By Ryan C. Wood
There are a number of issues regarding your home and filing a Chapter 13 bankruptcy case. Were you current on the mortgage payments at the time of filing of the bankruptcy case? Did you miss payments after the bankruptcy case was filed? For arguments sake we will assume for this article that: (1) You missed 10 months of mortgage payments before the case was filed (2) you intend to save the house and make up the missed mortgage payments in the Chapter 13 Plan. You are filing the Chapter 13 to payback the 10 missed mortgage payments and make all of your normal mortgage payments as they come due after the bankruptcy case is filed.
After you filed your Chapter 13 case your mortgage holder filed a motion for relief from stay and the bankruptcy court for whatever reason granted them relief. The mortgage company now has permission to continue the foreclosure process. The issues here is whether a mortgage company that has already received relief from the automatic stay can initiate foreclosure proceedings against you to foreclosure on your home while you are making payments in a confirmed/approved Chapter 13 Plan? The quick answer is no. The first issue is that the mortgage company has already obtained relief from stay. That means the mortgage companies bankruptcy lawyer has obtained permission from the bankruptcy court to continue to foreclose on your home even though you have filed for bankruptcy. You then proceeded with the Chapter 13 case and included the mortgage company in the Chapter 13 Plan to pay back the 10 missed mortgage payments in the Chapter 13 Plan. The mortgage company’s bankruptcy lawyers did not object to the Chapter 13 Plan when they had a chance to. The bankruptcy court then approves/confirms your Chapter 13 Plan. So can the mortgage company continue with foreclosure now that the confirmed/approved Chapter 13 Plan is paying them back the missed mortgage payments? The answer is again no.
The mortgage company is bound by the terms of the confirmed/approved Chapter 13 Plan. In In re Hilemand, 451 B.R. 522 (Bkrtcy C.C. CA. June 2011) Judge Tighe held that the mortgage company should have objected to confirmation of the Chapter 13 Plan or if there is a post-confirmation default by the bankruptcy filer then obtain a decision that the Chapter 13 Plan is no longer binding and therefore a foreclosure can proceeds. The mortgage company needs to file a motion to dismiss the case or modify the confirmed chapter 13 plan. What we normally see is the mortgage company files another motion for relief from stay after the Chapter 13 plan is confirmed if any mortgage payments are missed after bankruptcy case is filed.