Account review letter from creditor after filing?

[PoorGrammyinBK7]

We prefer to just continue payments and do a "ride-through" if it is possible and try to stay in the house (condo) as long as possible. We would only reaffirm any of the loans now, after all I have learned on this forum, if we are just backed into a corner.

I am not sure though if it might be better to just reaffirm this one than having to face a separate, expensive adversarial lawsuit brought by a creditor and hire a lawyer and all that entails - even though I really don't think they would have a case. The problem is that we took this latest advance to pay 3 credit cards less than 90 days ago. Before that, we had a zero balance for about 8 or 9 months. We have made 2 payments so far since this particular advance (we are current) and the next one is not due till August, which we will pay, of course.

I could just kick myself for doing something so dumb, but we just did like we always have been taught to do - tried to get the debts down to the lowest interest rate, so they would be more manageable etc. If I had known the future I would never have done it.

[Help!]

I think they're bluffing. Taking out cash advances to pay credit cards, even within 90 days, is not fraud! Some bean counter probably did the math and realized that it's too expensive to open an adversarial proceeding but if they can frighten and intimidate you into paying on a discharged debt it's worth writing a few letters.

[PoorGrammyinBK7]

I think they're bluffing. Taking out cash advances to pay credit cards, even within 90 days, is not fraud! Some bean counter probably did the math and realized that it's too expensive to open an adversarial proceeding but if they can frighten and intimidate you into paying on a discharged debt it's worth writing a few letters.

So do you think this could be considered a violation of the stay?

[PoorGrammyinBK7]

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.

My thoughts exactly.

[Frogge]

I agree with Help! and others that they are trying to build a case on you by obtaining this info. They are desparate to get paid and they know they probably won't.

The 2nd mortgage lender on our old home is nearly unsecured and we owe them $45,000. The loans (1st and 2nd, different lenders) were done "stated income" and boy were they overstated. The broker was a friend of our family and we gave her our info over the phone (out of state) with the idea it was a NINJA loan and the rates would be high. We didn't see the applications until the day of closing. Looking over them when we went to our attorney, we can't believe what ridiculous info she put on them to get these loans approved. Each of the applications has different info on them regarding our employment, income and even addresses. We didn't have jobs. We were buying the house while living in another state. We were insolvent -$67,000. Our lender knows what they did, and that neither the broker or the banks performed due diligence before making the loan.

Therefore, the attorney has sent letters to both of them kindly requesting that they dismiss any deficiency in exchange for the keys.

I would give this letter to your attorney asap. It does sound as if, since you've filed 10 days ago and they must have notice already that they could very well be in violation.

[FreshLikeADaisy]

Grammy, ditto what everyone else said, but keep in mind that they may be trying to get you to requlify for the purpose of extending you credit -- i.e. a "new" loan that will just cover the amount of the existing debt -- that will survive bankruptcy.

Don't sign a thing.

Whether it's a sideways reaff, an attempt to collect, or requalifying you for new credit that will survive bk, the day you filed is the day they needed to stop with the letters. If they want to try to build a creditor objection, they can do it without your help. You need not even respond. Give the letter to your atty and let him deal with it.

If you want to know whether the creditor has been notified, you should be seeing your "BNC Notice" on PACER any day now: that's the document that shows who was served, whether electronically or by mail, at at what address. By the time you see that notice, they've heard of your bk, I guarantee you.

For what it's worth, I think you're one of the lucky ones: you had the good sense to see that something isn't right, and you're questioning it thoroughly before acting. What scares me are the number of incredibly trusting people who would have just signed it and sent it back, thinking it was a part of their bk. I am glad that there was not one single positive post in this entire thread!!!

Good luck!!!

P.S. Don't reaffirm anything you don't want to prior to the creditor filing an objection. If you think you can't/won't win it, then sure, consider reaffirming. But NOT before then, just because they do a little saber-rattling and you know you can't afford to fight. Wait for them to make a serious move; if you reaffirm too quickly you'll never know whether you could have avoided that reaffirm altogether...

[PoorGrammyinBK7]

Update:

Just got ANOTHER letter from them! This one just states that they sent the other letter on July 18, the info they wanted, included another form to fill out (same as first letter), that they have not received the info and they now want it by next week (coincidentally by the EXACT date of our 341!!).

