Bankruptcy Basics: Mortgage Workout Compared to Chapter 13 Bankruptcy.
A chapter 13 bankruptcy can often be structured to give the homeowner a plan similar to a mortgage workout. But there are differences. Unlike a workout involving a loan modification, a chapter 13 bankruptcy plan will generally not change the interest rate or loan term for the mortgage as a whole, and will not involve forgiveness of delinquent amounts. There are also expenses to file a bankruptcy case and a portion of the payments paid under the plan (approximately ten percent) will be retained by the bankruptcy trustee as a commission.