In “Is It Really Over When It’s Over?”, I wrote about the fact that creditors must cease collection attempts once bankruptcy is filed. All too often, however, creditors don’t follow the rules! Creditors who pursue borrowers for additional money after the borrowers’ bankruptcies have been discharged puts the creditors in contempt of court.
A recent story in the New York Times is particularly shocking. Not only did one lender, Countrywide Financial, continue to pursue borrowers for additional money after the borrowers’ bankruptcies had been discharged, it went two steps further. The story centers around a Pittsburgh, Pennsylvania homeowner named Ms. Hill who had filed a Chapter 13 bankruptcy in March of 2001, with the goal of saving her home from foreclosure. Five years later, Ms. Hill had fulfilled her side of the agreement by making regular and on-time mortgage payments to Countrywide over the 60- month period of the bankruptcy plan. Ms. Hill’s case was officially closed in March of 2007, with the court records showing that she was current on her mortgage, and with no contradiction of that fact offered by Countrywide.
One month later, Ms. Hill received a foreclosure notice from Countrywide, stating she was in default and owned the company more than $4,000 in monthly “late charges”. Luckily, the homeowner hired an attorney to represent her. Countrywide sent copies on company letterhead of three notices they had supposedly written to Ms. Hill telling her about late payments. When it became evident that neither Ms. Hill, her attorney, or the bankruptcy trustee had ever received such letters, Countrywide said they had “recreated” the letters for proof purposes, because they could not produce the originals! As the investigation continues (yes, it gets even worse!) it appears that homeowners’ checks may actually have been purposely misplaced or even destroyed by the mortgage lender, just so they could levy charges against the homeowners.
Going back to what I wrote in an earlier blog, if something like this happens to you or to someone you know, call up that lender ASAP. Tell that lender your next two phone calls will be to the Attorney General of the State of Indiana and to your bankruptcy attorney. Then make those phone calls immediately, so that it really will be over when it’s over!