The Allmand Law Firm, PLLC Difference

Unlike most bankruptcy firms in the Dallas / Fort-Worth area, Allmand Law Firm, PLLC spends the time to understand the complete financial picture for every one of our clients. We provide resources, tools and advice to address the unique needs of North Texans.

Conduit Mortgage Payments in Chapter 13 Cases

Posted By Allmand Law Firm, PLLC || 23-Jun-2016

If you are behind on your mortgage and file for Chapter 13 bankruptcy, your plan will have to include your mortgage payments (“conduit mortgage payments”). Prior to the enactment of an order that requires mortgage payments to be made within a Chapter 13 plan, debtors were able to make payments directly to their mortgage company without the need to go through a trustee. Now, however, debtors have to pay a 10% fee for each conduit mortgage payment they make to their bankruptcy trustee within the plan. For some people, this added expense is a huge burden that could cost them the success of their case.

While it may be possible to petition the court to be excused from conduit mortgage payments, judges are not likely to excuse a debtor without truly extenuating circumstances. If they do make an exception and allow you to opt out, however, there isn’t much wiggle room. In order to succeed in a Chapter 13 case, it is imperative that you make all of your payments on time and in full. If you fall behind on your payments, your lender will file for a relief from stay and they will be able to move forward with foreclosure, which defeats the entire purpose of your bankruptcy filing. If you are only a few months behind on your mortgage, the best thing to do is to get current on your payments before you file for Chapter 13.

Most mortgage servicers will waive all late fees while a debtor is in bankruptcy. As long as you stay current with your repayment plan, you will not be responsible for paying late fees incurred during the bankruptcy process. At the end of your case, your trustee will file a Motion to Deem Current to address the state of your mortgage and determine how much, if anything, it still owed.

The Advantages of Conduit Payments for Filers

Conduit payments do provide some advantages for bankruptcy filers. For starters, making payments to a trustee results in more accurate and reliable accounting of payments. This is especially important if there are disputes over payments, penalties, or the status of the loan at the end of the case. Secondly, making payments to a trustee reduces the likelihood of a mortgage company filing a motion to lift stay and pursue a foreclosure. This is a big time and money saver because it reduces the time spent fighting these motions and reduces legal fees associated with doing so.

Chapter 13 Bankruptcy Attorney in Dallas

If you have fallen behind on your mortgage payments and are considering filing for bankruptcy, talk to a Dallas bankruptcy attorney at Allmand Law Firm, PLLC. We can review your filing options and explain how Chapter 13 bankruptcy may save you from foreclosure. We can also help you understand the Chapter 13 process and what will be required of you when it comes to making your mortgage payments.

Schedule a free financial empowerment session with us when you call (214) 238-9608.

Blog Home