Account review letter from creditor after filing?

[PoorGrammyinBK7]

Got an interesting letter in the mail today ...from our bank that holds the 2nd mtg - a home equity line of credit. It was sent 10 days after we filed. Hmmm.


They suddenly decided to do an account review and want us to fill out an entire new financial statement and send them 2 years of tax returns. Not one word about a re-appraisal of the home. Can't remember, but I think thats more info than they asked for when we took out the HELOC. It has not even been 2 years since we first got the HELOC. Is this common? Seems strange to me.

Never in all the years that I have had loans and mortgages have I received something like this! Of course we have always been current on our loans and credit cards - well might have been a few days late, but nothing major. We are current on this one, but took out some money to pay off 3 credit cards in April (yeah I know - stupid). I do believe it is in response to the notice of our filing BK. Half of the credit card debt we paid off was their own card, by the way.

I have my own ideas of why they are doing this, but thought I would ask you guys your thoughts.

[ccaplinger]

I would consult your attorney before filling out the paperwork. That's what he/she is getting paid for.

[ThreadsSnapping]

Was this sent certified mail or any other traceable way? If not, then "Letter? What letter? I didn't get any letter."

Personally, I wouldn't give them a single piece of info. Hell, they didn't ask for it when they gave you the loan and then the money. It looks like they are loking to file an objection for application fraud and asking you to provide the evidence to hang yourself with.

Would this be considered continued collection activity? Why else would they want it except to try and get a payment?

TS

[PoorGrammyinBK7]

I would consult your attorney before filling out the paperwork. That's what he/she is getting paid for.

I will show this to the attorney, but I have no intention of filling it out ----
unless he says I have to - but I don't think I do.

[PoorGrammyinBK7]

Was this sent certified mail or any other traceable way? If not, then "Letter? What letter? I didn't get any letter."

Personally, I wouldn't give them a single piece of info. Hell, they didn't ask for it when they gave you the loan and then the money. It looks like they are loking to file an objection for application fraud and asking you to provide the evidence to hang yourself with.

Would this be considered continued collection activity? Why else would they want it except to try and get a payment?

TS

No, just regular mail.

Yes, I do think they are trying to get information to pick through and try to build a case of some kind. Well, our income has changed since we first took it out. But not really much different than what it was the 2 years prior (IF we gave them 2 years of tax returns then, which I don't remember doing, but its possible).

I don't see it as anything other than trying to collect a debt (but in sort of a back door approach). Because they know we filed BK and can't take on any new debt, so we could not use up the rest of the line. We have only borrowed about 60% of it.

I just see it as a red flag of possible problems to come.

[AngelinaCat]

I agree with showing this to the attorney. To me it looks like they are trying something fishy. And I would keep it filed in your 'Just In Case' file.

[Help!]

Sounds like a scare tactic to me. It's none of their business what your previous years' tax returns look like. I think these companies holding second mortgages are getting pretty desperate... they know that in the event of a foreclosure the first mortgage lender gets paid the auction proceeds first and that given this market, they will likely get nothing. Their only hope is to somehow object to discharge alleging fraud. If they need info. from you to build a case I think that shows they don't have enough documentation to do it.

Amazing how little they verified when we refinanced and they stuck us with a HELOC - I remember a pay stub or two and that was about it. Why is it that these mortgage companies gambled on our home values and they seem to think they're entitled to win either way?!

[laurannm]

I would agree with everyone else, it almost sounds like they are trying to build a case saying that maybe you were insolvent at the time you took out the HELOC, or if it wa sone of those no doc loans, maybe checking to see if you lied about your income when you took out the HELOC. Then again, if you are current and have been current then I doubt they would have a leg to stand on. Definitely speak with your attorney

[magyar123]

The way I see it is that they violated the automatic stay by even contacting you after you filed. You are under no obligation to send them anything NOW. If they file an objection as to the dischargeability of that debt you will be notified by the court or your lawyer to produce more information.

[PoorGrammyinBK7]

I agree with showing this to the attorney. To me it looks like they are trying something fishy. And I would keep it filed in your 'Just In Case' file.

Yes it will be in my BK file box - personally I wonder if it is a violation of the stay...

[PoorGrammyinBK7]

Sounds like a scare tactic to me. It's none of their business what your previous years' tax returns look like. I think these companies holding second mortgages are getting pretty desperate... they know that in the event of a foreclosure the first mortgage lender gets paid the auction proceeds first and that given this market, they will likely get nothing. Their only hope is to somehow object to discharge alleging fraud. If they need info. from you to build a case I think that shows they don't have enough documentation to do it.

Amazing how little they verified when we refinanced and they stuck us with a HELOC - I remember a pay stub or two and that was about it. Why is it that these mortgage companies gambled on our home values and they seem to think they're entitled to win either way?!

Thanks, Help! - May very well be a scare tactic. The thing is, we were really thinking of reaffirming thjis and our 1st mtg (we go back and forth on it just about daily). But if they are gonna be mean about it, maybe we won't. They can have it. We certainly had every intention of paying this (in fact, have already paid off this line once or twice). We just did something incredibly stupid and certainly did not realize what was coming (judgment), we thought it would all be settled out of court. If we had "planned" our BK, we would never have taken from our own equity and paid credit cards which could have been discharged!

[southernbelle]

I agree with everyone else. Don't give them the rope to hang you with. You should definitely talk to your lawyer about this, but don't fill out anything or send them anything that could come back to haunt you. Why do they need this information after you filed BK, but not before giving you the loan? Thats insane.

[PoorGrammyinBK7]

I would agree with everyone else, it almost sounds like they are trying to build a case saying that maybe you were insolvent at the time you took out the HELOC, or if it wa sone of those no doc loans, maybe checking to see if you lied about your income when you took out the HELOC. Then again, if you are current and have been current then I doubt they would have a leg to stand on. Definitely speak with your attorney

I can't remember if it was "no doc" - I think it may have been. I don't think we were "insolvent" then - not exactly sure what the true definition of that is. The reasons we are now are mainly because of 2 things:

1.) Real estate market has taken a dive in the last 2 years which has lowered the value of our home.
2.) Recent judgment which we had always thought would be settled.

Both were beyond our control.

But yes, I think they are trying to build a case. Don't think they have one though.

[PoorGrammyinBK7]

The way I see it is that they violated the automatic stay by even contacting you after you filed. You are under no obligation to send them anything NOW. If they file an objection as to the dischargeability of that debt you will be notified by the court or your lawyer to produce more information.

I wonder also if they have violated the stay. I really hope they don't file an adversary. Maybe we should just reaffirm it and that would stop that.

But that probably means we'd have to reaffirm the 1st mtg also and both cars (which are at a CU so they are probably cross-collateralized). And we had fully intended to do that, but lawyer says not to so we have followed his advice...

[Help!]

I wouldn't reaffirm. Do you really want to sign up for more of the stress you're experiencing because of their letter? I may have an extreme view about debt now, but I absolutely refuse to ever owe anyone anything again. Debt of any kind is imprisonment as far as I'm concerned - it backs you into a corner and takes away your freedom to make choices. I will never have a mortgage again.