My Bank wants permission to start collections calls after Ch7. Is this for real?

[MBeach222]

My Ch7 was discharged in Feb 2012, where I stated I would give up the home. Both my primary mort anf HELOC were with the same bank (WF) and both loans were included in discarge.

They started Foreclosure, and I called the bank to see if a modification was posible. They said yes it was, even after BK, but that as a condition they needed a fax from me permanentatly revoking my "do not call" option. That would start collections call and skip tracing (ie, calling all my relatives anywhere in the US with my same last name!) and any other collections attempts.

I reiterated that the loans were discharged, and that a bank can NOT try to collect after discharge. The lady's reply was "even though the loans were discharged, you still owe us the money."

Huh?

I did not want to argue with her, so I asked if there was any way to authorize calls regarding mod, but not collections. She said no. I rephrased the question a couple times, to ensure there was no misunderstanding. I even pointed out the difference between collecting the debt vs. the lein. There was no way around the collections calls, per the person I spoke to.

I refused and said I would talk to an attorney.

Can anyone shed light on collections calls being a pre-requisite for modification after BK? Do we still "owe" money after discharge?

Any other tips on modification after Ch7 would be appreciated. While at filing time, I thought I would walk away from the home, now my finances have improved and I would like to keep it. It is also the only way I can own something without coming up with an entire down-payment.

thanks

[keepsmiling]

I think WF should be renamed WTF.
What is it about the term "Discharge" that they don't get?
Sure, let them make the calls. And then happily collect a grand a pop.... I'm guessing a judge might have a field day with this and get even more punitives on it.

Until the pros jump in here, I'm scratching my head on this one, as is the lawyer who lives in my house.

[LadyInTheRed]

That's crazy. I wonder if an agreement to allow them to attempt collection would even be enforceable. I wouldn't be surprised if WF insisting on it as a condition to negotiate a modification is in violation of the permanent injunction. Would probably come down to how a judge views it. Definitely talk to your attorney.

[Logan]

Try calling again and talk with another person. You may get the same answer or maybe not.

[FullOfIt]

Try calling again and talk with another person. You may get the same answer or maybe not.

Pretty much my thoughts....although I lean more towards maybe not!

[malf1204]

I would think that a Permanent Court Ordered Injunction is just that. Only the Court can waive the Injunction not an individual. Funny my auto loan (not-reaffirmed) refuses access via online account because they claim this violated the PI even if I request it. I suspect that you could sign the form but it would not be enforceable and the Court would frown on it. If this were allowed all types of creditors could do it. I can see a credit card company saying that they will reconsider you for a new card if you sign away your rights...

[OHBOY]

My Ch7 was discharged in Feb 2012, where I stated I would give up the home. Both my primary mort anf HELOC were with the same bank (WF) and both loans were included in discarge.

They started Foreclosure, and I called the bank to see if a modification was posible. They said yes it was, even after BK, but that as a condition they needed a fax from me permanentatly revoking my "do not call" option. That would start collections call and skip tracing (ie, calling all my relatives anywhere in the US with my same last name!) and any other collections attempts.

I reiterated that the loans were discharged, and that a bank can NOT try to collect after discharge. The lady's reply was "even though the loans were discharged, you still owe us the money."

Huh?

I did not want to argue with her, so I asked if there was any way to authorize calls regarding mod, but not collections. She said no. I rephrased the question a couple times, to ensure there was no misunderstanding. I even pointed out the difference between collecting the debt vs. the lein. There was no way around the collections calls, per the person I spoke to.

I refused and said I would talk to an attorney.

Can anyone shed light on collections calls being a pre-requisite for modification after BK? Do we still "owe" money after discharge?

Any other tips on modification after Ch7 would be appreciated. While at filing time, I thought I would walk away from the home, now my finances have improved and I would like to keep it. It is also the only way I can own something without coming up with an entire down-payment.

thanks

I sure would like to have clarification on this too.... My foggy understanding is that though the primary mortgage was discharged you still own money on the note and hence they can foreclose on you. If they told you that a 'modification' is possible after bk, I can see that they would need to have the option to communicate with you throughout that process. Personally, I would not hesitate to give them permission to call me pertaining to a 'modification' in order to get 'this thing going' and I would therefore have no qualms signing an agreement giving them permission to call me ,not for collection purpose, but to get a modification or refi going.
However I must admit that I don't understand the difference between a modification and a refi. I have been told that it's quite common to get a 'refi' after bk (even right after bk...) but I don't know if those involve reaffirmed mortgages or non reaffirmed ones.
Sure would love to hear from somebody that really knows the 'scoop'.

[justbroke]

You still owe the money and they can send your "informational" bills and other communications so long as they indicate as such. The bill must not demand payment or it should have something reading that the bill is otherwise for "information only" if the debt was discharged in bankruptcy.

Short of that, any other attempt to collect the debt is a violation.

[kornellred]

What debtors do not seem to understand is that a bankruptcy "discharge" does not mean that the Court declares that the discharged debt no longer exists - as if you could wave a magic wand and poof! all of a sudden there is no debt. The discharge just means that the debtor no longer has an obligation to repay the debt. Forever. I realize that this is, in effect, the same as saying the debt no longer exists - because it no longer exists for the debtor.

However, post-discharge, secured creditors can specify any terms they wish with regard to assets with a lien on them.

[malf1204]

However, post-discharge, secured creditors can specify any terms they wish with regard to assets with a lien on them.

Thats not true. If your mortgage was discharged your creditor cannot start calling you and send you collection noticed because they have a lien. I did not reaffirm my auto loan and my auto lender cannot contact me unless I approve it. If that were true Best Buy could start calling you and sue you because they have a lien on your dvd player.

[kornellred]

That's not what I said. Secured creditors cannot try and collect on the discharged debt, of course. But, the debtor will not get possession of the property with a lien on it unless new terms are satisfied.

Creditors having a lien on consumer goods are SOL, because the debtor already has possession of the goods. It's not worth the hassle of trying to recover it. In the case of vehicles - the debtor will not get the title until the entire balance of a discharged auto loan is paid. If you don't pay, the vehicle will be repossessed if it has any value. Mortgages are complicated - you still owe the lender for a discharged mortgage even though you do not have to pay it. How long you get to live in the mortgaged dwelling will depend upon the lender.

[justbroke]

If that were true Best Buy could start calling you and sue you because they have a lien on your dvd player.

Actually, Best Buy could sue you in order to get a judgment and a Writ of Replevin to recover property that has a lien on it. The only thing Best Buy would not be able to do, is have you pay anything in order for them to repossess the property. It is not worth Best Buy's time to try such a thing because, in many cases, the Debtor could re-open their case and file an 11 USC 522(f) motion to avoid the lien.. but that's not worth the debtor's time and money either. So it's a standoff.

As kornel wrote, the discharge only removes your liability to pay. it does not remove the debt itself. Those creditors that enjoy a lien upon the property, keep that lien (unless you had the lien specifically avoided in the bankruptcy). That means that they can pursue repossession of or foreclosure upon the property itself. It's an interesting fact that most people forget about bankruptcy; that is, that it does not remove the debt.

I will say that it's a fine line between calling for informational purposes to warn you of an impending foreclosure and a violation or "attempting" to collect the debt. Nothing bars the secured creditor from actually foreclosing or sending informational messages to the debtor.

The other fact is that most secured creditors choose to not make any calls or send any "informational" messages because they fear it being construed as attempts to collect a debt. My mortgagor sends me 'informational" messages every month on my discharged mortgage. It's a "courtesy" for me. They are not attempting to collect, just letting me know what's due and owing.