Our Stories

Fighting Loan Modification Fraud in the Bankruptcy Court

U.S. Bankruptcy Court, Central District of California

Many people filing for bankruptcy today are financially responsible and never imagined they would be insolvent. Layoffs, reduced work schedules and/or unexpected medical expenses have wreaked havoc on our community. 

An elderly couple visited Public Counsel's Bankruptcy Self-Help Desk because they were afraid of losing their home.  They had negotiated a "trial" loan modification and were current with their payments to their lender. 

Disappointingly, their lender still proceeded to file a Motion for Relief from Stay in the bankruptcy to foreclose on their home, on the theory that the they had fallen behind on their original mortgage loan obligation. 

The couple was terrified that they would lose their home, and their health suffered as a result.  Fortunately, the staff and pro bono volunteers at the Self Help Desk quickly analyzed the situation and assisted them in preparing an opposition to the lender's Motion for Relief from Stay. 

After receiving the opposition brief, the lender immediately withdrew its motion. 

The couple now has peace of mind that they will not lose their home to foreclosure while they conclude their loan modification.