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).ï¿½ 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. Bankï¿½s] 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 Lenderï¿½s rights in the Property, including payment of taxes, hazard insurance and other items mentioned in paragraph 2.
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