Mortgage Loan Contracts Must Specify Bankruptcy Attorneys Fees or Fees Disallowed from Proof of Claim

21 Dec Mortgage Loan Contracts Must Specify Bankruptcy Attorneys Fees or Fees Disallowed from Proof of Claim

A mortgage lender does not automatically get to charge you attorneys fees when you file chapter 13 bankruptcy, the fees must be expressly authorized in the loan documents, a Kansas bankruptcy judge has ruled.

Judge Janice Miller Karlin disallowed fees to U.S. Bank, which included $350 in attorneys fees in its proof of claim for a mortgage arrearage in the chapter 13 bankruptcy, In Re Tabares, 08-40324-13, (Bankr. D. Kan. December 15, 2008).� She ruled the following general provisions in the loan contracts are insufficient for the lender to charge bankruptcy attorneys fees:

If [Debtors] fails to make these payments or the payments required by paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect [U.S. Bank�s] rights in the Property (such as a proceeding in bankruptcy,for condemnation or to enforce laws or regulations), then [U.S. Bank] may do and pay whatever is necessary to protect the value of the Property and Lender�s rights in the Property, including payment of taxes, hazard insurance and other items mentioned in paragraph 2.

 

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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.
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