What are your options if you cannot afford your current mortgage payment and you are a Chapter 13 debtor? Well, you can surrender your home or you can try to modify your mortgage payment. The option to modify your mortgage payment may be available to you in a chapter 13 bankruptcy before your case is confirmed if you cannot afford your current payment, want to keep your home, and you can afford to pay 31% of your net income to a modified mortgage payment.
What is mediation? Mediation is an informal meeting conducted to resolve disputes and reach an agreement. Mediation is conducted by a neutral intermediary. The mediator is selected by you and your lender. You would pay for the cost of the mediator. The mediator would help you and your lender reach a mutually satisfactory agreement. The mediator cannot force a lender to modify your mortgage. The mediator must be completely impartial.
If you are interested in a mortgage modification while in Chapter 13 bankruptcy you would need to request mediation to participate in the Mortgage Modification mediation program. If you qualify for the mediation program you or your attorney would need to complete and file a Motion for Referral to Mortgage Modification Mediation. The Bankruptcy Court will then enter an order requiring you and the lender to mediate within 60 days. You will have to pay $306.00 to your Chapter 13 Trustee before the mediation for the mediator’s fees. You and the lender will need to agree upon an approved mediator. If you cannot agree upon the mediator the Court will choose one for you. At least 10 days before mediation you will have to provide certain financial information to the lender.
Additionally, the lenders attorney is allowed $300.00 for fees to attend the mediation, which will be paid either through your Chapter 13 Plan or through the mortgage modification. If an agreement is reached at mediation, the Bankruptcy Court will still have to approve the agreement before it is enforceable.