Once you file a Chapter 13 case your lawyer will tell you about Chapter 13 plan payments and about the importance of making each payment on time in the way that the trustee requires for your district. But, if you are also supposed to continue making mortgage payments to your bank, please make those payments on time as well.
About five years ago, Congress enacted Bankruptcy Rule 3002.1 as a way to help debtors in Chapter 13. Prior to that, for many debtors, the completion of their Chapter 13 case did not mean the end to troubles with their mortgage lending bank. During many bankruptcy cases banks were adding fees to mortgage accounts without the homeowners’ knowledge. Then after the bankruptcy was completed the bank would demand money from the debtor threatening foreclosure if it was not paid. The debtor, just freshly out of bankruptcy, would be facing foreclosure again.
To prevent this Congress passed Bankruptcy Rule 3002.1 which requires a bank to file a statement with the court whenever it adds a fee or charge to the homeowner’s account during the five years the Chapter 13 case is pending. The bank also has to file a statement at the conclusion of the Chapter 13 informing the court whether the debtor has paid all mortgage payments that had come due during the case. The thinking was that this way the banks were being supervised.
But since this Rule was developed and Chapter 13 trustees are now being served with a document detailing a debtor’s payment history, the trustees will now object to the debtor’s discharge on the basis that the debtor has missed a few payments or had been late on payment. How? The debtor’s Chapter 13 plan typically contains a provision that the debtor will make a monthly payment to the trustee for distribution to creditors AND continue making mortgage payments if retaining the family home. If the mortgage was not paid, some trustees in certain jurisdictions have begun to refuse to certify the the debtor made all payments under the plan under section 1328(a).
So what can you do to make sure you get your discharge after working so hard for five years to make payments under your Chapter 13 plan? Make all your payments on your mortgage every month on time and keep your payment records. If you miss any payments consult with your lawyer right away. Your lawyer may be able to make a formal request to the court to give you additional time to catch up on payments if you have fallen behind.