If your mortgage servicer is calling you after you surrendered property in bankruptcy, you may have to sue them. Many of our bankruptcy clients come to us burdened with a mortgage payment that is beyond their means, paying a mortgage that’s now well over the actual value of the property. Rather than continue to be obligated on that debt, some people elect to give their homes back to the bank in their bankruptcy. When this happens, the bankruptcy debtors are surrendering their interest in the property, and it’s up to the bank to legally foreclose on the property
The filing of a foreclosure lawsuit after a bankruptcy debtor receives a discharge of debts is not a violation of the bankruptcy code – as long as the bank isn’t trying to get any money from the debtors. Just because the bank or mortgage servicer filed a lawsuit to foreclose on the property doesn’t mean they have carte blanche to disrupt your post-bankruptcy life. The bankruptcy code specifically prohibits a creditor from attempting to collect the debt after the discharge of debts has been entered – and this prohibition applies with equal weight to the bank or mortgage servicer attempting to foreclose on the surrendered property.
The Florida Consumer Collection Practices Act (FCCPA) also prohibits anyone from asserting a legal right to debt when that right doesn’t exist in the process of attempting to collect a debt. These laws make it very clear that, despite a foreclosure action, a bank or mortgage servicer can’t call you up and try to get you to pay your mortgage when that obligation has been lawfully discharged in bankruptcy. I see this happen almost on a daily basis, however. I have seen countless clients who have surrendered their homes in bankruptcy get relentlessly harassed by the foreclosing entity, who calls constantly, sometimes up to eight times a day, asking: “What do you want to do with the property? Would you like to work out a modification? Are you going to short sell it? What are your intentions???” This is ridiculous because the bank already knows my clients’ intentions.
In many cases, the bank or mortgage servicing company was duly notified of the bankruptcy proceeding and is fully aware that the property has been surrendered. They’ve received the bankruptcy discharge and they should know that they’re not allowed to contact my clients anymore. But that doesn’t stop them from calling and sending letters alleging that debt is still owed. Sometimes they continue to call even after repeatedly being told by my clients of the bankruptcy. Sometimes they continue to call even after we’ve sent a cease and desist letter
So what can you do to stop them? I’ll tell you what you can do: sue the jokers! It is illegal for anyone to attempt to collect a debt from you that has been discharged in bankruptcy, and that includes debt associated with a note and mortgage on a property that has been surrendered. You don’t owe that money anymore, and if they state or imply that you do, it’s lawsuit time!
So if you’ve surrendered your home in bankruptcy and you’ve received a discharge from the Bankruptcy Court, see an attorney immediately if the bank or mortgage servicer:
- Calls you for any reason
- Sends you a billing statement
- Sends you correspondence stating that insurance will be placed on the property and charged to your account if you do not send them proof of current insurance
- Sends you any correspondence that states or implies that you are still responsible for making the mortgage payments
- Does anything else that leads you to believe you remain obligated on the mortgage debt
Many of these lenders are rolling the dice that the majority of their victims aren’t aware of their legal rights, or aren’t going to go to the trouble of hiring a lawyer to enforce those rights. For most of these companies, the cost of changing their collections systems to comply fully with the bankruptcy code far exceeds the potential legal fees expended in fighting the relatively few lawsuits filed against them for such violations. They shouldn’t be able to get away with that. It’s time we stood up to these guys and let them know that their flagrant disrespect for the law and the rights of American citizens will not be ignored. Who’s with me?
