Washington Business Daily

What happens if my bankruptcy trustee isn't making the payments to my creditors?

I am in chapter 13 bankruptcy that was confirmed in February. I have made all the required payments to my trustee since I filed last September. She has NOT made a payment to my mortgage company since March and now they want to forclose on my property. I gave my attorney all the payment receipts to prove I made them. Are there any repercussions to the trustee for not making the payments? She has over $6,000 of mine that she hasn't paid to my mortgage company. What can we do?

Public Comments

1. Are you sure that your Ch 13 Plan calls for you to make your mortgage payments through the Plan? Some do and some don't. Some Ch 13 plans only pay mortgage arrears through the Plan (i.e., via payments to the trustee) but call for the debtor to make regular ongoing mortgage payments directly to the mortgage company. It depends on how your Plan was written. Also, most Ch 13 Plans call for payment of certain administrative expenses first before payments to creditors begin. Your mortgage company cannot foreclose on your property without first filing (and being granted by the judge) a motion for relief from stay in bankruptcy court. If and when the mortgage company filed a motion for relief from stay, that should have afforded you an opportunity to correct any misunderstandings about where and to whom the payments should have been made. If the mortgage company is foreclosing without first filing for relief from stay and being granted that by the judge, then the mortgage company is engaged in a very serious violation of Federal bankruptcy law, and your attorney can sue the mortgage company for damages in bankruptcy court. What does your bankruptcy attorney say? He or she is the best source of information about your specific case. IF - by some chance - the trustee is actually not disbursing the funds as required (and this would be very, VERY rare -- usually it is some other snafu or misunderstanding that is at the root of the problem) you can report the situation to the US Trustee for your District (a different person with a different role from the Ch 13 trustee), who is responsible for overseeing the Ch 13 trustees in that district, and ensuring that they are doing their jobs correctly.
2. The mortgage compnay has to go through the court to even think about foreclosing (assuming the mortgage & property were a part of the bankruptcy case). They should not be contacting you directly (unless the Court has given them specific permission to) - that is against federal law. If you meet the requirements and agreements of the Chapter 13, the distribution of monies, or lack therof, should not affect you at all.