Resolve mortgage accounting disagreements in Chapter 13 by forcing your mortgage lender to be upfront about how much you owe and to dispute the amount efficiently.
Catching Up on Your Mortgage over Time
A Chapter 13 case gives you the power to catch up on your home mortgage over an extended period and will help you to resolve mortgage accounting disagreements at the same time. This “adjustment of debts” type of bankruptcy can provide you up to 5 years to catch up.
The Bankruptcy Code allows you to cure “any default within a reasonable time.” Section 1322(b)(5). That amount of time is interpreted to mean, in most circumstances, the length of your Chapter 13 payment plan. Most payment plans are between 3 and 5 years long.
The Mortgage Accounting Challenge
If you fall behind on your mortgage, it can be ridiculously difficult to get accurate information from your lender about the amount you owe. If you don’t have precise information, you can’t fulfill your desire and responsibility to cure the arrearage. But, the Code allows you to force the creditor to resolve your mortgage accounting issue.
This problem is aggravated throughout the case when the mortgage payment amount changes over time. This problem can be from regular changes in the interest rate, property tax and insurance, or the addition of fees.
You can’t cure the arrearage or maintain monthly payments if you aren’t timely told the amounts you owe. You can’t efficiently dispute the stated amounts if the lender does not respond in good faith.
This accounting confusion had been a severe problem for millions of homeowners trying to save their homes. Therefore, in 2011 a new procedure, Rule 3002.1 of the Federal Rules of Bankruptcy Procedure, was created in Chapter 13 to resolve mortgage accounting disputes efficiently. The rule gives you the power to force your lender to work with you to determine how much you owe.
How the Procedure to Resolve Mortgage Accounting Disagreements Works
The procedure focuses on changes to the ongoing mortgage payment amount. Your lender “shall file and serve on” you, your bankruptcy lawyer, and your Chapter 13 trustee “any change in the payment amount.” This service includes “any change that results from an interest rate or escrow account adjustment.” The creditor must give the notice “no later than 21 days before a payment in the new amount is due.” Rule 3002.1(b) of the Federal Rules of Bankruptcy Procedure.
You or your Kalispell bankruptcy lawyer can object to the change in the lender’s notice. You must do so before that new payment is due. If you don’t object on time, the lender’s payment change goes into effect.
If you do object, the bankruptcy judge determines whether the lender’s proposed new amount is appropriate or not.
This procedure forces the lender to be upfront about changes in how much you owe. It allows you to dispute those changes, and to get a quick court determination about who is right.