Remaining current on your mortgage payment after you file Chapter 13 is a requirement of your Chapter 13 confirmation order. In many areas of the country your ongoing mortgage payments must be made through the Chapter 13 Trustee. In the Northern District of New York courts, you generally make your mortgage payments directly to the mortgage company. Of course, during the 3 to 5 years of your Chapter 13 many unexpected events may happen. Income could decrease, expenses could increase, the American economy could collapse. So what happens if you get behind on your mortgage payments?
It will not take the mortgage company too long to react to your getting behind in payments. They will either:
1) Write your attorney a letter informing her/him of your missed payments.
2) Make a motion to the bankruptcy court to lift the automatic stay.
3) Send the court an ex-parte affidavit of default and ask the court to lift the stay. In the Northern District of New York, the confirmation order gives the mortgage creditor the right to do this if you get three months behind. In this case, you do not get an opportunity to oppose their application.
As with most other questions that come up during your Chapter 13, you should contact your attorney as soon as you know you are having problems. Do not let yourself get three months behind because it may be too late for your attorney to do much to help. Discuss with her/him your situation and fully discuss your options.
If you fell behind due to an unforeseen emergency, and you are able to start making payments again and get caught up in a reasonable amount of time, you can try to enter into a Conditional Order with the mortgage company to allow you time to get caught up. You will usually be given between 60 to 90 days depending on your situation. Of course you must continue to keep your mortgage payments current. If the mortgage creditor does not agree to give you a chance to catch up, you can bring it before the judge and ask him to sign a Conditional Order that allows you the time to catch up.
If you fell behind because of a more permanent change of circumstances, you will want to explore other options with your attorney. It may be time to give up the house, and maybe convert your Chapter 13 to a Chapter 7. If you are also behind on your Chapter 13 plan payments, your Trustee may make a motion to dismiss your case. If your case gets dismissed, you may be eligible to file a new Chapter 13. The new case would allow you to pay all of your mortgage arrears, including all missed payments up to the date that your new Chapter 13 was filed. There are some hoops you will have to jump through, but under the right situation you can get this second chance.