What happens if they deny my loan modification?

If you are serious about keeping your house, you have to be able to answer this question. You can’t rely on a lender approving a loan modification, you need to have a back up plan. Only a bankruptcy will stop a foreclosure auction without the mortgage company’s consent. Nothing else you can do will ensure that a scheduled foreclosure auction will not go forward.

A bankruptcy can also assist in getting a loan modification in two ways. One way it can help is by eliminating other debts, the freeing up more money to pay more towards your modified mortgage. The other advantage is the bankruptcy will give you additional time to complete the loan modification process even if there is a pending foreclosure auction date. You can get a loan modification approved while you are in a bankruptcy.