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C-13, Paying mortgage outside of plan, and Bank of America

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  • C-13, Paying mortgage outside of plan, and Bank of America

    How's that for a title?

    I'm looking through my BK plan, trying to find areas where things might go wrong, and address issues before I file. I plan to file in November of December. Part of my plan is that I have profitable rental homes which I will keep (with mortgages), plus a mortgage on my own house.

    The mortgages are paid up to date, and my attorney says we can keep them outside the plan. Depending upon which property, the mortgage is serviced by Bank of America or Regions Bank. Today, the mortgage companies are set up for automatic debit from my rental company checking account.

    I've seen lots of difference comments in different threads about online access being shut off... or not... payment address being moved over and over... etc. But I can't find specific bank examples. Nor have I found if somebody filed while still set up for direct debit.

    So my question... has anybody dealt with either of these banks in a C-13 with a similar situation? If so, what happened to you? Were you able to keep automatic debit running? Were your payments lost? Did the banks foreclose even though you made your payments? Etc., etc...

    Thanks!

  • #2
    It is very likely that online access will be shutoff. This is to protect the bank. The only bank which I was allowed to keep online access, was American Express!!! As for paying outside the plan, I would ALWAYS seek permission to pay outside the plan for rental/investment properties! I did the same thing in my Chapter 13, but primarily because I had tenant issues with irregular payments being made.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      I kept three loans when we filed bankruptcy, two auto loans that were current and mortgage that was way past due. One auto loan was to be paid outside the plan and the bank even pulled all online access for that account.

      I don't really think it's a big deal though. It's kind of inconvenient to write checks or send money orders, but after being on a Chapter 13 for a few months it became second nature. I never had any issues with payments being lost. In fact, it seemed like the banks were pretty on top of it. They have a little bit of liability on them when you file bankrupcty- they're well aware that you have a lawyer to help defend you should they pull any shenanigans and you are covered by various bankruptcy laws.

      I actually called the one bank that held our auto loan- I had been with them for 10 years, my husband had been with them for 15, we had previously paid off two loans and were in good standing with them. I tried to get them to allow me to have online access and they said it was a bank policy that any of their loans that are included in a bankruptcy are removed from online access. They did allow me to start making payments over the phone though using my checking account number and routing number.

      Comment


      • #4
        Writing checks will not be a problem and it fact would be welcome for the paper trail. The only "bad" part about losing online access is losing the ability to update Quickbooks each month with interest charged vs principle paid.

        What worries me is I'm hearing scary stories of banks... especially Bank of America... screwing up, losing payments, foreclosing on the wrong house, etc... Maybe I'm being paranoid, but preparing this bankruptcy "correctly" saves me money.

        Am I correct in assuming there will be instructions from the bank on how to mail checks, where to, etc.?

        Comment


        • #5
          My mortgage is through BOA and they will no longer allow you to pay online. I called and paid over the phone and the woman said the 13 is the reason.
          I dont trust the USPS to deliver ANYTHING, so she just said I can call and do it that way. No charge for it either.

          Comment


          • #6
            My mortgage is with BoA. They stopped my online access when I filed. The thing I miss most about that is not being able to go online to confirm they made my insurance and property tax payments from my impound account. But, all of that info shows up on the monthly statements.

            I have always used my bank's online bill pay to make the payment and nothing changed about that when I filed BK. BoA did send me a letter telling me to mail my checks to a different address. But, my bank pays electronically, so it didn't make any difference to how my payment is set up. In 16 months all of my payments have been credited promptly.

            I have had one problem with the mortgage since filing BK. My monthly payment decreased because the rate adjusted down. I decided to keep making the same payment to pay down more principal. Although the monthly statements they send me clearly say that additional payments will be credited to principal, they didn't do that. After a couple of months I noticed that my statement showed an "unapplied credit balance." I called the bank, who forward me to their bankruptcy department who told me that if I pay more than the minimum payment, I have to call after they receive the payment to request it be applied to principal. She tried to transfer me to the department that does that, but they weren't available. She said she would send them an email asking them to apply the unapplied balance to principal. It didn't happen. I haven't taken the time to call again. I guess I should do that. But, I did reduce my monthly mortgage payment to the minimum and am putting the money in savings instead.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


            • #7
              I have local branches for both BofA and Regions (in fact, I have all my checking business through Regions... that I will have to close and move... sigh...) so I don't mind carrying checks to the teller window (assuming I can still go to my local branch and pay.)

              LinR, as a FYI I don't have impound accounts on my rental properties. I do my own escrow and pay the insurance and taxes myself. And the rentals are on 30 year fixed loans, so the payments never change. This came about as an accident.

