Many individuals and couples who file for a Chapter 13 bankruptcy do so because they want to keep their home. Bankruptcy can freeze foreclosure proceedings and allow you to stay in your home and catch up on your mortgage.
Unfortunately, many debtors are caught short when they receive a notice of post-petition mortgage fees and charges in a New Jersey Chapter 13 bankruptcy. The chapter 13 bankruptcy attorneys at Gillman Capone Law can monitor these charges and file legal objections if you are overcharged.
When you file for a Chapter 13 bankruptcy, the holder of the mortgage on your primary residence must file an Official Form 410A with its Notice of Claim to the bankruptcy court. This form details your debt to the lender as of the date of your filing. Your Chapter 13 payment plan will include payments to resolve mortgage arrears.
You also must make monthly mortgage payments as they come due for the duration of your payment plan. Many debtors are surprised to learn that their bank or mortgage holder can add fees to their mortgage balance after a bankruptcy filing.
The bank or lender incurs expenses when you declare a Chapter 13 bankruptcy and they may add fees to cover these expenses. You must pay these additional charges or risk losing your home. Our New Jersey attorneys can explain the types of charges your mortgage lender is most likely to impose during a Chapter 13 bankruptcy.
When you file for a Chapter 13 bankruptcy, the lender will hire an attorney to monitor your case. The attorney will review the repayment plan and lodge any objections, assess the equity in your home, ensure your homeowner’s insurance remains up-to-date, and take any other steps necessary to protect the mortgage holder’s investment. These attorney fees will be added to your mortgage balance.
The mortgage holder will hire a property inspector to do a drive-by evaluation of your home’s condition. These inspections will occur periodically throughout your Chapter 13 repayment period.
You may see other costs added to your mortgage balance. For example, if the lender must advance cash to pay property taxes on your home or fund escrow, it will charge fees for this service. If you are late in making your mortgage payments, a late fee could be added to your balance.
When a lender adds post-petition fees or charges to your mortgage balance or monthly payments, these extra costs may impact your ability to keep current on your mortgage. If you make a monthly payment without adding an assessed fee, you could be in technical default. The lender might then ask a bankruptcy judge to lift the automatic stay against collection efforts and you could potentially lose your home.
Post-petition charges could also lead to a larger-than-expected mortgage balance at the end of the repayment term. This might mean that you cannot afford to stay in your home even after discharging other debt through bankruptcy.
Many people who choose Chapter 13 bankruptcy do so in order to stay in their homes. When our New Jersey attorneys represent homeowner clients in a Chapter 13 bankruptcy, we closely monitor mortgage lender filings and immediately review any new charges or fees. We also ask our clients to monitor their payments closely and inform us if their mortgage payments change for any reason.
The lender cannot just add fees as it wishes. There are specific rules and procedures they must follow for a post-petition charge or fee to be enforceable.
Bankruptcy Rule 3002.1(c) requires the lender to disclose any charges or fees imposed after the bankruptcy filing that the lender believes are recoverable from the debtor or the mortgaged property. The mortgage holder must file a form describing the charges within six months of the date they were incurred. The, the lender also must file an amended Notice of Claim with the bankruptcy court that includes these post-petition fees and charges.
The notice must be served on you, your bankruptcy trustee, and your attorney. When we receive notification of post-petition charges and fees from a mortgage lender, we scrutinize them carefully. If the lender did not provide acceptable notification in accordance with Bankruptcy Rule 3002.1, or if the fee or charge is excessive or unwarranted, we can file a motion with the court objecting to it.
The lender cannot assess post-petition charges and fees unless the mortgage contract allows them, and sometimes a lender charges fees that the contract did not anticipate. In that case, our New Jersey attorneys can bring a motion before the Chapter 13 bankruptcy court to determine the post-petition mortgage fees.
These motions require the lender’s attorneys to justify each charge before the court. If the bankruptcy judge finds the charge is not allowed in the mortgage contract or under non-bankruptcy law, the judge can disallow it. The court can also impose fines on the lender and require it to pay your attorneys’ fees.
If you receive a notice of post-petition mortgage fees in a New Jersey Chapter 13 bankruptcy, do not always assume the charges are proper. It is wise to consult a bankruptcy attorney at Gillman Capone Law.
Lenders are allowed to make specific post-petition charges, but it must be in accordance with the mortgage agreement or non-bankruptcy laws, and you must get proper notice. Speak with our office today if you have concerns about these charges.
Gillman Capone Law Group
N/a
