Berwyn Bankruptcy Attorney, Mortgage Arrears & Your Chapter 13 T...

Berwyn bankruptcy attorney claims that whether it’s a first, second, or third mortgage, the debtor makes those payments directly outside of the Chapter 13 bankruptcy plan to the mortgage companies.  If there are mortgage arrearages, then those arrearages are paid by the Chapter 13 trustee.  The Chapter 13 plan is going to consist of the arrearages, any other type of financed vehicle debt, as well as any other type of debt.  All those debts sit in a pot, and from that pot, the Chapter 13 trustee makes distributions to creditors once per month.  If the debtor is current on the mortgage payment, then there is no arrearage that the trustee has to administer.  The trustee will simply administer other assets or other monies on behalf of other creditors.   

In the event that there is an arrearage, then the trustee will make adequate protection payments and then further payments once the plan is confirmed to those mortgage companies.  The amount of the arrears must be paid back within a three-to-five-year period.  Chapter 13 plans cannot exceed 60 months, so you must have the ability to repay your mortgage arrears and either all or a portion of your other debt over a three-to-five-year period.  The Chapter 13 trustee will determine what you are required to pay into the plan each month based on your income, your expenses, your assets, and your liabilities.  This approval is done through a confirmation hearing.  At the confirmation hearing, the trustee will stand up and either recommend or deny confirmation of your plan.   

In the event that the plan is recommended for confirmation, the payment plan becomes solid, and as long as you as the debtor continue to make your monthly payments, you are going to have success in your Chapter 13 bankruptcy case.  If, on the other hand, the Chapter 13 trustee stands up and says he cannot recommend your plan for confirmation, then he must give a reason to the court and to the debtor and to your attorney as to why the case is not being recommended for confirmation.  Oftentimes the matter can be put over for two to four weeks to allow the debtor and the debtor’s attorney to make modifications to the plan and/or amendments to the schedules to allow for the trustee to be in a position to recommend confirmation.  If the case cannot be recommended for confirmation, then it will eventually be dismissed on a trustee’s motion to dismiss for denial of confirmation and the inability of the debtor to propose and get a plan confirmed.