Then they said that failure to send this info could result in suspension of our "draw" privileges. (If they would bother to simply do a re-appraisal on the condo, they could already do that - ha!).

Should I write them and tell them as they surely know by now, since they have been duly notified, we have filed BK, Ch 7 and the info they requested has already been supplied to the BK trustee and I am sure it is public information - or should I just ignore the letter?

I still think it is a back-door violation of the stay.

[BnkrptcyLwyr]

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.

Another thought, approach your attorney about whether there has been a Truth in Lending Act (TILA) violation. Get all of your HELOC docs together. It may be that you can rescind that mortgage, and pay very little back.

[PoorGrammyinBK7]

Another thought, approach your attorney about whether there has been a Truth in Lending Act (TILA) violation. Get all of your HELOC docs together. It may be that you can rescind that mortgage, and pay very little back.

Thanks for your reply BnkrptcyLwyr -- What kind of violation do you see? I don't think they did anything formally to make us wait 3 days before using it - nor did I get any "right to rescind" in writing (or verbal) this time - when we took this latest draw. Should I have? Also, I just went to the bank by myself and did this. Can't remember if my husband signed anything this time or not. Don't think he did.

We originally applied for the HELOC in Sept 2006, but did not use it until several months later - and then paid it off and it was at zero balance from last Sept till this latest draw in April this year.

I am gonna get those papers out and go over them with a fine tooth comb!

Could we really rescind this - while in BK already?

Thanks again!

[BnkrptcyLwyr]

There's nothing for me to "spot" just given what you've said. It's just a consideration that you should be looking for in any equity line of credits.

For example, if you and your husband both applied for it, did you get FOUR notices of your right to rescind? Each of you should've gotten two.

Take it to your attorney and ask. You can have up to three years to rescind.

[PoorGrammyinBK7]

For example, if you and your husband both applied for it, did you get FOUR notices of your right to rescind? Each of you should've gotten two.

Take it to your attorney and ask. You can have up to three years to rescind.

NO we definitely did not get 4 notices - maybe one, in the beginning - nothing this time.

[PoorGrammyinBK7]

Don't reaffirm anything you don't want to prior to the creditor filing an objection. If you think you can't/won't win it, then sure, consider reaffirming. But NOT before then, just because they do a little saber-rattling and you know you can't afford to fight. Wait for them to make a serious move; if you reaffirm too quickly you'll never know whether you could have avoided that reaffirm altogether...

Thanks Fresh - thats what I was thinking too.

[No Gravy]

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.

You didn't say how long ago the HELOC was taken out, but I would think since you've been paying the monthly payments since then, that right there states you were not insolvent at the time.

Though both you and I would probably make different choices today, knowing what we know now, I wouldn't beat yourself up over taking out the HELOC to pay off credit cards. After all, that's how most 2nd mortgages are marketed as "for"!

"Use the equity in your home to pay off credit cards, send your kid to college, go on that vacation you've always wanted..." I still get flyers from WaMu, telling me I deserve a vacation and should use the equity in my home to finance it! lol They're half right, anyway.

[No Gravy]

Should I write them and tell them as they surely know by now, since they have been duly notified, we have filed BK, Ch 7 and the info they requested has already been supplied to the BK trustee and I am sure it is public information - or should I just ignore the letter?

I still think it is a back-door violation of the stay.

I would certainly think it is! At the very least, they should be contacting your attorney for anything they think they need, not you directly.

[Flamingo]

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.

Grammy - I didn't read the other postings in here...My first thought with this, and I apologize if someone may have already said it, is that a lot of people are having their HELOC lines of credit reduced by lenders. This is also occurring on credit card limits. This could be just a coincidental thing and they want to evaluate a few things as to when you took out your account as to now or it could be tied to you filing BK and they may want to reduce the amount of cash that is available in your HELOC. Others probably have other thoughts, suggestions but this is going on quite rampently now and lenders/creditors are protecting themselves by doing this as they have the right to lower credit amounts on HELOCS or credit cards. Pull out your HELOC paperwork and see what is in there as to them possibly being able to lower the amount available on your HELOC.