Chapter 13 & mortgage arrears

Anonymous · ‎06-14-2020

Helllo,

I am 4 months out from the end of my 5 year chapter 13 payment plan and I have a question about my mortgage arrears. My mortgage is paid "direct" by me during my plan and numerous times over the last 5 years I have tried calling wells fargo and figure out how to pay the back money owed on the mortgage and they keep insisting that the arrears are to be paid from my 13 plan. Now that I am near the end of my plan I am worried about the situation and don't want any issues getting my discharge or lose the house for non payment. My lawyer refuses to help me without me paying her hourly and what little help she does give me is usually very wrong and not even close to addressing the actual issue and it's very obvious she is not reading the email.

Does anyone have any experience with this? Do the pre petition arrears just go away if not paid even though the mortgage is listed as "direct" on NDC and there are no other claims or do I need to try and find a way to get Wells Fargo to take the money I am trying to give them. I really don't want to want give the lawyer another dime if I don't have to because she has been so terrible. She originally promised me I could do a chapter 7 no issue even though another lawyer I consulted with told me I didn't qualify (I admit was stupid for choosing her in hindsight but I liked her answer better at the time) and when I showed up to her office to sign the paperwork it was for a chapter 13 and proceeded to treat me like I was dumb for ever expecting a 7 because my income was too high despite my original payment agreement paperwork with her stating chapter 7 etc. She didn't bring my file and didn't even know she was supposed to be representing me during the MOC and wouldn't have even shown up if not for being there for another client already and the list goes on. I have called two other lawyers and neither one wants to touch the situation while I am still being represented by the current lawyer on my case. I just don't want these last 5 years of tight finances and payments to be flushed away with something stupid that could have an easy answer.

I understand a lawyer is ultimately the best answer I just don't have any faith in mine so any direction you fine folks could provide is greatly appreciated.

Thanks,

Jason

despritfreya · ‎06-15-2020

@Anonymous wrote:
I am 4 months out from the end of my 5 year chapter 13 payment plan and I have a question about my mortgage arrears. My mortgage is paid "direct" by me during my plan and numerous times over the last 5 years I have tried calling wells fargo and figure out how to pay the back money owed on the mortgage and they keep insisting that the arrears are to be paid from my 13 plan. Now that I am near the end of my plan I am worried about the situation and don't want any issues getting my discharge or lose the house for non payment. Does anyone have any experience with this? Do the pre petition arrears just go away if not paid even though the mortgage is listed as "direct" on NDC and there are no other claims or do I need to try and find a way to get Wells Fargo to take the money I am trying to give them.

How many months were you behind when you filed the Chapter 13?
Are you stating that no one filed a Proof of Claim in your case?
Are you stating that the mortgage lender did not file a Proof of Claim listing the pre-petition arrears?
Are you stating that your Chapter 13 Plan and/or the Order Confirming the Plan did not address the pre-petition arrears?

You need to view the claims register to see who filed claims and, specifically, what the mortgage lender's claim states. You also need to look at your Chapter 13 Plan and the Order Confirming to see if either (or both) addressed how to pay back the pre petition mortgage arrears. If you do not have these documents get a PACER account and review them. Go to www.pacer.gov

In general a mortgage lender will file a very detailed Proof of Claim. In general, the claim will list the amount owed pre petition (arrears). In general, a Plan will not be confirmed unless the Plan (or Order Confirming) addresses the mortgage arrears.

Until you review the Plan, Order Confirming, and the mortgage Poof of Claim you really do not know how the arrears were being treated. For all you know, the pre petition payments were included in the Plan and, assuming you have made each and every mortgage payment since filing, on time and in the correct amount, you are current.

Des.

Anonymous · ‎06-15-2020

Hello,

Thanks for replying.

How many months were you behind when you filed the Chapter 13? 1.5~ months I was on a catch up plan and filed my chapter 13 before that plan was completed and my lawyer told me to make the last catch up payment even though I filed already and wells fargo applied it towards post petition payments and now have me listed as being paid ahead but still show a pre petition arrears balance of about $3500 including late fees.
Are you stating that no one filed a Proof of Claim in your case? Other creditors filed without issue and are reflected in my plan and they have been receiving their disbursements for the last 56 months.
Are you stating that the mortgage lender did not file a Proof of Claim listing the pre-petition arrears? This appears to be the case but they are listed as being "direct" on NDC under the unfiled/other section.
Are you stating that your Chapter 13 Plan and/or the Order Confirming the Plan did not address the pre-petition arrears? This appears to be the case.

