, the music stops.

Failed businesses – Once the government contracts dry up or the economy slows down, the LLC or Corporation begins to fail. Unfortunately, some individuals go down with their sinking ship. Business owners have guaranteed personal loans or have used their personal credit cards in a desperate attempt to save their business.  As the business is no longer profitable and the debt begins to mount, creditors begin to pursue these folks personally and bankruptcy is typically the only way out.

Underemployment – People like to talk a lot about unemployment numbers, but I think the statistic that hides in the shadows and is often overlooked is the fact that millions of people in this country, particularly those living in more expensive parts of the country like Alexandria, VA and Fairfax, VA, simply do not earn enough money.  They can barely cover their bills, but when it comes to anything “extra,” like a trip to the dentist, the basement floods, or the car has to be taken to the mechanic for major repairs, there simply is not enough money in the bank.  That is when credit cards and personal loans become relied upon out of mere necessity.  This typically goes on for years as the individual faithfully pays at least the minimum balance each month.  Eventually, the amount of debt becomes insurmountable and the only way to escape is to file for bankruptcy.

We need to stop referring to people who have filed for bankruptcy as “deadbeats.”  It not only demonstrates insensitivity, but also a great deal of ignorance as to why people declare bankruptcy in the first place.  So, my advice is “judge not, lest you be judged.”

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