Do I Still Have to Make Mortgage Payments While I’m in Bankruptcy?

Once you decide to file Bankruptcy, whether it is a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will need to decide if you intend on keeping your home.  If you qualify for a Chapter 7 bankruptcy filing and you wish to keep your home, you will need to be current with your mortgage payment(s) and your homeowners’ association dues at the time of filing.  As per federal bankruptcy law, you must remain current throughout the duration of the bankruptcy; this includes first, second, third mortgages attached to the home, as well as, your homeowner’s association dues.  If you fail to keep current with your mortgage payment(s) or your homeowners’ association dues, the “relief from stay” can and most likely will be lifted and the mortgage company or the homeowner’s association may initiate foreclosure proceedings on the home.

In a Chapter 13 bankruptcy filing, you will make monthly payments to the Trustee’s office.  The Trustee will then distribute those funds to your creditors.  The creditor payments are according to priority deemed by the Bankruptcy Court.  Your mortgage lender is almost always one of the creditors at the top of the list.  Therefore, you will not be making direct payment to your mortgage lender if you are behind on payments.  This payment will be included in your Chapter 13 payment plan and the Trustee’s office will make the mortgage payment from the funds you send each month.   An exception would be your homeowners’ association dues, which you will continue to make payment directly to the homeowners’ association.  Also, in some districts if you are current on your mortgage payment the Trustee will allow you to make direct mortgage payments to the mortgage company.

Regardless of which type of bankruptcy you plan to file, if you want to keep your house you will need to continue to make your mortgage payments and stay current on your payments.