Please advise... I think I may be in default.

[TheBajan]

I was just looking at the claim filed by my mortgage holder (Navy Federal Credit Union) and apparently they included a $425 pre-petition fee and on page five of the petition is says this amount is needed to cure the default. I have never made a single late payment and I haven't received any notice about this or that it is owed. Every month they send me an "informational" statement and it never shows that this amount is due or that I am past due on anything. I'm somewhat confused and afraid that someone is going to come knocking saying that I have been in default for the past 8 months and they are taking the house or something. I don't know what to think or do about this. Does this sound normal? Do I owe this money and is it normal for them not to let me know? After all, I didn't receive this. It was sent to the trustee and I downloaded a copy from PACER or I might never know about it. Please help with any info.

Thanks much,
The Bajan

[Tater]

I wish I could give you some solid advice but have you contacted your attorney?

[justbroke]

Since you are in an active Chapter 13, no one will come knocking! At worst, NFCU would need to file a Motion for Relief From Stay and you'd know why at that point. They'd then have a hearing and you'd have a chance to cure.

Now that I wrote that, let's talk about what really happens in Chapter 13s and mortgages. Almost every mortgage that is inside a Chapter 13 is technically or actually in arrears. The Chapter 13 protects you from the lender taking any action without notice and a hearing. So, your Chapter 13 Plan should have provided to "cure" any arrears. You would have until the end of the plan to cure the arrears -- although most Trustees like to cure secured debt arrears over time. Super worst case... you pay $425 at the end of the plan! The arrears are not subject to further interest or penalty.

So I would find out just what is in your plan and how it is being dealt with in your plan. You write that this is in their claim and in the "petition" (I suppose it is "scheduled"), then the debt does exist. If it was invalid, then you probably needed to object to the claim and this particular mystery $425. I don't know if it's worth fighting the amount, from an attorney hourly rate, but you'd need to speak with your attorney on that.

[TheBajan]

JB,
Thank you. I contacted my atty today and he basically said this was some sort of fee that NFCU tacked on due to the BK and that the Trustee would cure it just as you have described. I was just freaking out a little when I read that last night and hoped someone had some insight. My atty also mentioned that it wouldn't be worth fighting it and I agree. Thanks again. I appreciate you sharing your knowledge with me.

The Bajan (feeling much better now)

[justbroke]

I am very happy to read that you are now relaxing. Breathe... breathe. Okay, now just stay in plan and make us proud by reaching and getting that Chapter 13 discharge!