The US Bankruptcy Court for the District of Rhode Island is one of only two such courts that have a loss mitigation (loan modification) program in place. Either the debtor (you) or your creditor (lender) can move to put this program in motion after you file for either Ch. 7 or Ch. 13 protection. The Court assists the parties In making the determination of whether or not a loan modification will work for the debtor and lender by controlling the time it takes to get a loan modification and moving the parties along the process. If a debtor qualifies (in arrears or in jeopardy of foreclosure; loan amount under $729,750.00; mortgage older than 1/1/09; current mortgage payment (PITI] is more than 31% of homeowner’s monthly gross income) the lender will try to reduce the monthly mortgage payment to 31% of the debtor’s gross (pre-tax) income. This can be done by any combination of the following methods: reduce interest down to 2%; extend the term of the loan out to 40 years from the date of modification; and/or deferring a portion of principal, interest-free until the loan is paid off. If a debtor qualifies and the new modification meets the lenders Net Present Value Test, the Court reviews the Loss Mitigation Order and approves or rejects it. If approved, the modification is in place until the loan is paid off, regardless of the debtor's future financial circumstances.