If the Bank denies your loan modification and you still want to keep your home, a Chapter 13 may be an option; however, you will still need to show the U.S. Trustee that you can both afford to stay current on your mortgage payments as well as pay off your prearrange (the amount you are behind) over a 3 to 5 year period (see below for discussion on Chapter 13).
If you really cannot afford to keep your home, you should look into options to avoid the sale of your home at a sheriff sale, such as a deed in lieu or a short sale. If your home is sold at a sheriff sale, you will be liable to the bank for the total amount of the Court’s Judgment (the payoff); in addition, the foreclosure will hurt your credit score.
If a person does not qualify for a loan modification and still wants to keep his home, he can consider a Chapter 13 Bankruptcy. If he cannot keep his home and wants to be free of liability on the mortgage note, he should look into a deed in lieu or a short sale
Attorney Eli Tamkin is a Cleveland bankruptcy lawyer. He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.