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Glossary

Arrears: What Past-Due Payments Mean in Bankruptcy

Arrears are the payments you have already missed on a debt — the past-due balance that has built up behind your regular monthly obligation. In bankruptcy the term most often describes mortgage or vehicle arrears. A Chapter 13 plan may provide for curing a default (11 U.S.C. § 1322(b)(3)), which is how arrears are commonly handled.

Key points

  • Arrears are the accumulated past-due amount on a debt, separate from the ongoing monthly payment that keeps coming due.
  • A Chapter 13 plan may provide for curing any default and maintaining payments while the case is pending (11 U.S.C. § 1322(b)(5)).
  • The prepetition arrearage is measured as of the petition date, but the amount is still subject to claim allowance and to dispute.
  • Chapter 7 has no plan mechanism for curing arrears, and a discharge of personal liability does not remove a valid lien.
  • Local rules differ on how mortgage arrears are paid and monitored, so your district's practice matters.

You may have first seen this word on a court form, a proof of claim, or a letter from a mortgage servicer. It is not a legal threat by itself — it is an accounting term for how far behind an account has fallen. Here is what it means and why bankruptcy treats it as its own category.

What does "arrears" actually mean?

Arrears is the total of the payments already past due on an account. If your mortgage payment comes due monthly and you missed several, the sum of those missed payments — often with the late charges and costs the contract allows — is the arrearage. It is distinct from the balance of the loan itself and distinct from the next payment coming due.

Bankruptcy paperwork usually splits the term two ways. A prepetition arrearage is the amount past due as of the day the case is filed. Some districts define it precisely: E.D.N.C. LBR 3070-2 calls the "Pre-Petition Arrearage" the total amount past due on a real property creditor's claim as of the petition date. A postpetition arrearage is what falls behind after filing. W.D. Okla. General Order 26-01 uses both categories on its local mortgage form, asking separately for the allowed amount of each.

The word appears most often with home mortgages, but it applies to any account with periodic payments.

Why do arrears matter in a bankruptcy case?

Arrears matter because bankruptcy treats them as their own claim, handled differently from the ongoing payment and differently by chapter.

In Chapter 13, the plan may provide for the curing or waiving of any default (11 U.S.C. § 1322(b)(3)), and may provide for curing a default within a reasonable time and maintaining payments while the case is pending on a claim whose last payment comes due after the plan's final payment (11 U.S.C. § 1322(b)(5)). That pairing is why arrears are usually discussed alongside Chapter 13: the plan addresses the past-due amount over time while the regular payment continues.

Chapter 7 contains no comparable plan mechanism. Filing also generally triggers the automatic stay under 11 U.S.C. § 362, which commonly halts collection while the case proceeds — but a discharge relieves personal liability and does not by itself remove a valid mortgage or security interest, as the Notice under 11 U.S.C. § 342(b) states.

How are arrears handled in practice?

The mechanics are mostly local. Many districts route mortgage money through the Chapter 13 trustee rather than direct payment. E.D.N.C. LBR 3070-2 requires debtors to remit mortgage payments to the trustee for disbursement to the real property creditor unless excused. D. Kan. LBR provides that a timely claim for mortgage arrearages will be paid by the Chapter 13 trustee as filed and allowed, with the proof of claim controlling over any plan unless an order says otherwise.

Fed. R. Bankr. P. 3002.1 governs the notices that keep the numbers honest in a Chapter 13 case secured by the debtor's principal residence — the claim holder must file notice of any change in the payment amount, generally at least 21 days before the new payment is due.

Bankr. N.D. Miss. guidance directs that payments on the prepetition arrearage claim be applied exclusively to that claim, not to current installments.

  • The prepetition arrearage is measured as of the petition date and is subject to claim allowance and objection.
  • Some districts add an administrative arrearage on top of the prepetition figure (E.D.N.C. LBR 3070-2 defines it as two full postpetition mortgage payments).
  • Local practice varies widely — use /courts/ to find your district.

What do people get wrong about arrears?

The most common misunderstanding is treating the arrearage as a fixed, settled number. It is measured as of the petition date, which is not the same as being conclusively established — the amount is still subject to claim allowance, and a debtor, trustee, or other party in interest may object to a claim. D. Kan. LBR says so expressly.

A second mistake is assuming the arrearage replaces the regular payment. Under 11 U.S.C. § 1322(b)(5), curing the default and maintaining ongoing payments are two things happening at once.

A third is expecting a discharge to erase a lien. Discharge addresses personal liability; the Notice under 11 U.S.C. § 342(b) warns that liens on property may still be enforced, and a creditor may have the right to foreclose a mortgage or repossess a vehicle.

A fourth is assuming arrears mean only mortgages. Priority claims such as past-due support are also arrears, and 11 U.S.C. § 1322(a)(2) requires full payment of priority claims in deferred cash payments unless the holder agrees otherwise.

Frequently asked questions

Is an arrearage the same as the loan balance?
No. The arrearage is only the past-due portion — the payments already missed, with any late charges and costs the contract permits. The loan balance is the entire remaining debt. A proof of claim in a Chapter 13 case typically states both separately, which is why local mortgage forms ask for the allowed amount of the arrearage as its own line.
Can arrears be paid over time?
In Chapter 13, a plan may provide for curing a default within a reasonable time while maintaining payments on a claim on which the last payment is due after the plan's final payment (11 U.S.C. § 1322(b)(5)). How that works in your case depends on the plan, the allowed claim, and local rules. Chapter 7 has no equivalent plan mechanism.
Does filing stop the late fees from piling up?
It varies by district and by what the court orders. D.N.M. LBR 3015-4 provides that on plan confirmation, a prepetition mortgage arrearage provided for in the plan is deemed current, precluding the mortgagee from charging late payments or other default-related fees. Bankr. N.D. Miss. guidance takes a similar approach to postpetition late fees. Other districts handle this differently.
Do arrears show up outside of mortgages?
Yes. Any account with periodic payments can fall into arrears, including vehicle loans and domestic support obligations. Support arrears are treated as priority claims, and 11 U.S.C. § 1322(a)(2) requires a Chapter 13 plan to provide for full payment in deferred cash payments of claims entitled to priority under 11 U.S.C. § 507, unless the holder agrees to different treatment.

Sources

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Sources verified July 29, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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