Money is what dictates the success or failure of a Chapter 13 bankruptcy case. I am constantly advising clients as a Crestwood bankruptcy attorney that the plan paymentis not the only payment that a debtor has to make while he is in a Chapter 13. In the case of a homeowner who is paying mortgage arrears through a Chapter 13 trustee, there will also be the obligation to make a current mortgage payment. Thus, when an individual debtor files a Chapter 13 bankruptcy case and is trying to reorganize the arrearage that might have fallen upon the house, the debtor must make the Chapter 13 plan payment and he must make the regular mortgage payment inside the bankruptcy case once again.
What typically happens is the debtor will be able to make the bankruptcy Chapter 13 trustee payment because that’s being deducted out of his check, but he will have a problem making his regular mortgage payment outside of the bankruptcy case because that payment is not being decided from his check. Payments being deducted from the check are going to limit the amount of money that the debtor has disposable-wise per month. It is from that disposable income that the debtor must make his post-petition mortgage payment outside of the plan as well as all of his other necessary living expenses like food, clothing, housing, utilities, transportation, etc.
If the debtor falls behind on either the trustee payment or the post-petition mortgage payment, the creditor or the trustee can bring a motion to dismiss the case or a motion to modify the automatic stay. Unfortunately, this is all too common when you file Chapter 13 bankruptcy. In the case of a dismissal, the trustee will bring on notice a motion to dismiss set before the court on a particular hearing date.
On that heard date, the trustee may pursue the motion to dismiss if the debtor has not made any payments towards that arrearage. Of, on the other hand, the debtor can make a partial payment, and then typically the debtor’s attorney is going to be able to ask for a continuance to put the trustee’s motion to dismiss over to another date, typically two to four weeks down the road. If the debtor can become current by the continued trustee’s motion to dismiss date, then the trustee will withdraw his motion to dismiss. Once the trustee’s motion to dismiss is withdrawn, the case is back running smoothly and the debtor can commence making the regular mortgage payment once again. If you fall behind in the future, I would suggest that you contact your Chapter 13 bankruptcy lawyer immediately.