Paying Your Mortgage Directly vs. Through the Chapter 13 Trustee

How does the direct-versus-conduit choice actually work?

Chapter 13 separates two things: the arrears you owe as of filing, and the ongoing monthly payment that keeps coming due after filing. A plan may provide for curing a default within a reasonable time and maintaining payments while the case is pending on a claim whose last payment is due after the final plan payment (11 U.S.C. § 1322(b)(5)). That is the mechanism that lets a long-term mortgage be brought current inside a three- to five-year plan.

The arrears are almost always paid through the trustee. The question is where the ongoing payment goes. Under a "conduit" arrangement, you send one larger payment to the trustee each month and the trustee disburses the regular mortgage payment to the loan holder. Under direct payment, you keep paying the servicer yourself and the plan handles only the arrears. Section 1326(c) states that, except as otherwise provided in the plan or confirmation order, the trustee makes payments to creditors under the plan.

• Pre-petition arrears: cured through the plan over its term
• Ongoing monthly payment: either conduit (trustee disburses) or direct (you pay the servicer)

What actually changes the answer in your case?

The single biggest factor in most districts is whether the loan was current on the petition date. Local rules repeatedly draw the line there. D. Kan. LBR 3015(b).2 requires conduit payments if the debtor is delinquent on the petition date or becomes delinquent afterward. D.N.M. LBR 3015-3 requires conduit payments if the debtor was delinquent on the petition date, becomes delinquent before confirmation, or becomes delinquent after confirmation. W.D. Mo. LBR 3094-1 permits direct post-petition payments only when there are no past due payments or charges other than the regular payment due in the month of filing.

Feasibility is a second factor. A plan is confirmed only if the debtor will be able to make all payments under it (11 U.S.C. § 1325(a)(6)). S.C. LBR 3015-1 lists "Feasibility Factors" — payments three or more months past due, a prior dismissed Chapter 13 within a year, prior stay relief, or a pending foreclosure — as circumstances where a conduit plan may be warranted.

What does federal law say about who pays the mortgage?

The Bankruptcy Code sets the frame and leaves the detail to plans and courts. Section 1322(b)(2) bars modifying the rights of a holder of a claim secured only by a security interest in real property that is the debtor's principal residence. Section 1322(b)(5) then permits curing a default within a reasonable time and maintaining payments while the case is pending. Together those provisions explain why a home mortgage is cured and maintained rather than rewritten.

On routing, 11 U.S.C. § 1326(c) provides that except as otherwise provided in the plan or in the order confirming the plan, the trustee makes payments to creditors under the plan. Direct payment is therefore the exception the plan or confirmation order carves out, not the default. Section 1326(a)(1) also requires the debtor to commence payments no later than 30 days after the plan is filed or the order for relief, whichever is earlier. The trustee's duties include ensuring the debtor commences timely payments under § 1326 (11 U.S.C. § 1302(b)(5)).

• 11 U.S.C. § 1322(b)(2) — no modification of a claim secured only by the principal residence
• 11 U.S.C. § 1322(b)(5) — cure the default, maintain the ongoing payments
• 11 U.S.C. § 1326(c) — the trustee pays creditors unless the plan or confirmation order says otherwise

Where do local and district rules differ most?

This is one of the most district-specific questions in consumer bankruptcy, and the variation is not subtle. E.D.N.C. LBR 3070-2 states that Chapter 13 debtors shall remit all mortgage payments to the trustee for disbursement, with an excuse available in the trustee's discretion or by court order. W.D. La. LBR Appendix D requires conduit payments where the mortgage is in default by two or more payments on the petition date, and sets separate terms for the Shreveport Division — so treatment can differ by division within a single district.

W.D. Mo. LBR 3070-1 takes the opposite framing: all payments go through the trustee unless the court orders or the trustee agrees otherwise, with a listed exception for unmodified payments on a note secured by real property when nothing is past due. D.N.M. LBR 3015-3 requires a debtor proposing direct payments to file an affidavit demonstrating eligibility. Vermont, Delaware, Alaska, South Carolina, and the Carolinas all publish their own versions.

