Sending extra in mortgage payment while in a ch13.

[spidge]

I am well into my ch13 plan and wonder how additional funds included in my mortgage payment would be applied.
Would they be applied to principle if I requested?
Would still having a negative amortized interest balance cause complications?
Would having arrears in my ch13 plan effect this?
Would it simply be added to the suspense account?

Could this be considered a preferred payment even if it is a small amount?

My gut feeling is that it is up to the lender to a degree regardless of my request. I have also had some late payments, but the lender has not done anything. I do not see a late payment fee balance and even have access to the account online.

[justbroke]

I would absolutely not send extra payments in an Active chapter 13, especially where the account was in arrears. There are so many accounting isues that occur with defaulted mortgages in a Chapter 13. As you speculate, how it would be applied is the question. It would typically just go into suspense.

I have a better idea for you. Why not take this extra money, put it into an interest bearing savings account, and just wait. That accomplishes two things. First, you get a nice emergency fund. Two, once your Chapter 13 is completed and discharged, and your mortgage is back to normal (payments are no longer in suspense, and there is no past due amount), then you could make a lump sum payment towards principal.

Otherwise, as I would tell any Chapter 13 debtor, never send in "extra" payments during a Chapter 13.

[despritfreya]

Agree with JB. Attempting to send in extra $$ to the mortgage lender will create an accounting nightmare.

Des.

[spidge]

Thanks for the responses.

[LadyInTheRed]

When my adjustable rate mortgage payment went down, I decided to keep making the higher payment, believing the language on my monthly statement that says extra payments will be applied to principal if there is no unpaid accrued interest. Instead of applying the additional payment to principal, the bank held it in an "unapplied balance account" that earns no interest. I had to call the BK department who called a different department to get the payments applied to principal. They told me that if I wanted to pay extra principal, then I had to call the BK department after each payment and they would call the other department who may or may not agree to apply the payment to principal. I have never been late on my mortgage, and it is still not worth the trouble to pay a little extra toward principal. I increased my 401k contributions instead.

[jange]

I have a home equity loan (my regular mortgage is paid off) my monthly payment dropped every month as the principal dropped. Once it got to a certain payment amount last year I have continued to send in the higher payment, about $50 and the difference has been applied to the principal. I probably would not have done that with a regular mortgage.

Does anyone see an issue with me continuing to do that? I only have 10 months left on my ch13. thanks