Chapter 13 Bankruptcy and Future House Payments
In every Chapter 13 bankruptcy case, I always stress the importance of making all future house payments directly to the mortgage company. When house payments that come due after the bankruptcy case gets filed in Northwest Georgia, the trustee may dismiss the case if these monthly payments are missed before confirmation.
I have recently had a rash of cases where the client filed for Chapter 13 bankruptcy and then failed to pay their mortgage prior to confirmation.
Paying the mortgage is so important that I require my clients to sign a notice that says, “I understand that I must make all future mortgage payments to XYZ Company starting on ____date.” Its so important that I ask them to sign it again at the meeting of creditors.
Even with my warnings, some clients will choose not to make their mortgage payments.
In one case, the client received a letter from the mortgage company that led them to believe that they did not have to make anymore house payments until the court approved their case. I have since edited my form to say that if you ever receive a letter from a creditor that contradicts anything I say, please contact me as soon as possible so I can help prevent any misunderstandings that could result in the dismissal of the bankruptcy case.
In other case, the client had some medical bills that had to be paid for his child to receive treatment. In this case, the medical bills were quite large and the client chose to stop making house payments so that he could pay the medical costs. I will never tell anyone that they should not get medical treatment for their child. However, I wish that this client could have found another way because their case was dismissed at confirmation.
The bottom line is that if you stop paying your mortgage, you either lose the house or your case may get dismissed.