How do trustees handle ARM payments?

[Babs9]

I have a 5/5 ARM and the first rate change will begin 11/1/20. Since the rates are so low, we now have a rate that makes our monthly payment almost $600 less/month than what it was when the BK13 was started January, 2018. I know our attorney and the trustee received the notice that was sent almost 7 months ago stating our rate would change along with the new expected payment. Neither of them have said anything to me or sent anything. Will the trustee want that money or can I continue to apply the difference to the mortgage principal?
How are matters like this handled usually? I'm in a 35% payback of non- secured debts. I wasn't behind on mortgage or any secured debt so that's paid outside the plan.
I know I can't get a firm answer, I'm just looking to see what others experienced or what knowledge you have on situations like this where the ARM goes down during BK13. I will be 3 years in come January out of a 5 year plan.
Thank you for any info you can offer.

[justbroke]

Hey Babs9 welcome to BKForum!

It's hard to tell and the Chapter 13 Trustee is the ultimate person to make the decision. In some Chapter 13 cases, or more like in some bankruptcy districts, the trustees are lenient and so long as there are no major changes, they don't care to modify a confirmed plan. A recent survey showed that Chapter 13 cases were modified at a rate less than 10%. That means 9 out of 10 don't have any modifications to their plan.

When my ARM went up, the Trustee increased the payment to the bank. Luckily for me, that didn't increase my plan payment. What happened was that the money was "taken" from the unsecured pool. Now, if you are paying your mortgage "through" the Trustee, then the Trustee is still receiving that $600/month and will likely hold it for the unsecured creditors.

So the big question is... are you paying directly to the bank or through the Trustee.

[Babs9]

Thank you for responding! I'm paying the bank directly not the Trustee. I wasn't behind on the mortgage and wanted to keep the home. The Trustee doesn't take my tax return refunds either. The payments for the plan are directly withdrawn through my payroll department (wage garnishment) so I have not had contact with the Trustee since the 341 meeting. I asked my attorney about raises and she said so long as I don't increase my income by more than 10%/ year that the plan will continue as expected without modification. This rate drop is the only thing that has popped up leaving me with the excess funds or "DI." Hopefully there won't be any issues. The attorney isn't saying to do anything different and I paid her to ensure I'm doing what is expected of me. Hopefully no issues will come of it as I haven't had one issue to make the Trustee question my case or want a modification. I sent an email to my attorney but she sometimes takes a week or more to get back to me if it's not urgent. Thank you for your response as it does offer some hope that it won't be an issue. keeping my fingers crossed!

[Carmella]

I would think you would be informed if there was a change since it will change the terms of the BK. No news is good news at this time When my payments for mortgage changed due to tax increase the bank notified the trustee even though we paid it directly and then we were sent a copy of the info from the trustee. We of course also had been notified by the bank regarding the change in payment.

[justbroke]

Just bank the extra money into a savings account. It will come in handy one day. If by some means your attorney responds and says that the Trustee must be notified, at least you have been saving the money. If the Trustee then says that they don't care, you now have the start of a nice rainy-day fund.