What Happens if I Fall Behind on My Mortgage Payment If I’m in Chapter 13 Bankruptcy in Alabama?

When you file Ch. 13 there is a provision in the law called the Automatic Stay. The Automatic Stay is like a blanket that covers you when you file, preventing your creditors from taking “any action to collect a debt” from the date that you filed forward without permission from the Court. That Automatic Stay provision is what stopped the foreclosure when you filed.

When it comes to mortgage payments in Ch. 13, the rule is if you want to keep your house you must resume your regular payments when you file. Any arrearage that existed before you filed will be included in your Ch. 13 plan payments, but the regular monthly mortgage payments (along with taxes and insurance) must be kept current after you file. This is very important.

Evidently you have gotten behind on your mortgage payments again since filing Ch. 13 which is never good. However, you will likely be given one more opportunity before the blanket of the Automatic Stay is lifted and your mortgage company is allowed to foreclose. There is a case that came out a few years ago called Hoggle (it’s the name of one of the parties) and that case describes a process that will give you a second chance.

Hoggle says that when you get behind on your mortgage payments after filing Ch. 13, the arrearages that have accumulated since you filed can be rolled into the Ch. 13 plan payments. This almost always results in an increase in your Ch. 13 plan payments and you still have the obligation to make all future mortgage payments on time and keep your taxes and insurance paid. The mortgage company is also entitled to add attorney fees and filing fees to the arrearage because you got behind again. And when I speak of getting behind all it takes is missing one payments or being a day late on an important obligation like your mortgage even if there is a late fee clause. I speak to so many people who do not understand that being one day late can legally result in a default of your loan. In exchange for this second chance your mortgage company doesn’t have to file another Motion for Relief from Automatic Stay if you get behind again. All they have to do if you become delinquent again is send you a letter giving you 10 days to cure the late payments and if you do not cure it within 10 days the blanket of protection (i.e. the Automatic Stay) will be lifted and they will be allowed to foreclose.

In your situation you have one chance and only one chance no matter what your circumstances are for missing payments. I look at Chapter 13 Bankruptcy as a contract between you and your creditors that is supervised by the Bankruptcy Court and when you cannot live up to your obligations you are no longer entitled to the blanket of protection that it provides.

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