When a Florida homeowner files for Chapter 13 bankruptcy to stop a foreclosure, the goal is almost always the same: use the "cure and maintain" provision of the Bankruptcy Code to pay off the missed mortgage payments over time while keeping the home. But many homeowners are surprised by how much the cure amount turns out to be -- and by the items the lender includes that are not always obvious from the monthly statement.
This guide explains exactly how the Chapter 13 mortgage arrears cure works under 11 U.S.C. 1322(b)(5), what goes into the cure amount, and how to challenge a lender's proof of claim if it overstates what you owe.
The Cure-and-Maintain Provision: 11 U.S.C. 1322(b)(5)
Section 1322(b)(5) of the Bankruptcy Code is the foundation of the Chapter 13 mortgage cure. It provides that a Chapter 13 plan may:
"...provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due."
Because a 30-year mortgage's final payment is due decades after any Chapter 13 plan ends, a Florida homeowner can use 1322(b)(5) to:
- Pay the full past-due amount (cure) in equal monthly plan payments to the trustee
- Resume and maintain regular monthly mortgage payments directly to the servicer (in most Florida districts, outside the plan)
- Keep the home as long as both the plan payments and the ongoing monthly payments are made
Filing Chapter 13 also triggers the automatic stay under 11 U.S.C. 362, which immediately halts the Florida foreclosure proceeding the moment the bankruptcy petition is filed.
What the Cure Amount Includes
The cure amount is calculated from the lender's proof of claim (Official Form B 410), which the lender must file in the bankruptcy court. The proof of claim itemizes everything the lender asserts is owed as of the petition date. This typically includes:
- Past-due principal and interest payments -- the sum of all missed monthly principal and interest installments from the date of the first missed payment through the bankruptcy filing date
- Late fees -- typically a percentage of each overdue payment, as specified in the mortgage note (commonly 5%)
- Attorney fees and costs -- legal fees the servicer incurred in connection with the default and foreclosure filing, to the extent authorized by the mortgage contract and Florida law
- Escrow advances-- property taxes, homeowner's insurance premiums, and flood insurance premiums the servicer paid on your behalf because you had an escrow shortage or stopped making escrow payments during the default
- Inspection fees and broker price opinions -- fees the servicer charged for property inspections and value assessments during the default period, if authorized by the mortgage contract
- Force-placed insurance premiums -- insurance the servicer placed on the property when your coverage lapsed, if the premiums are recoverable under the mortgage terms (see our guide on force-placed insurance in Florida foreclosure)
The cure amount does not include future interest on the arrears. Under the Bankruptcy Code as amended following Rake v. Wade, 508 U.S. 464 (1993), a Chapter 13 plan may not require the homeowner to pay interest on mortgage arrears at the contract rate -- the cure amount is simply the sum of the overdue amounts without interest accrual on top.
The Anti-Modification Rule: Nobelman v. American Savings Bank
One important limitation on the Chapter 13 cure applies to the principal balance. Under 11 U.S.C. 1322(b)(2) and the Supreme Court's holding in Nobelman v. American Savings Bank, 508 U.S. 324 (1993), a Chapter 13 plan cannot modify the rights of a holder of a claim secured only by the debtor's principal residence.
This means you cannot reduce (cramdown) your first mortgage principal balance to the current value of the home through a Chapter 13 plan. You must cure the arrears and maintain the original contractual payment amount. The anti-modification rule is one reason why homeowners who are deeply underwater on their principal residence may find that Chapter 13 cures the default but does not solve the longer-term problem of owing more than the home is worth.
The anti-modification rule does not apply to second mortgages or home equity lines of credit that are wholly unsecured -- those can sometimes be stripped off in Chapter 13 through a lien strip motion.
How the Cure Is Paid Through the Chapter 13 Plan
Once the cure amount is established, it is divided into equal monthly payments over the plan term (3-5 years) and paid to the Chapter 13 trustee. The trustee disburses the monthly cure payment to the mortgage servicer. Simultaneously, the debtor makes regular ongoing monthly mortgage payments directly to the servicer (in most Middle and Southern Districts of Florida) -- these direct payments keep the loan current going forward.
Two payment streams run in parallel:
- Through the trustee: monthly cure installment (past-due arrears spread over the plan)
- Directly to servicer: regular contractual monthly mortgage payment (principal + interest + escrow)
Missing either stream risks plan dismissal. Use our foreclosure checklist to track deadlines and payment obligations throughout the Chapter 13 case.
Disputing the Lender's Proof of Claim
If the lender's proof of claim includes inflated attorney fees, improper charges, or previously repaid escrow advances, you can file an objection to claim in the bankruptcy court. Common objection grounds include:
- Attorney fees that exceed reasonable amounts or are not authorized by the mortgage contract
- Fees added without proper notice under CFPB Regulation X at 12 CFR 1024.35/1024.36
- Force-placed insurance charges for periods when you maintained your own coverage
- Inspection fees charged at a frequency not authorized by the mortgage agreement
- Escrow advances that were already repaid prior to bankruptcy
Your bankruptcy attorney will review the proof of claim against your payment history and the mortgage servicer's account records. See our guide on sending a Notice of Error or Request for Information to your servicer for how to obtain the account payment history before the bankruptcy case is filed.
Loss Mitigation in Chapter 13: An Alternative to the Pure Cure
In many bankruptcy courts in Florida, including the Middle District and Southern District, there are procedures that allow debtors in Chapter 13 to negotiate a loan modification with their servicer during the bankruptcy case. This can be a powerful alternative to a pure arrears cure: instead of paying the full arrears over 5 years, the modification agreement may reduce the monthly payment and capitalize the arrears into the loan balance -- eliminating the separate cure payment entirely and making the plan more affordable.
Discuss this option with your bankruptcy attorney early in the case -- the availability and mechanics of loss mitigation in bankruptcy vary by district and by the servicer's willingness to engage. The loan modification process and the Chapter 13 cure can sometimes be combined most effectively by filing bankruptcy first to stop the foreclosure, then pursuing modification during the case.
Barrett Henry: EEAT and Real Estate Guidance
Barrett Henry is a Broker Associate at REMAX Collective with 23-plus years of Florida real estate experience helping homeowners evaluate whether Chapter 13 bankruptcy, a loan modification, a short sale, or a pre-foreclosure sale is the best path forward. Chapter 13 bankruptcy is a legal matter that requires a licensed Florida bankruptcy attorney -- Barrett can help you understand the real estate dimensions of your situation and refer you to experienced bankruptcy counsel.
Free resources for Florida homeowners considering Chapter 13 include our full resource guide and the HUD housing counselor network. Use the equity estimator to determine whether you have enough equity to make a pre-foreclosure sale viable as an alternative to the bankruptcy cure route.
Facing foreclosure in Florida? Contact us today for a free consultation -- no cost, no obligation. Barrett Henry helps homeowners across all 67 Florida counties.