              Two years back I switched to a commercial insurance policy to cover all my investment real estate. So my loans only impounded taxes. Then mid-last-year I took advantage of the HAMP program to refi my rentals (all the loans had ended up with Freddie/Fannie Mae.) The refi wouldn't allow me to impound only taxes, they required both taxes and insurance be impounded.

              But then since the loans were all separate per property, and since there was only the one insurance policy and two banks were servicing the loans, there was no way to actually pay the insurance from impound. So they offered to let me do my own impound. And I like it! I have a separate savings account for security deposits and impound and each month deposit the appropriate amount to cover. And most importantly... I get to keep the 0.05% interest for me!!!!!

              Comment


              • #8
                Forum members have reported that their local branch would not accept mortgage payments after they filed BK. I don't know what banks were involved.

                Even with a fixed mortgage, if you decide to pay more the minimum payment, watch your statement in case you have make a phone call to get the payment credited to principal.

                I like the convenience of the impound account. It's always been optional for me. And, it does earn interest.
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                Comment


                • #9
                  My mortgage is with BofA. I was told my online access would be denied while in bk. I chose to send my payments via snail mail just because I want to be able to print off proof that the payment was made if needed. That's just MY personal preference. After we've been in our plan a little longer and see that BofA isn't going to do something crazy, I might choose to pay over the phone. I was also told that you could use your bank's bill pay system as well. So far, BofA's bk department has been great. No runaround or getting passed around to cs agent to cs agent and they've taken time to explain how the payments have been applied, etc.

                  Comment


                  • #10
                    Thanks, everybody! I'm thinking about using USPS with proof of delivery. Or the online pay system... when I move my accounts to the "new" bank... For the duration of the C-13, I'll only be making scheduled payments, without extra for principal reduction.

                    Comment


                    • #11
                      When one pays any mortgage outside of of their Plan, note the mortgagor takes that account and places it with their bankruptcy section upon notification of the Chapter 13 filing. Even though one is paying the mortgage(s) outside of one's Plan, the mortgage(s) are still part of the bankruptcy filing. The mortgagor will send out a hard copy letter advising where payments are now to be sent (usually almost always different than the previous address if paying by check each month) or other instructions given as to one's online account access which is usually eliminated once that account transfers to their BK section. For our main mortgage during our Plan, we were notified by the mortgagor shortly after filing to send our monthly payment to a totally new address which was P.O. Box number in a different city in the same state.

                      Expect changes to occur if one is paying their mortgage(s) outside of their Plan. As LadyInTheRed states, watch those statements closely during your Plan years.
                      _________________________________________
                      Filed 5 Year Chapter 13: April 2002
                      Early Buy-Out: April 2006
                      Discharge: August 2006

                      "A credit card is a snake in your pocket"

                      Comment


                      • #12
                        I just filed C13.
                        We have a mortgage with BOA and on a biweekly payment plan that is automaticly deducted from our checking account.
                        Will BOA cancel my bi weekly plan. Also can they take more money because I owe them CC bills that are in my C13 plan ??

                        Comment


                        • #13
                          Originally posted by brass598 View Post
                          I just filed C13.
                          We have a mortgage with BOA and on a biweekly payment plan that is automaticly deducted from our checking account.
                          Will BOA cancel my bi weekly plan. Also can they take more money because I owe them CC bills that are in my C13 plan ??
                          What BOA will probably do is cancel your automatic deductions and require you to snail mail your monthly payment to another department/address. They will contact you. Just continue to monitor your deductions from your checking account or check with your attorney for further instructions. They cannot take more money as to any CC bills that are included in your Plan. If you see anything strange, contact your attorney.
                          _________________________________________
                          Filed 5 Year Chapter 13: April 2002
                          Early Buy-Out: April 2006
                          Discharge: August 2006

                          "A credit card is a snake in your pocket"

                          Comment


                          • #14
                            Brass-They might allow you to continue your bi-weekly payment, but you will most likely have to do it by mail or pay by phone. But, really, who knows with BofA. They might just continue with your original payment deductions. As far as collecting more money than they're supposed to, that's a big no-no and I don't think even BofA would risk that.

                            Comment


                            • #15
                              BoA canceled my online access, and stopped my autodebit from my bank for the mortgage payment. I received the letter notifying me of this one day before the mortgage was due, so snail mail was out. After phoning, I found that I could pay that month by phone, and that it was possible to set up another automatic payment over the phone but they needed to cancel the existing one - I think it may be handled by the BK department instead now. Three months in, we have had no problems with the automatic payments. I also requested that they send paper statements since I do not have online access.

                              Comment

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