Can an Increase in Mortgage Payments Cause a Reduction in Chapter 13 Bankruptcy Payments?

  • Chapter 13 Bankruptcy

Can an Increase in Mortgage Payments Cause a Reduction in Chapter 13 Bankruptcy Payments?

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Suppose, you have a five-year repayment plan under Chapter 13 bankruptcy which you’re unable to keep up to due to lack of money. In order to make up for the shortage, you’ve not been paying your property taxes. Your mortgage company agrees to make changes to your loan, but that will shot up your house payment. Do you think your bankruptcy trustee will decrease your Chapter 13 monthly plan payment by the amount equal to the increase in your mortgage payment? The answer is no, unless under exceptional circumstances.

When you apply for Chapter 13 bankruptcy, the trustee makes your monthly budget of normal living expenses. This budget includes all the necessary expenses which you are bound to make every month. The bankruptcy trustee deducts this budget from your monthly income, and your bankruptcy monthly payment is then decided based on the leftover amount of money.

All the property taxes are originally included in the budget for normal monthly living expenses. In such a case, you cannot request for a reduction in Chapter 13 bankruptcy payments. Reduction in monthly payments of Chapter 13 bankruptcy is possible only if you prove some necessary expense like supporting a family member, which was not originally included in your normal monthly budget. Otherwise, the trustee will tell the court that you’ve spent your tax money for matters, which it was not intended for, and so the lender doesn’t deserve to be penalized.

Thus, it’s better to avoid approaching a fiscal cliff by consulting competent attorneys like You can also contact them on 888-297-6203 and get more information on ways to get a reduction in Chapter 13 bankruptcy monthly plan payments.