Cure Mortgage Arrears: How to Force a Lender to Accept Your Payments

To cure mortgage arrears and stop a foreclosure is every homeowner’s goal, but as I recently saw in a case that illustrates a common frustration for debtors and attorneys alike, lenders don’t always make it easy. Despite having the funds ready to bring the mortgage current just days before the foreclosure sale, the homeowner was met with a flat refusal from the bank.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

The lender’s response? A flat refusal.  Once a lender has “accelerated” a loan, the lender requires the balance in full. This is a standard clause in mortgages. Why would a lender refuse a homeowner’s funds to bring the mortgage current? Because they want the house, or they want the full payoff, and realize the house will sell at the foreclosure auction at a price that will wipe out the mortgage balance.

There are two options to consider when the mortgage lender refuses payment. Filing a motion with the foreclosure judge or filing for bankruptcy.

Getting Your Mortgage Back on Track: Key Takeaways

• Lender Refusal is Common. The Workaround: Lenders often refuse “partial” payments after loan acceleration because they prefer a full payoff or foreclosure. However, they are legally required to accept payments once a Chapter 13 plan is confirmed.
• The “Motion to Compel”: If a lender refuses to credit payments properly, debtors can file a Motion to Compel to force the lender to accept funds and comply with the bankruptcy court’s orders.
• Documentation is Critical: Homeowners should maintain a “paper trail” of any rejected payments (returned checks, screenshots of blocked portals) to use as evidence of being a “ready, willing, and able” debtor.
• Chapter 13 Bankruptcy to “Cure Mortgage Arrears: Under 11 U.S.C. § 1322(b)(5), Chapter 13 bankruptcy allows a homeowner to “cure” (catch up) on missed payments over 3–5 years while “maintaining” regular monthly payments.
• The Automatic Stay is Immediate: Filing for bankruptcy triggers an immediate stay that halts foreclosure sales, even if the sale is scheduled only days or hours away.
• Credit Impact vs. Home Ownership: While bankruptcy impacts credit scores, a foreclosure is often more damaging. Chapter 13 provides a guaranteed path to save the home, and credit can be rebuilt post-discharge.

What to Do When the Lender Refuses Payments

It is a common tactic by the mortgage lender that when a homeowner attempts to make a post-petition payment, the lender rejects it. Often, the lender claims they cannot accept “partial” payments or that the account is “in foreclosure.” Note, there’s no law prohibiting accepting payments. But once faced with the situation, here are the steps to consider:

Keep a “Paper Trail” of the Mortgage Lender’s Refusal: If a check is returned, save the envelope and the letter from the lender. If an online portal is blocked, take a dated screenshot. This is your evidence that you are a “ready, willing, and able” debtor. Keep track of all phone calls and correspondence.

File a Motion to Compel to Cure the Mortgage Arrears: If the lender isn’t complying with the statutes on curing the mortgage arrears, your attorney can file a Motion to Compel the Lender to Accept Payments. This asks the judge to issue a formal order requiring the lender to credit your account properly after accepting the payment.

However, sometimes there isn’t sufficient time to file a motion and schedule a hearing, so that’s when the power of Chapter 13 bankruptcy and the automatic stay becomes the homeowner’s best friend.

Curing the Mortgage Arrears with Chapter 13 Bankruptcy

In legal terms, to “cure” a default means to act as if the default never happened. It simply means catching up with the missed payments (arrears). If a lender is unwilling to accept payment, then Chapter 13 bankruptcy is another option.

Under 11 U.S.C. § 1322(b)(5), a debtor can propose a payment plan that:

1. Cures the Arrears: Pays back the missed payments (the “arrearage”) over the life of the plan (3 to 5 years).
2. Maintains the Current Payments: Requires the debtor to keep making the regular monthly mortgage payments as they fall due.

Contract Law (Mortgages) vs. the Bankruptcy Code

In this case, it’s a textbook example of why Chapter 13 is so powerful. Outside of bankruptcy, the lender has the contractual right to refuse a partial payment after acceleration, but states do have statutes regarding “curing” the mortgage with a lump sum payment.

Generally, lenders prefer to work out a payment plan, unless they believe they can get the full mortgage balance in a foreclosure sale, either because there is substantial equity in the property, or property values in that area are high.

However, the Bankruptcy Code overrides these contractual rights. Remember, federal law always trumps state law. To learn more about how to take advantage of Chapter 13 to save your home, read this prior article.

The Process: How the “Cure” Works with Chapter 13 Bankruptcy

When a Chapter 13 bankruptcy is filed to cure a mortgage, the process generally follows this path:

Stage	Action
The Filing	The “Automatic Stay” immediately halts any scheduled foreclosure sale.
Proof of Claim	The lender files a document stating exactly how much is owed in back payments, late fees, and legal costs.
The Plan	The debtor proposes to pay that “arrearage” amount in monthly installments through the Trustee.
The Discharge	After 3–5 years, once the arrears are paid, the mortgage is legally “de-accelerated.”

Why Lenders Fight the Cure

Lenders often prefer foreclosure because it is faster and “cleaner” for their books. They get paid immediately, versus dragging out the payments. Creditors do object to the proposed bankruptcy plans by claiming it is not feasible. This argument focuses on the debtor not being able to afford both the arrears and the current payment. But as I tell my students, the Code is designed to keep people in their homes, although the lender’s preference is foreclosure.

Another objection is that the debtor can afford to pay more into the plan, but that argument is typically made by the unsecured creditors, such as credit cards and personal loans, that tend to receive a fraction of what is owed.

The Professor’s Final Thought

If you are a homeowner with the ability to pay but are dealing with a mortgage lender who won’t listen, don’t assume you’ve run out of options. The “Cure and Maintain” provision was written specifically for people in your shoes.

Note, while debtors are generally concerned with their credit score dipping because of the bankruptcy, the fact that they fell behind on the mortgage to the point that a foreclosure was started has already deeply affected their credit score.

While filing Chapter 13 bankruptcy will result in their credit score dropping, it does guarantee that they can keep their home, and their credit score will improve with time anyway. In this prior article, I detail how to improve your credit score post-bankruptcy filing.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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