What I am unclear on is since they are listed as being "direct" and I still make my normal monthly payements to them and not through the trustee is if that means they are supposed to be collecting the arrears from me or since they didn't file a claim specific to the arrears it's sorry about your luck Wells Fargo you don't get the money.

despritfreya · ‎06-15-2020

@Anonymous wrote:
Hello,

Thanks for replying.

How many months were you behind when you filed the Chapter 13?
1.5~ months I was on a catch up plan and filed my chapter 13 before that plan was completed and my lawyer told me to make the last catch up payment even though I filed already and wells fargo applied it towards post petition payments and now have me listed as being paid ahead but still show a pre petition arrears balance of about $3500 including late fees.

What I am unclear on is since they are listed as being "direct" and I still make my normal monthly payments to them and not through the trustee is if that means they are supposed to be collecting the arrears from me or since they didn't file a claim specific to the arrears it's sorry about your luck Wells Fargo you don't get the money.

The Chapter 13 Plan should have included payment of the arrears, even if only 1.5 months. The lender properly applied post petition payments to post petition months.

My guess is that once your discharge is entered the lender will update its records, take the funds held in suspense (the funds that are reported as post petition "ahead") and apply them to the loan. Once applied, if you are not "contractually current" I suspect the lender will ask for payment of the difference. You will work it out with the lender since the amount owed, if any, will not be huge.

I would not be losing sleep over this.

Des.

Shooting-For-800 · ‎06-15-2020

Your arrears should have been paid in the beginning of your plan right after your lawyer fees. It should have been the highest priority as a secured loan. Find a better attorney or beg to talk with the trustee. You should have a payment schedule with all your debts from the original BK paperwork.

Rebuild started in 2014 - $100k unsecured credit in 2017 - $500k unsecured credit in 2024.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

Music1 · ‎06-21-2020

Your mortgage company should have filed a POC. Mine never did and my lawyer filed for them. But at the end they came back saying I still owed them arrears. Thats when the year long battle started. Your lawyer should have told care of this in the beginning. I had a good trustee that was on my side telling the mortgage you had time to file a claim or reject the one filed for you but you waited till the end of the plan to say something. After the last payment is made the trustee will send the mortgage company a notice of final cure. At which time I see them saying you still owe more. Your lawyer was paid to handle this in the plan. If they have to do more in a battle after. They need to tell the Mortgage company lawyer they want paid from them. Good Luck. Hope it works out for you

@Anonymous wrote:
Helllo,

I am 4 months out from the end of my 5 year chapter 13 payment plan and I have a question about my mortgage arrears. My mortgage is paid "direct" by me during my plan and numerous times over the last 5 years I have tried calling wells fargo and figure out how to pay the back money owed on the mortgage and they keep insisting that the arrears are to be paid from my 13 plan. Now that I am near the end of my plan I am worried about the situation and don't want any issues getting my discharge or lose the house for non payment. My lawyer refuses to help me without me paying her hourly and what little help she does give me is usually very wrong and not even close to addressing the actual issue and it's very obvious she is not reading the email.

Does anyone have any experience with this? Do the pre petition arrears just go away if not paid even though the mortgage is listed as "direct" on NDC and there are no other claims or do I need to try and find a way to get Wells Fargo to take the money I am trying to give them. I really don't want to want give the lawyer another dime if I don't have to because she has been so terrible. She originally promised me I could do a chapter 7 no issue even though another lawyer I consulted with told me I didn't qualify (I admit was stupid for choosing her in hindsight but I liked her answer better at the time) and when I showed up to her office to sign the paperwork it was for a chapter 13 and proceeded to treat me like I was dumb for ever expecting a 7 because my income was too high despite my original payment agreement paperwork with her stating chapter 7 etc. She didn't bring my file and didn't even know she was supposed to be representing me during the MOC and wouldn't have even shown up if not for being there for another client already and the list goes on. I have called two other lawyers and neither one wants to touch the situation while I am still being represented by the current lawyer on my case. I just don't want these last 5 years of tight finances and payments to be flushed away with something stupid that could have an easy answer.

