does this make sense?

[RAnthony83]

I am in western PA to provide some locale background. My lawyer is telling me that My wife and I need to include our mortgage and car payments in the BK trustee payment. We are current with no late payments. I would rather continue paying them outside of the BK. From the way my lawyer made it sound, that is not an option. is this normal?

[flashoflight]

It's district and trustee specific. Keep in mind you have one major benefit from having your mortgage inside the trustee payment. At the end of the case, the bank can't play games by adding random fees throughout the case because they have to deal with the trustee to resolve any deficiencies vs. the proof of claim and subsequent filings. Even with a paid mortgage, you will probably end up in arrears at the end due to all of the junk fees added between filing and the end of your case. They might waive the fees or they might try to add on to their proof of claim periodically. When you file even if current, your mortgage statements going forward will occasionally be filled with all sorts of fees like corporate advances, property preservation fee, lawyer fee, etc. Yeah it sucks to pay the trustee fee so it might end up a wash. You pay extra either way.

Before you file, you should set statements for the car and mortgage to mailed statements rather than e-statements. You will lose access to your loan/credit accounts online when you file. It's a royal pain to change it after filing.

If you refi out of this after 12 months of on-time post-petition payments, it will be post-petition debt and you can get out of fee hell whether it's the trustee fee or the mortgage lender.

[justbroke]

From what I understand, this does vary by district. However, if current, your attorney can always motion the court to allow payments outside the plan. I did this myself but then the judge told me she would allow it, but it was moot; the district already allowed payments outside the plan.

As flashoflight wrote, paying inside the plan is very beneficial. Every payment to the Trustee, regardless of when the Trustee actually pays the creditor, is considered to be an on-time payment. So no strange issues at discharge (or at least the creditor wouldn't have the right to claim any late fees).

However, if you don't have any DMI, then you'll be paying the Trustee a 10% premium to write checks to the mortgage creditor(s). That's what I was doing when I was paying over $7K a month to the Chapter 13 Trustee. I was paying $700+ a month for the Trustee to write checks. But it all came from my DMI so it didn't affect me directly. It did, however, affect the unsecured creditors as they were technically out $42K over the life of my 60 month plan.

[Barbisi]

What if paying your mortgage through the trustee was never an option,jb?
When we filed we were 100% current with no arrears, shortages,etc. The attorney never demanded the $2300+ be paid along with the plan payment.
That would have added $230+ to our plan payment, an amount that would have jeopardized our ability to make the payments, particularly before my husband started working at his new company with the attendant and substantial raise.
Should we be concerned about fees after the last payment in 2022? Could they not allow the sale of the home?
We receive a paper form and pay online each month and the bankruptcy statement clearly says we owe $00.00 beyond the monthly mortgage fees - no arrears , no penalty fees,etc.! How could they suddenly tack on new fees once the BK13 has been discharged and closed?
It does say the pay off amount is more than the amount shown (which is decreasing by about $700 per month (the rest of the payment goes to escrow, PMI ,insurance and taxes.) And of course our goal is to sell before we get saddled with $$$$ of home repairs and updates in the coming years.

[justbroke]

In some districts, any secured creditor which is current with no arrears could be automatically paid outside the plan.

Suffice it to say that most Chapter 13s that included a mortgage payment have some accounting issues with the creditor. It's a never-ending story and this is because of the way that the creditors computer systems deal with shortages, suspense accounts, and fees. I don't think it's exclusive to those that pay outside the plan, it may just be more frustrating for those that do. I would also venture to guess that this doesn't happen with all mortgage creditors in a Chapter 13. It is definitely something related to how the computer systems deal with the limbo period in the Chapter 13.

I can't say whether or not you'll have this Chapter 13 mortgage phenomenon, but it's good to know that it can cause some frustration after the discharge. Just keep good records and copies of any cancelled checks. Keep your mortgage statements too, if you're getting them, so you can reconcile the payments. Make sure you didn't pay late at any time, because that's usually the thing that causes the problem.

Just as every other Chapter 13 discharged debtor, you'll have to examine the status of your mortgage account and determine if there are any issues. I just think the "late payment" argument is easier to quash when the Chapter 13 Trustee was making the payments. Hopefully your attorney would help you deal with any post-discharge issues.

[flashoflight]

What if paying your mortgage through the trustee was never an option,jb?
When we filed we were 100% current with no arrears, shortages,etc.

No arrears is good. You got a good chance of avoiding any problems with the mortgage lender. A lot of people with houses going into a 13 have mortgage arrears including me. One of the lenders hasn't added any junk fees but I don't get statements so who knows and they're not forthcoming about giving me any paper documentation. The other one adds a lot of junk fees along with waivers of junk fees sometimes and is inconsistent about mailed statements. I'm trying to refi out of both so it won't be a problem at the tail end and the 2nd is an adjustable so it has to go.

I've paid past the 1st on occasion but my lawyer says it doesn't really matter unless it's after the 16th late date for the grace period. I know in my case it's likely going to be a huge mess if I don't refi out of it.

[Barbisi]

Hey guys thanks for explaining that further - I just don't want to end up tied down even longer here by some phantom fees that force us to keep paying this mortgage for many months or years beyond the closing and our supposed liberation from a stifling life in Colorado!
Flashoflight, I hope you're able to get rid of that second mortgage - it sounds like a real rip off!