Bank Violating Automatic Stay

[willdufauve]

Hi,
I applied for a mortgage mod then, 2 months later, before the bank/mortgage company responded, I filed BK7. About a month after the 341 meeting with the Trustee, I started getting regular calls from the loss mitigation department at the bank left on my machine. They sent a payment plan/trial mod to be applied toward making up the missed payments (which I am bankrupting and will not need to pay).

I'm not responding to the bank's calls. I did send them a Suggestion of Bankruptcy letter with the case number asserting the Automatic Stay, which they haven't lifted, but they continue calling and leaving messages. They know I'm in bankruptcy, they're the only secured creditor, I'm surprised they keep calling me.

I'm not sure how to proceed. I might eventually want the mod... but I definitely want the protection of the automatic stay. Why file bankruptcy and still put up with more collection calls, right?

For the lawyers and experts here on the forum, should I: 1) just ignore the bank's calls, 2) return their calls - essentially giving up the Stay, 3) wait until after my discharge and case closed expecting to resume the mod process, 4) pursue sanctions? Advice?

[despritfreya]

While the lender is violating the automatic stay it might not be in your best interest to complain about it. You state you want to keep the home and are hopeful that you can get a loan modification. You might not want to piss off the lender as, if you do, you know your loan modification package will be put at the bottom of the pile. There is nothing wrong with you exploring the loan modification especially since you started the process before you filed bk.

You also state that you don't have to pay the missing payments ("which I am bankrupting and will not need to pay"). This tells me that you have a fundamental misunderstanding of bankruptcy. You are correct in the sense that the lender cannot force you to pay the missed payments. However, if you do not pay, the lender will simply take back its property. Now, if you modify the terms of the loan you will be deemed "current". But if you want to keep the property and the lender will not modify, you will have to bring the payments current.

Des.

[AngelinaCatHub]

I strongly agree with Des. After all, you started this action yourself, and finally got a call back for a Mod. A rare event. If you wish to keep the house, bk7 is not that kind of debt forgiveness. It is a TOTAL liquidation and the chattel of the house belongs to the debt. Bring up to current ASAP and do NOT reaffirm the mortgage note but "pay through" so you would still have bk protection in the event things get worse and you cannot pay the mortgage. You then could walk away. 'Hub

[SMinGA2]

My understanding is the automatic stay (for secured property) automatically expires 30 or 45 days after the 341 meeting. I don't know the full details on how that works, but its possible that they are not in violation of the stay by contacting you about the modification. You indicate this contact started 'about a month after' the 341. When did you file? Have you been discharged? In an earlier post, you intended to file on April 30th. If you did, then you have possibly been discharged already. Meaning there is no more automatic stay...

[despritfreya]

My understanding is the automatic stay (for secured property) automatically expires 30 or 45 days after the 341 meeting.

This is correct if one does not act on their intentions as it relates to personal property (not real estate). And, yes, the stay protecting the debtor would terminate upon entry of discharge and be replaced with the discharge injunction.

Des.

[HHM]

Let's see, you contacted them about getting a loan mod and now your upset that they are calling you to discuss the modification? Don't think that will fly in BK court if you tried to bring a stay violation. Courts are fairly sympathetic to the bureaucracy of large organizations, just because you sent the notice of BK to the bank, doesn't mean it necessarily filters to all parts of the bank, and therefore, it is hard to show a "knowing" violation, and even more difficult, any harm to you.

Talk to the bank, get the modification process going if that is what you want to do.

Note, you don't give up the stay by talking to the creditor voluntarily, the stay is only lifted if it lifts automatically due to BK code provisions, case is dismissed, case is discharged, or the court enters an order lifting the stay.

[lorelei]

Bank of America called me while I was in the middle of bankruptcy to see if I wanted to work with them on a loan mod after they had turned me down *twice* and asked me to send in paperwork eight times. They just don't know what the hell they are doing, or they are playing stupid intentionally to drag their feet on loan mods while appearing to the feds that they're putting in a good faith effort. I let them have it - politely. But I let them have it.

[tobee43]

what about making actual payments while the stay is in effect? it is absolutely understandable to at least speak with them to iron out any details about your pending or actual loan modification process. it's another if they are attempting to have your reaffirm this mortgage using the terms of that modification agreement. as des and hhm point out, this may not be the worse thing... it may be in your best interest to at least hear what it is exactly they want.

[justbroke]

Actually, the way this reads, I don't see it as a technical violation. If the OP wrote "surrender" on their Statement of Intention, then the stay is lifted 30-days after the 341-Meeting of Creditors. (11 USC 362) If the Trustee has technically abandoned the property (No Distribution Report or actual abandonment), then it's not even property of the Estate anymore.

I would say that most financial institutions (creditors) would wait until still file a Motion for Relief from Stay (RFS) just to confirm that the stay has in fact been lifted by operation of 11 USC 362.

As HHM suggested, proving a willful violation of the stay -- if in fact it still existed at that point -- could be difficult.

[willdufauve]

Thanks everyone. I'll try to clarify - 1) per Pacer, the bank has not moved to lift the stay, 2) I'm not expecting a meaningful modification, so I'm doing 'stay and save' not 'stay and pay', 3] if I get a meaningful modification I'll keep the house, if not, the bank gets it and I move on post discharge, 4] I was afraid it would de facto lift the stay if I moved forward on the mod, 5] in Mass we have 150 days moratorium on foreclosure to mod, so after the discharge I'll have 10 weeks of that left to work it out or move on if necessary.

"Let's see, you contacted them about getting a loan mod and now your upset that they are calling you to discuss the modification?" .....Yes, it's a little neurotic or at least inconsistent, but I needed the Auto Stay period to 'recharge' my personal energy, it's been a rough few years. It's the timing of everything i'm trying to work out.

[tobee43]

but I needed the Auto Stay period to 'recharge' my personal energy, it's been a rough few years. It's the timing of everything i'm trying to work out.

i hear that! and amen, it's so important to keep you head on straight during this process. the mere fact you reconize it is excellent. we are still spinning....