Mortgage discharged in 2013, Wells Fargo trying to collect fees?

[Pizza]

We filed Chapter 7 in 2013 and included our mortgage. We have since moved out and let the house go. An attorney's office on behalf of Wells Fargo sent us a letter telling us that we owe fees totaling about $5,000 in relation the foreclosure action. Since we did not reaffirm our house, wasn't all debt in relation to it essentially discharged? Should I just send them a copy of the BK, showing that we owe squat?

[LadyInTheRed]

Yes, and include a strongly worded letter telling them that if they continue to attempt to collect on the discharged debt, you will file complaint for violation of the bankruptcy court's permanent injunction.

[Pizza]

Thank you very much.

[Pizza]

So I'm correct in that all penalties and interest in association with the debt go with it? The letter read like a scare tactic, maybe hoping since we moved we wouldn't get it the letter and perhaps they could try for a default judgment.

[spidge]

Yes, and include a strongly worded letter telling them that if they continue to attempt to collect on the discharged debt, you will file complaint for violation of the bankruptcy court's permanent injunction.

Can Pizza go straight to demanding the penalty as this is a violation? The mortgage company and attorney know the rules/laws and decided to gamble. I ask because with property values and equity rising again the collections and foreclosures on old debts is likely to begin in earnest.

[LadyInTheRed]

So I'm correct in that all penalties and interest in association with the debt go with it? The letter read like a scare tactic, maybe hoping since we moved we wouldn't get it the letter and perhaps they could try for a default judgment.

A collection letter is a scare tactic by definition

Yes, all obligations under the mortgage were discharged with the mortgage.

I was assuming the foreclosure already happened and they were trying to get the expenses from you. If the letter you received was a notice of their intent to foreclose, it is not a violation of the discharge order. They must give the owner notice of how to cure a default before they foreclose.

[LadyInTheRed]

Can Pizza go straight to demanding the penalty as this is a violation? The mortgage company and attorney know the rules/laws and decided to gamble. I ask because with property values and equity rising again the collections and foreclosures on old debts is likely to begin in earnest.

Pizza can try to threaten to sue them and ask them to pay the fine instead of incurring the cost of litigation. But they are unlikely to pay. For the court to award the penalty, Pizza would have to prove the violation was willful. That's a lot easier to do if Wells Fargo tries try to collect after receiving a cease and desist letter. Wells Fargo isn't likely to do that which would be evidence that the violation was not willful.

By the way, that letter should be sent certified mail return receipt and Pizza should keep a copy of it.

[Pizza]

A collection letter is a scare tactic by definition

Yes, all obligations under the mortgage were discharged with the mortgage.

I was assuming the foreclosure already happened and they were trying to get the expenses from you. If the letter you received was a notice of their intent to foreclose, it is not a violation of the discharge order. They must give the owner notice of how to cure a default before they foreclose.

Ah, so it must be their intent to foreclose the letter was referring to. The verbiage suggests something else. "...the Mortgage Servicer is authorized to collect the debt and to administer any resulting foreclosure of the property securing the above referenced loan". So it reads as if they want to foreclose AND take the money from us.

We moved out in June. Since the default, the mortgage company itself has sent us a bunch of letters (they reference our bankruptcy as 'for informational purposes only, not an attempt to collect a debt'), taken over utilities, cancelled mail delivery, and started the foreclosure process on paper, resulting in all the fees tacked onto the payoff amount.

The letter from this law firm gives us 30 days to dispute the validity of the debt, or they consider it valid and "take action to collect the debt" without specifically saying what kind of action. It also refers to the $5,000 as 'the amount of the debt' and 'the amount you pay'. Also, the ominous phrase that probably shouldn't be here "THIS FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT THE DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE". So whether it's true or not, it reads like they are trying to collect $5,000 as a personal payment from us in addition to taking the house - as they are only mentioning the $5,000 "debt".

Then they end the letter with "If you are not obligated on the Debt, or if the Debt has been discharged in a bankruptcy proceeding, the Mortgage Servicer is not attempting to collect from you personally. You are being given this notice as a courtesy because your interest in the Real Estate may be affected". Doesn't sound very courteous to me ... sounds completely in contrast with the other verbiage on the letter.

What sent the adrenaline pumping is the thought that even with the bankruptcy wiping out the mortgage debt, they might try to present this $5,000 as some new fees (new debt) that occur after bankruptcy that the discharge wouldn't protect us from. Since mail delivery was shut off BEFORE they mailed this to us, we could possibly not have received the letter and had them sneak a judgment past us.