3. Cure and Maintain – Curing Past Due Payments While Maintaining Future Mortgage Payments.
At least fifty percent (or more) of all Chapter 13 bankruptcy cases are filed with the primary intent of saving a home from foreclosure. The Chapter 13 process is especially helpful in allowing individuals to "cure and maintain" – repay past due mortgage payments in a bankruptcy plan over a 3 to 5 year time period while simultaneously making the ongoing (future) mortgage payments. This major exception to the anti-modification rule (which prevents changing the terms of a home mortgage) permits the Court to approve a bankruptcy plan which allows the homeowner to cure a default on the mortgage payments by paying the missed payments in installments over a 3 to 5 year time period while continuing to pay the future mortgage payments. This process (typically called “cure and maintain”) is designed to help individuals who had sufficient income to pay their home loan when they purchased it, but suffered a temporary interruption in income which prevented them from making the payments.
The only major requirement for this relief is “feasibility.” Dick and Jane need to prove that they can make the monthly plan payments of $1,320 (the future mortgage payments plus the extra amount to cure the default), the $500 car payment, plus all other ongoing expenses. In this example, Dick and Jane will probably be able to convince the court to approve their plan if their budget shows that the income remaining after the house and car payments ($1,780) will be sufficient to pay for food, utilities, insurance, medical expenses, transportation costs and all other ongoing family expenses.