DebtDoc Bankruptcy News Blog

Wednesday, 22 May 2019 22:34

U.S. Bankruptcy Appellate Court Reverses Chapter 13 Plan Modification Roadblocks

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A recent Bankruptcy Appeals Court decision changes the way plan payments are defined and when plan modifications are consequently considered allowable.

In a chapter 13 repayment plan, debtors who are catching up on missed mortgage payments make payments to a trustee to get caught up on the missed payments, while continuing to make their regular ongoing monthly payments directly to the mortgage company. It used to be that a debtor could complete their bankruptcy case when they made all their scheduled trustee payments, even if they weren't current in the monthly mortgage payments that came due after the case was filed.

Rules changed a little over a year ago that requires a mortgage company to file a statement at the end of a chapter 13 as to whether the debtor is current or not. This is good, because it means that a debtor can exit their bankruptcy with confidence that they have fixed their mortgage problems. But it now means that the trustee and other creditors know if the person hasn't made their mortgage payments. Since the chapter 13 plan payment is based on a promise that the debtor will also make all mortgage payments, a case can now be dismissed if they miss mortgage payments during their case.

If you are in a chapter 13 plan and are having difficulty paying both the trustee and your mortgage, call your attorney ASAP! You may have options, but timing is important. Call attorney Chris Bush, at 619 295‑3322, if you need help. He is an experienced bankruptcy attorney and consumer debt advocate. He’ll help you find the best solution to your debt burden and get back you on a track to financial freedom.

Read 199 times Last modified on Wednesday, 22 May 2019 22:44
Chris Bush

With over 12 years of experience and thousands of cases as a consumer bankruptcy attorney, Chris Bush is on the cutting edge of Bankruptcy and Student Loan Law. Chris can assist you in untangling the options to find the best solution for your specific debt relief case.

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