A Chapter 13 Plan and an Adjustable Rate Mortgage

by Douglas Jacobs, Esq.

December 8, 2007

So, you filed a Chapter 13 bankruptcy, had the plan confirmed, and are happily making your payments.  In many cases those payments include the mortgage on your home.  And then it happens: the interest rate adjusts, and your house payment jumps $200 or more!

Now what?  First of all, don’t panic.  Go see your Bankruptcy attorney.  One of the best things about a confirmed chapter 13 plan is that it can be modified.  A change in a secured payment is a perfect reason to adjust the plan.

Changes don’t just mean increasing your payments.  Often, when this happens you can reduce the amount you are paying to unsecured creditors or stretch the term of the plan longer.  The payment in the Chapter 13 Bankurptcy may well stay the same!

If you are paying the mortgage outside of the plan, you can still file to modify the Chapter 13 Bankruptcy plan by explaining the increase in mortgage payment to the bankruptcy court, and reduce your payments accordingly.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.

Last modified: May 25, 2013