Legal Question in Bankruptcy in Maryland

Interest attached to mortages in chapter 13 plans

Is it true that mortgages (wheter 1st or 2nd) obtained before Oct. 94, that are being placed in bankruptcy petition (13), would have interest accessed on the arrears; or is it mortgages obtained AFTER Oct. 94.

If placing a 2nd mortage obtained in Jan. 96, which is being placed entirely under a Plan 13 bankruptcy, would it have the interest attached to it?


Asked on 4/27/99, 1:48 pm

2 Answers from Attorneys

Brett Weiss Brett Weiss, P.C.

Re: Interest chapter 13 plans

The answer, as with many areas of the law, is "it depends."

It depends on whether there is equity in the property as to that mortgage. It depends on the precise date of the mortgage. It depends on the specific language in the mortgage. The interest rate that would be charged depends on the particular circumstances of your case.

Your best bet is to speak with a local bankruptcy attorney, who can review your specific situation and let you know the answers to your questions. If we can help, please feel free to call us at (301) 924-4400.

Brett Weiss

Brett Weiss

Brett Weiss, P.C.

18200 Littlebrooke Drive


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Answered on 4/27/99, 4:05 pm
Daniel Press Chung & Press, P.C.

Re: Interest on mortages in chapter 13 plans

Pre 10/94 mortgages are entitled to present-value interest on the arrears being cured under a Ch. 13 plan, provided there is equity in the property. Post 10/94, no interest is due on arrears (technically, on the interest portion of the arrears -- interest does accrue on the principal) unless the note expressly provides for it in a manner consistent with state non-bankruptcy law. Very few loans include provision for such interest. For a '96 loan, interest would not accrue on interest arrears being cured.

Daniel Press

Chung & Press, P.C.

6723 Whittier Ave., Suite 302


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Answered on 4/27/99, 10:13 pm


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