Chapter 13 Debtors Beware: Recurring Problems with Mortgage Companies – Part 2 Failure to Send a Monthly Statement

by Peter Orville, Binghamton Bankruptcy Lawyer

January 27, 2010

In Part 1 we discussed how mortgage companies often engage in “double dipping” when you are in a Chapter 13.  Part 2 deals with how mortgage companies commonly fail to send you a monthly statement while you are in a chapter 13 bankruptcy.

In many parts of the country, when you file a Chapter 13, you continue to make your regular monthly mortgage payments directly to the mortgage company rather than in the Chapter 13 plan.  The mortgage company, however, may not send a statement each month requesting a payment, or even showing that a payment is due.  Of course the mortgage payment is still due, but this creates a whole host of problems.

Prior to filing Chapter 13, you received a statement each month showing the amount due and the principal balance on the mortgage, and you would simply send in your payment.  Your statement  also showed you when they received their last payment, and indicated how much was applied to principle, how much to interest and how much to escrow.  When they fail to send you a statement you cannot tell whether they applied your payment correctly, or whether they applied it at all.  Often they do not apply your payment to your account (see the upcoming Part 3), and you don’t know about it.

Another common problem you may face if you do not receive a statement, is not knowing how much you should be paying each month, and where to send it.  This often leads to incorrect payments amounts and/or the failure of the mortgage company to cash the check or applying it properly.  

The result frequently leads to the mortgage company making a “lift stay motion”, where they incorrectly report to the Bankruptcy Court that you have failed to send in your “post-petition” mortgage payment, and ask to be granted the right to foreclose on your home.

If you are having this or any issue with your mortgage company while you are in a Chapter 13, be sure to contact your bankruptcy attorney. Also, be sure to keep detailed records of all mortgage payments made, which includes the date sent, the amount, method of payment, and method of mailing.

Next: Chapter 13 Debtors Beware: Recurring Problems with Mortgage Companies – Part 3 Incorrectly Applying Payments

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.

Last modified: January 27, 2010