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Citi Mortgage claiming money owed AFTER being discharged!

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  • Citi Mortgage claiming money owed AFTER being discharged!

    HI everyone.

    My Chpt 13 was discharged as of early Oct 2014 – YES! Got the official letter and everything from the trustee’s office. So what’s the problem?

    Well you know how after you are discharged, the trustee’s office sends out a notice of discharge to all your previous creditors that are listed in your claim summary? Well, they did that and Citi (my secondary mortgage – I took it out during those now infamous sub-prime piggyback mortgage loan days) came back saying that I still owed them a whopping $36,000!

    Back in 2010 when I first filed for BK, Citi had originally put in a claim for the full amount owed to them of $76,000. This was the amount that I owed and the same amount I also made my attorney and trustee aware of when we filed my paperwork. Then right before the plan was confirmed, Citi withdrew the claim for the full $76K and instead put in two separate claims of $750 each –totaling $1500. My BK plan was then confirmed with the amounts owed to Citi as $1500 (listed as “secured mortgage arrears”). My trustee administered and paid the entire amount of $1500 from the very get-go. During the entire five years, neither my attorney nor I ever heard further from Citi about any additional amounts owed outside of the $1500 or why they withdrew the original claim of $76K. I know that by law, Citi could not have contact with me but they did have my attorney’s information, and I know that anything that came from any creditors, I would’ve forwarded directly to the attorney to deal with.

    Now that Citi is getting the notice of discharge, they are claiming that I owed them about $36,000 for the past five years of what they claim are payments of $650 a month! This is the first my attorney and I have heard of it and we never agreed to this. There was never any intention of making payments outside of the BK towards the secondary mortgage as I was obligated to pay about 88% into the BK plan and there was no way I could have afforded to pay off my monthly BK payments and an additional $650 a month to Citi.

    Our guess is that someone at Citi screwed up back in 2010 when they withdrew the original amount and put in the smaller amounts. Somehow my recent discharge papers flagged something, so Citi is trying to fix their mistake.

    Thoughts? Anyone else come across similar issues with Citi? I hope I didn’t go through all this blood, sweat and lots of tears for the past five years for naught

    My attorney is looking into this and we are working directly with the trustee's office as well as reaching out to other BK attorneys for their opinion.

  • #2
    This is a very frequent occurrence after a Chapter 13 has been discharged and the Chapter 13 Plan included payments to the lender. Typically, the lender, behind the scenes, acts as if there is no bankruptcy when it comes to the accounting. The lender then keeps doing things like putting money into suspense accounts, then taking it out when it reaches a certain amount... all while charging late fees and other fees. This is actually not allowed in a Chapter 13 with some caveats. The caveat being that you could not have any "post-petition" late payments. If the mortgage is being paid by the Trustee (and "through" the plan), then there could be no late payments and the creditor could only go back into Court to seek any fees.

    I am sure Citi will correct their mistake or your attorney will pounce on them for violating the discharge injunction. It really does happen more often than one would hope. It's just the nature of the Chapter 13 and moreso the accounting systems used by the creditors.

    Since your attorney is on top of this -- as well as the Trustee -- I would rest assured that this will all be behind you soon.
    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.


    • #3
      Congrats on completion! Don't you have to do a lien strip to get rid of second mortgages?
      Discharge date: October 2017 (will it ever get here?)


      • #4
        dmc has raised the correct question. Digger. . . please pull your copy of the Chapter 13 Plan AND the Order Confirming the Plan. Find the provisions in both that specifically apply to the loan in question. Post the exact provisions (leaving out any personal info) to this Forum so that we can see exactly how your lender was treated.



        • #5
          I agree with dmc and des in that your original post mentioned paying $1500 in arrears which implies your plan was to continue payments on the loan rather than including it in the amounts related to a lien strip claim.

          Sounds like you and the attorney were on different pages the entire time, but if the mortgage company were expecting a monthly payment I am sure they would have reported the late payments in the first year of your filing.
          11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP


          • #6
            Well, I totally missed that.
            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.


            • #7
              I think Judge WJ is the only judge in CA that requires an adversarial proceeding to complete a lien strip. My additional fees are estimated at $2K and I found out well into my fourth year of five. Not cool when I already paid extra in the beginning to have a judge approve it in the beginning.
              11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP


              • #8
                I don't think there is a lien strip. The plan would not pay arrears if the lien was being stripped. Also, if the lien was being stripped, CitiMortgage likely would have filed an unsecured claim like they did in my case.

                My questions as I read this post were "did the plan provide for regular monthly payments to CitiMortgage in addition to the arrears" and if not, "did Diggerdog501 make monthly payments during the plan". I agree with Des that in order for us to help, Diggerdog501 should post the details of his plan and order confirming the plan. It sounds to me like Diggerdog501 did not think he should be making monthly payments directly to CitiMortgage. I hope that is consistent with what was in the confirmed plan.
                Last edited by LadyInTheRed; 11-09-2014, 10:24 PM.
                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!


                • #9
                  If the 2nd was considered secured, wouldn't payments be made directly to CITI ?

                  Could it be that CITI was considered secured all along and the payments were to be made directly just like the 1st mortgage ?


                  • #10
                    Originally posted by ABC View Post
                    If the 2nd was considered secured, wouldn't payments be made directly to CITI ?

                    Could it be that CITI was considered secured all along and the payments were to be made directly just like the 1st mortgage ?
                    Payments are typically direct if you have arrears. Of course, that depends on your District, whether secured payments are presumptively required to be paid through the plan (by the Trustee), or the debtor motioned to make payments directly.

                    It's an interesting issue.
                    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.


                    • #11
                      Diggerdog, I might be piling on here, but check Line 6 of you Ch 13 plan ("The Debtor shall make regular payments directly to the following creditors:") Do you have any of your secures loans listed there? My first mortgage, HEL and HELOC are all listed there and I pay monthly payments directly to the lenders as I have pre-petition. My arrearages/past due on all three secured loans are paid via the Ch 13 plan through the Trustee.

                      On my Proofs of Claim the claim amount is the full amount of my secured loans. The arrearage is listed separately on the POC. If you check, the arrearage is listed as "Max Pay Amount", while the "claim amount" is the full amount that you owe on the loan
                      Last edited by switch625; 11-09-2014, 11:49 AM.
                      Filed Ch 13 Fall 2013, 60 month plan


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