Tuesday, March 2, 2010

New Rules for Mortgage Modifications in Massachusetts Bankruptcy

Today, the Massachusetts Bankruptcy Court issued an emergency standing order rendering void provisions in proposed loan modifications that state that the automatic stay will be lifted or waived upon default of the debtor. The order can be viewed here: http://www.mab.uscourts.gov/pdfdocuments/so10_02.pdf. This is a good rule. Debtors are often desperate for loan modifications in bankruptcy and will agree to anything that lowers their loan payment. The new rule prevents them from bargaining away the automatic stay if they default on their loan modification payments.