• Some districts require conduit by default and permit direct payment as an exception
• Some permit direct payment only for a loan that is fully current at filing
• Some vary by division inside the same district
• Some require a sworn affidavit or a court order to pay directly

What does each arrangement look like in practice?

Under a conduit plan, your plan payment includes the regular mortgage payment. E.D.N.C. LBR 3070-2 defines the "Plan Payment" as the total monthly amount to the trustee, including an amount sufficient to cover the conduit payments, and sets the conduit amount at the petition-date contractual mortgage payment subject to later authorized changes. When the loan payment changes, D.N.M. LBR 3015-3 authorizes the trustee to disburse the adjusted amount after the objection window passes, and deems the plan modified to reflect it.

Under direct payment, you keep the payment relationship with the servicer and the plan carries only the arrears. Delaware's rule illustrates the pre-confirmation split: if the proposed plan provides for direct payments to a secured creditor, the debtor must continue making regular payments to that creditor as and when due (Del. Bankr. L.R. 3023-1). Alaska's rule adds a protection on the conduit side — payments made timely to the trustee and timely distributed are conclusively presumed timely (AK LBR 3015-5).

What documents and information are involved?

Expect paperwork on both sides of the arrangement. Fed. R. Bankr. P. 3002.1 applies in a Chapter 13 case to a claim secured by a security interest in the debtor's principal residence where the plan provides for the trustee or the debtor to make payment — so it governs either routing. The claim holder must file notice of any change in the payment amount, including one from an interest-rate or escrow adjustment, served on the debtor, the debtor's attorney, and the trustee, generally at least 21 days before the new payment is due.

Local rules add their own filings. D. Kan. LBR 3015(b).2 requires a Mortgage Creditor Checklist sent to the trustee within 14 days of the petition, and requires the debtor or counsel to forward correspondence, statements, coupons, escrow notices and default notices to the trustee. D.N.M. LBR 3015-3 requires an Affidavit Regarding Mortgage Payments when a plan proposes direct payments.

• Proof of claim and its Official Form 410A mortgage attachment
• Notices of payment change and of fees, expenses and charges under Fed. R. Bankr. P. 3002.1
• District-specific checklists, affidavits, or local form plans
• Your own payment records — cancelled checks, bank statements, servicer statements

What should you ask a bankruptcy lawyer about this?

This is a question where a local attorney's knowledge of the district's rule and the standing trustee's practice matters more than general research. The rules are short, but they interact with the confirmation standard, the trustee's fee, and how your case is monitored for the next three to five years.

Useful questions to bring to a consultation include how your district treats a loan that is current versus behind, what the plan payment would look like each way, and how a mid-case payment change or loan modification would be handled. W.D. Mo. LBR 3082-1, for example, lets a debtor in a trial home mortgage modification elect to pay the mortgage directly or through the trustee during the trial period, with different consequences for arrearage disbursement either way. Filing costs are separate from this decision: the Chapter 13 filing fee is $235 (28 U.S.C. § 1930(a)(1)(B)), plus a $78 administrative fee (Bankruptcy Court Miscellaneous Fee Schedule, Item 8).

• Does my district require conduit payments given the state of my loan?
• What is my total monthly plan payment under each arrangement?
• What happens if the mortgage payment changes mid-case?
• How is a trial or permanent loan modification handled here?
• What proof of payment should I be keeping either way?

Frequently asked questions

Can I choose to pay my mortgage directly instead of through the trustee?

Sometimes, but it is generally the district's rule rather than your preference that decides. Under 11 U.S.C. § 1326(c) the trustee pays creditors under the plan except as the plan or confirmation order provides otherwise. Several districts allow direct payment only when the loan is current at filing, and some require a court order or a sworn affidavit before permitting it.

