How is bankruptcy affected by HAMP guidelines?

In the recent economic downturn, the mortgage industry has been badly affected. Many borrowers were unable to keep their accounts current. Aside from that many people lost their jobs, which made it impossible for them to meet payments. Not only were defaults numerous but also the filings of bankruptcy among homeowners.

Usually, when an individual files for chapter 7, the home can be foreclosed if the debt is not reaffirmed. A debtor cannot reaffirm the debt if he or she has lost his or her job. The house would then be lost to the creditor. The federal government does not want a lot of people or families losing their homes. The Home Affordable Modification Program has given homeowners a lifeline and a means to protect their homes from getting foreclosed. This means that HAMP has given homeowners hope to hold on to their dream homes.

The HAMP guidelines require creditors to review the borrower's eligibility for modification of his or her mortgage even when the debtor is in bankruptcy. The bankruptcy lawyer or trustee can even do the negotiation with the lender. Even if there is already a foreclosure initiated on the property, it has to be stayed until such time that the lender will determine the borrower's eligibility under HAMP.

If you are currently in bankruptcy and in danger of losing your home, get in touch with your lawyer or bankruptcy trustee to discuss if you are qualified for HAMP. Even if you are not in bankruptcy and has been a good payer, you can still avail of HAMP and get your loan terms modified.