Modifying Your Mortgage in Chapter 13


Under present Chapter 13 bankruptcy law, a mortgage secured only by a principal residence is not modifiable in Chapter 13 bankruptcy. Chapter 13 law does though allow one to cure and reinstate the arrearage on such a mortgage. Also a wholly unsecured or "underwater" second mortgage on a principal residence may be avoided.

The rule against mortgage modification though does not apply to mortgages on a second home or investment property and such mortgage are generally modifiable.

Under the Bankruptcy Court's new "Loss Mitigation Mediation" program, one may be able to obtain a modification of his mortgage. The Bankruptcy Court appoints a mediator who assists in negotiating a modification. Modification of a principal residence mortgage may include various provisions of the mortgage. First and foremost, modification may include a reduction in the interest rate, the monthly payment and the amount due down to the value of the real estate. .