QUESTION
If an account is actually included in bankruptcy and not reaffirmed, can they still consider my payments as late?
Asked on Sep 09th, 2015 on Bankruptcy - Michigan
More details to this question:
I was hoping someone may be able to help. On 2011, we had to file for bankruptcy because of medical bills related to our daughter’s treatment. We filed chapter 7 and our home equity loan was not reaffirmed, although we have never been late nor missed any payments on the loan. We have now sold the home and the balance on the home equity loan was paid in full. We are closing on a new home in 2 weeks and have now been informed by our new mortgage company sent a "verification of mortgage" and it is showing 6 late payments within the last 24 months. We are very concerned because we are now told if this is not corrected we will lose our loan for our new house that is being built. After the bankruptcy, I started making all my payments on the 1st of each month for that month’s payment. I'm not sure if an account that is included in bankruptcy and not reaffirmed has an actual payment due date. If so, I may have been paying the monthly payment before the bill was generated. I did review a transactions report that the mortgage company sent me and it does show they received my payments on the 1st or 2nd of each month and they were posted to principal only. Then a few weeks later, they reversed the payments and allocated the payment to interest and principal. I'm still working with the mortgage company to get this fixed. It was a struggle making these payments but we made them even though our attorney told us we did not have to. We wanted to do the right thing and now as they say no good deed goes up punished.
3 ANSWERS
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Retaining a lawyer well-versed in Consumer Law and real estate matters may save you a lot of grief. I would suggest that you first contact the lender which has been entering these mistaken reports. Since the debt was not reaffirmed, they should not be making any adverse notations on your credit report. If you don't have a lawyer, you can write the creditor yourself. Be polite, but be firm, and demand immediate action. Be sure to include all relevant facts, account numbers, bankruptcy case number, etc. At the same time, you can write each of the three major credit reporting agencies (Experian, Trans-Union, and a third), tell them of the improper reporting and ask them to investigate and correct their reports. Check first with the potential new mortgage lender, since its people may have already started this process. I doubt that the correction can be made in the next two weeks, and depending on what your new lender is willing to do, you may need to delay the closing.
Answered on Sep 15th, 2015 at 2:46 PM
Most mortgage lenders will not report to the credit bureaus after a bankruptcy because they worry that by doing this it could be considered as an attempt to collect a debt covered by a discharge. But by applying for a new mortgage, you authorized information about your credit history to be obtained by the prospective lender. I am confident that among the many papers you signed in applying for the new loan, you waived any confidentiality you had with your current mortgage companies. So basically, I see nothing wrong in a lender completing a comprehensive investigation about your credit worthiness after bankruptcy. Many lenders would have just said NO outright. If there has been a mistake on your mortgage accounting, you can contact the lender to see where you disagree and can share the evidence you have with the lender.
Answered on Sep 15th, 2015 at 11:35 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Speak with the attorney who was advising you to get this straightedge out with the creditor.
Answered on Sep 15th, 2015 at 10:02 AM