In the case of In re Claudie J. and Deborah D. Hairel, 2012 WL 2090435 (Bankr. M.D. Fla. 6/8/12), the Bankruptcy Court ruled that neither the automatic stay or the discharge injunction prevented a lender from modifying a mortgage with the debtors after they received a discharge in their Chapter 7 bankruptcy.

The mortgage was held by U.S. Bank, N.A. and serviced by American Home Mortgage Servicing, Inc.  After filing Chapter 7 bankruptcy, the debtors submitted a Home Affordable Modification Program application, which the lender approved.  After the debtors received a discharge, the lender asked the for the Court’s approval to enter into the loan modification.  The debtors did not enter into a reaffirmation agreement.

The Court said “[t]he automatic stay of 11 U.S.C. Section 362(a) arose by operation of law on the petition date of March 17, 2011.  The mortgage debt is dischargeable pursuant to 11 U.S.C. and was discharged on June 28, 2011.  The automatic stay and the discharge provisions of the Bankruptcy Code do not prevent the parties from negotiating and entering into a loan modification postpetition.”

—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing