Loan Modifications in Bankruptcy

Oftentimes a client will obtain a loan modification while the bankruptcy case is pending.  The lender may require court approval of the loan modification.  If so, your attorney will need to file a Motion for Approval of the Loan Modification.

Here are the procedures in San Diego.

This is the type of motion where no hearing is set unless someone files an objection and requests a hearing.  If a person wishes to object he must file the objection and request the hearing no later than 17 days from the date you serve the notice of motion.

In San Diego, your attorney will need to prepare 3 documents:

  1. A Court form Notice of Motion.  That’s form 1182
  2. A typed motion.  In this documents briefly explain the terms of the loan modification, i.e. what the new interest rate and monthly payments are and that the modification will not injure the interests of the creditors or the debtor
  3. A declaration by the debtor again briefly explaining the terms of the modification.  The loan modification documents should be attached.

The documents need to be filed and served on the trustee and US trustee.

If you’re an attorney and filing electronically first file form 1182.  Make sure you use the correct Event.  Use the Event specifically for 1182 notices.  That way, when you file the 1182, the system will automatically create an entry in the docket setting the time limit.  After you file form 1182 then file the Motion and the Declaration.  Once the 17 days passes upload the Order for the Judge to sign.

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