How does loss mitigation in the Eastern District of Pennsylvania work?
The Bankruptcy Court in the Eastern District of Pennsylvania allows a Debtor to seek loss mitigation options with a lender; however, the loss mitigation process is handled outside the scope of the Bankruptcy with little to no supervision of the loss mitigation process itself.
Essentially the Court gives the Debtor a limited amount of time to work on a loan modification with the lender outside the bankruptcy, usually 8-10 months after filing of the Bankruptcy Petition. Consequently, it is even more important to hire an attorney that specializes in handling bankruptcies and loan modifications in the Eastern District of Pennsylvania to ensure that the proper documents and forms are submitted to the lender in a timely manner.
What is the New Jersey loss mitigation program?
In recognition of the mounting number of foreclosures on residential and commercial properties in the current unstable economy, the United States Bankruptcy Court for the District of New Jersey adopted a Loss Mitigation Program which became effective in 2011.
The Loss Mitigation Program is designed to function as a forum for debtors and lenders to reach a consensual resolution when a debtor’s residential property is at risk of foreclosure. The program aims to facilitate such a resolution by opening and maintaining the lines of communication between the debtors and lenders. The Loss Mitigation Program encourages the parties to finalize a feasible and beneficial agreement with the assistance and supervision of the Bankruptcy Court.
Loss mitigation is intended to describe the full range of solutions that may avert the loss of a debtor’s property to foreclosure, increased costs to the lender, or both, and may include loan modification, loan refinance, forbearance, short sale, surrender of the property in full satisfaction, or some combination of these agreements.
The New Jersey loss mitigation program.
Any individual or joint debtor filing for relief under Chapter 7, 11, 12 or 13 of the Bankruptcy Code is eligible to participate in the Loss Mitigation Program, provided that they possess real property or a cooperative apartment that is used as a principal residence. However, almost all loss mitigation cases are filed and prepared in a context of a Chapter 13 Bankruptcy.
At the beginning of the loss mitigation process, the Loss Mitigation Parties should discuss the following:
- The time and method for conducting the loss mitigation sessions
- The types of loss mitigation solutions under consideration by each party
- A plan for the exchange of required information prior to the loss mitigation session, including the due date for the debtor to complete and return any information request or loss mitigation paperwork that each creditor may require.
At any time during the loss mitigation period, a Loss Mitigation Party may request a settlement conference or status conference with the Bankruptcy Court. They may also request an extension of the loss mitigation period. If a party does not consent, the Bankruptcy Court will schedule a hearing to consider whether further loss mitigation sessions are likely to be successful.
To ensure that the process proceeds in a timely manner, the Loss Mitigation Parties are required to provide the Bankruptcy Court with status reports according to the time set by the Bankruptcy Court in the Loss Mitigation Order. The Loss Mitigation Parties must seek Bankruptcy Court approval for any resolution or settlement reached during this loss mitigation.