I understand a lawyer is ultimately the best answer I just don't have any faith in mine so any direction you fine folks could provide is greatly appreciated.

Thanks,

Jason

SB_F · ‎08-19-2020

@Anonymous wrote:
Helllo,

I am 4 months out from the end of my 5 year chapter 13 payment plan and I have a question about my mortgage arrears. My mortgage is paid "direct" by me during my plan and numerous times over the last 5 years I have tried calling wells fargo and figure out how to pay the back money owed on the mortgage and they keep insisting that the arrears are to be paid from my 13 plan. Now that I am near the end of my plan I am worried about the situation and don't want any issues getting my discharge or lose the house for non payment. My lawyer refuses to help me without me paying her hourly and what little help she does give me is usually very wrong and not even close to addressing the actual issue and it's very obvious she is not reading the email.

Does anyone have any experience with this? Do the pre petition arrears just go away if not paid even though the mortgage is listed as "direct" on NDC and there are no other claims or do I need to try and find a way to get Wells Fargo to take the money I am trying to give them. I really don't want to want give the lawyer another dime if I don't have to because she has been so terrible. She originally promised me I could do a chapter 7 no issue even though another lawyer I consulted with told me I didn't qualify (I admit was stupid for choosing her in hindsight but I liked her answer better at the time) and when I showed up to her office to sign the paperwork it was for a chapter 13 and proceeded to treat me like I was dumb for ever expecting a 7 because my income was too high despite my original payment agreement paperwork with her stating chapter 7 etc. She didn't bring my file and didn't even know she was supposed to be representing me during the MOC and wouldn't have even shown up if not for being there for another client already and the list goes on. I have called two other lawyers and neither one wants to touch the situation while I am still being represented by the current lawyer on my case. I just don't want these last 5 years of tight finances and payments to be flushed away with something stupid that could have an easy answer.

I understand a lawyer is ultimately the best answer I just don't have any faith in mine so any direction you fine folks could provide is greatly appreciated.

Thanks,

Jason

Your post is two months old, so you are getting closer to discharge. I don't think I know the legal issues like the other two that answered before me, but I think you need to hire another lawyer ASAP. Not sure how to get rid of this one first so another will take the place. However you can do it, you need to give any new lawyer time to clean things up. If their final anwer is don't worry about, well at least then you wold have confidence in the answer assuming you pick a better lawyer.

After my initial fee to my BK13 atty, I never gave my atty another penny, and he handled issues every month or so for 5 1/2 years. A couple of issues were my fault for forgetting something that needed to be added, but most were arguing with trustee who filed motions the whole time to dismiss. In the end, we won almost every argument, and then he asked for and got fees paid from the plan. Don't be surprised if your discharge drags out several months which, besides keeping you on pins and needles, delays start the two year post discharge waiting period some banks and mortgage companies enforce. My BK13 goes off CRs in three months (11/20), but I'm already getting feedback from mortgage companies that I shouldn't bother to apply with them until 07/21 since my discharge was delayed 7 months (which makes no sense since we paid for 60 months BEFORE the 24 mo clock starts).

After all is said and done, I would consider filing a malpractice complaint or bar association complaint against your current attorney for not dealing with this.

Good luck!

BK13 filed 11/2013 discharged 6/2019
Oct 2019 EQ 672 TU 643 EX 663
Julu 2021 EQ 840 TU 828 EX 819

jmw1 · ‎08-22-2020

I don't think you need to hire another lawyer for this issue. The answer from Wells Fargo is technically correct. If you have access to a recent statement, it will help a lot to understand the math.

The lender doesn't know if you will complete the chapter 13. They will assume you eventually fail. Until you discharge, the lender will want to apply all payments including those made by the trustee from oldest to newest just as if the bankruptcy never happened and then to fees with whatever is left over. The lender may track the payments from the trustee and show the arrearage paid so far, but it's still applied from oldest payment to newest payment so you can't fully catch up on arrearages ahead of time until all secureds are paid in full or month 60 if it's near a 0% plan. As long as you pay the trustee and you make your contractual post-petition mortgage payments in full and all the math is correct, you will not owe a huge amount at the end. As des said, you need not lose sleep over this.