February 26, 2020

Missed Mortgage Payments in Your Chapter 13 – An Expensive Problem

In the Northern District of Georgia, the “standard” Chapter 13 plan that is used provides that on-going mortgage payments are to be made directly to the mortgage company during the pendency of your Chapter 13 plan.  In other words, if you file Chapter 13 because you are three payments delinquent, your missed payments (the mortgage “arrearage”) will be paid in your plan.  However your ongoing mortgage payments are sent directly to the mortgage company.

I know that in some bankruptcy filing districts, on-going payments are collected by the trustee and paid through the trustee’s office.   The trustees in the Northern District of Georgia do not do this as a matter of course.

This means, therefore that Chapter 13 debtors have the significant responsibility for paying their mortgage payments on time each month after their cases are filed.  If you miss one or two payments, the mortgage lender can and will file a Motion for Relief from Stay.  They will argue that your missed payments reflect your inability to afford your mortgage and that bankruptcy protection ought to be lifted so that the mortgage lender can foreclose.

As a rule, bankruptcy judges are reluctant to lift the stay because doing so would mean that you will lose your homes, perhaps because of an emergency or unexpected situation beyond your control.  I have argued a number of Motion for Relief hearings and in almost every case, the judge will give my client “one more chance” to keep his home.  Usually this means that you will have to cure the “post-petition” arrearage over the next  six months.

Attorneys that represent mortgage companies know that they are unlikely to get the stay lifted, so they are usually agreeable to a deal, at least the first time a post-petition delinquency happens.

However, and this is a big however, the a consent agreement with your mortgage company to deny its motion for relief from stay comes at a cost.  Not only will you have to repay your missed post-petition payments over a short (usually 6 month) period of time, but you will also have include late payments in this agreement.  The lender’s attorney will also include a hefty attorney’s fee provision – usually $600 to $750 for the privilege.

A case I am working on right now should give you and idea about how this consent order process works.   My client fell behind on his mortgage payments by two months in October and November.  I did get a letter from the mortgage company’s attorney but my client did not have the cash.  The creditor’s attorney filed a motion for relief in December with a hearing scheduled for mid-January.  Just a few days ago, my client called to say that he had the missed two months payments and that he had sent the money in to the mortgage company.

The lender’s attorney takes the position that it had to file a motion and that it will go forward with its motion.  Our options are to settle by paying the $750 + the two missed late payments of about $90 each – a total of $930, or we can take our chances in front of the judge.   Will the judge deny the motion on the grounds that the payments have been made, but still award attorney’s fees because the lender had to retain counsel?  What if the judge is in a really bad mood and decides to lift the stay on the grounds that the debtor was technically in default?

The choice, of course, is the hands of my clients, but I can guess what they will decide.  Even though they feel that they are being held up by the mortgage lender, they will take the deal and pay the $930 so they can sleep at night and not worry about possibly losing their house.

This particular case is probably a winner – I believe I could convince the judge to reduce the attorney’s fee demand because the missing two months have been paid.   Usually, the consent deal involves paying two or three months over time and my argument that fees ought not be added is much weaker.

So, bottom line – if you are in a Chapter 13 and you fall behind on your mortgage, or insurance lapses on your house and the lender files a legitimate motion for relief from stay, you can figure that you are going to get stuck paying $600 to $750 in attorney’s fees to the mortgage company’s lawyers.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.


  1. why “…t you are going to get stuck paying $600 to $750 in attorney’s fees to the mortgage company’s lawyers…”

    I am sorry I dont understand..

  2. Originally, I was paying a monthly mortgage of $586.00 monthly. I fell behind in my property taxes and it resulted in my mortgage bank paying the delinquent taxes. Following this, my mortgage increased to $1,400.00 monthly. This was an effort by the bank to recapture the monies within a 12 month time frame for the property taxes that had been paid by them. The bank refused to negotiate any longer terms for re-payment of the taxes. Unavoidably, with becoming unemployed and not being able to remain current with the increased monthly mortgage payment, the bank begin filing foreclosure procedures. In response to this action, it precipitated me to resolve matters with filing Chapter 13 to avoid losing my property. Upon the Chapter 13 plan being consummated, it prescribed that my monthly mortgage be assigned to $750.00. This amount of monies cover the interest, principal, and escrow. The bank has not desisted and has aggressively persisted with charging me $1,400 a month mortgage. Obviously, this is a breach of the Chapter 13 plan, which was approved by the Northern District of Illinois. My attorney has not question or inquired as to how the bank is justifying this exorbitant cost, nor has challenge the violation of the Chapter 13 plan. He has suggested that I hire attorney and document what I should be paying monthly based upon the Chapter 13 plan. This is simple mathematics. I filed for Chapter in February of 2013. Only 3 months has passed since this time. Essentially, the total cost is 3-times $750.00. This comes to a total $2,250.00. At present, in an attempt to avoid the bank filing a motion, it resulting in my paying the bank $4,600 based upon their estimation. As for my attorney, I am strongly of the belief he has not adhered to his fiduciary oath. He communicates in a manner inferring that I have almost no recourse for resolving this matter, what I know is quite untrue. Please tell me of some of my options at this time. Today, in desperation I was compelled to a submitted a thorough correspondence to the designated court trustee with the hope some of my concerns can be ethnically and honestly addressed. Thanks, Leo`nard J.

  3. Leonard, you are asking for legal advice – if you are not happy with the responsiveness of your lawyer you should ask for a second opinion from a bankruptcy lawyer in your jurisdiction.

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