When a consumer files a chapter 13 bankruptcy to save a home from foreclosure, he or she must pay the amount of the past due payments and fees that existed prior to the filing over the course of the Chapter 13 plan. After the Plan is filed, in Arizona, the consumer must continue to make timely monthly house payments.
During the chapter 13 plan, mortgage companies that are servicing the loan will charge the consumer various fees that are theoretically related to "servicing" the loan. These fees must be disclosed to the Court and permission granted for their payment. Some of the disclosed fees are reasonable and some are unreasonable and would never be allowed if challenged.
Some however, are hidden and only show up after the chapter 13 case is over. They usually appear when the consumer attempts to re-finance the home.
Fees that are disclosed to the Court and approved because they were never challenged by the consumer are legal. Hidden fees that show up after the fact are not, and according to this New York Times article are often the cause of foreclosure problems both inside and outside of the Bankruptcy context.
If you are behind on your mortgage and are using a chapter 13 bankruptcy to dig out, make sure that the fees that the mortgage servicer is charging are properly disclosed to the court and challenged if inappropriate. If after the bankruptcy, a number of fees pop up that were no where to be found during the case, talk to a lawyer familiar with the subject before closing on a new loan or paying the fee. You can contact me here and we can speak for free about the problem.