Are House Payments Made Through A Chapter 13 Plan?

23 Nov Are House Payments Made Through A Chapter 13 Plan?

Chapter 13 plans come in all shapes and sizes.  They vary from district to district.  The amount paid through the plan can vary as well, so long as certain minimums are met.  My colleague, Brett Weiss, wrote an excellent article on the requirements for calculating plan payments.

Often a chapter 13 is filed when the debtor is behind in her house payments.  In fact, one of the only ways to avoid losing a house through foreclosure is to file a Chapter 13 bankruptcy.  Under those circumstances, the arrearage owed on the house must be paid through the plan.  

Does that include the regular house payment?  The issue here is that all payments made through the plan will also have to include a percentage to the trustee assigned to the case.  That can be as much as ten percent of everything paid.  If the house payment is included in the plan, the amount of the monthly payment will be increased by 110% of the house payment to take care of administrative costs – the trustee’s fees.

In some districts, if you are behind in your house payments and getting caught up through the plan, you have to include the normal payment through the plan as well.  In some districts, it’s optional – you can include the mortgage payment in the plan, but you don’t have to.  It depends on where you live and the local rules of your bankruptcy court.  One more reason why you need competent, knowledgeable counsel to file bankruptcy.

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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.
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