What is a conduit mortgage payment?

A conduit payment is a mortgage payment the debtor pays through the Chapter 13 trustee rather than directly to the servicer. E.D.N.C. LBR 3070-2 defines it as a mortgage payment paid by a debtor through the Chapter 13 trustee, in an amount equal to the petition-date monthly contractual mortgage payment, subject to later changes made in compliance with the rule.

Does a conduit plan cost more?

The monthly amount you send the trustee is larger under a conduit plan because it includes the mortgage payment. Under 11 U.S.C. § 1326(b), the standing trustee's percentage fee is paid before or at the time of each payment to creditors under the plan. Because the fee schedule and the amounts running through the plan vary, ask a local attorney what the difference works out to in your district.

What happens if my mortgage payment changes during the case?

The claim holder must file and serve a notice of the payment change, generally at least 21 days before the new payment is due, under Fed. R. Bankr. P. 3002.1(b). In a conduit district, the trustee then adjusts the disbursement. D.N.M. LBR 3015-3 authorizes the trustee to disburse the adjusted amount once the objection period passes and deems the plan modified to reflect the new amount.

Do conduit payments stop if the lender gets relief from the stay?

It depends on the district's rule and the court's order. W.D. Mo. Local Rules provide that if an order granting stay relief is entered, the trustee continues making payments under the confirmed plan until an objection and order direct otherwise, the claimant says no further payments are owed, or an amended plan confirmed to that effect. Fed. R. Bankr. P. 3002.1's requirements generally cease when stay relief as to the residence becomes effective.

Does the trustee's disbursement protect me if the servicer says I was late?

Some districts address this directly. AK LBR 3015-5 provides that payments the debtor makes timely to the trustee under the plan, and that the trustee timely distributes, are conclusively presumed to have been made timely for all purposes. That protection is a local rule, so it does not apply everywhere. Keep your own payment records regardless of which arrangement your plan uses.

Is this decision different from state to state?

The controlling rules here are federal statutes and federal district-level local bankruptcy rules, not state law. State law can matter for the underlying mortgage and foreclosure process, but whether you pay through the trustee is set by the Bankruptcy Code, your plan, and the local rules of the bankruptcy district where you file.

Sources

• 11 U.S.C. § 1322 — Contents of plan · official source
• 11 U.S.C. § 1326 — Payments · official source
• 11 U.S.C. § 1325 — Confirmation of plan · official source
• 11 U.S.C. § 1302 — Trustee · official source
• Fed. R. Bankr. P. 3002.1 — Chapter 13—Claim Secured by a Security Interest in the Debtor's Principal Residence · official source
• E.D.N.C. LBR 3070-2 — Chapter 13 – Residential Mortgage Payments
• D. Kan. LBR 3015(b).2 — Conduit Mortgage Payments in Chapter 13 Cases
• D.N.M. LBR 3015-3 — Conduit Mortgage Payments in Chapter 13 Cases
• W.D. La. LBR Appendix D — Rules for Mortgage Payments Through the Chapter 13 Trustee
• S.C. LBR 3015-1 — Chapter 13 — Filing a Plan and Service of Plan
• W.D. Mo. LBR 3070-1 — Chapter 13 Direct Payments
• W.D. Mo. LBR 3094-1 — Payments on Real Property
• W.D. Mo. LBR 3082-1 — Home Mortgage Modifications in Chapter 13 Cases
• W.D. Mo. Local Rules of Practice (adopted January 5, 2026)
• Del. Bankr. L.R. 3023-1 — Special Procedures in Chapter 13 Matters
• AK LBR 3015-5 — Payments by Chapter 13 Trustee
• 28 U.S.C. § 1930(a)(1)(B)
• Bankruptcy Court Miscellaneous Fee Schedule, Item 8

Related

• Chapter 13
• Chapter 7
• Build your personalised roadmap
• Find your local bankruptcy court
• The automatic stay
• Bankruptcy tools and screeners