A request to pay your mortgage outside of the Chapter 13 bankruptcy plan is not generally granted by the trustee unless there is some special circumstance. Under the bankruptcy law, a debtor in Chapter 13 bankruptcy who is in default on their mortgage must pay delinquent mortgage payments plus their regular mortgage payment through the bankruptcy plan. Paying their mortgage through the bankruptcy plan will incur a trustee administration fee which all debtors want to avoid. But avoiding bankruptcy trustee administration fees is not good enough reason for a trustee to allow a debtor to make mortgage payments outside of their bankruptcy plan.
Below are a few reasons why most trustees won't grant a request to make mortgage payments outside of the bankruptcy plan:
- Most debtors won't make the payments as agreed. In one bankruptcy case where the debtor was granted permission to make payments outside of their Chapter 13 bankruptcy plan, the debtor made payments which were several hundred dollars less than what was ordered. The bankruptcy court has determined that this is just the nature of how most people will approach payments made outside of their bankruptcy plan.
- It is costly and difficult to oversee mortgage payments made outside of the bankruptcy plan. It is the responsibility of the bankruptcy trustee to make sure that the debtor is making their payment plans. If the debtor fails to make payments, the trustee is obligated to dismiss their bankruptcy case. If payments to the mortgage lender are made outside of the bankruptcy plan, then it is more difficult for the bankruptcy trustee to know if those payments are being made.
- In most cases there is no benefit to the creditors, the trustee or the debtor to make mortgage payments outside of the bankruptcy plan. The only benefit is that the debtor can possibly avoid trustee administration fees.