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Different Forms of Contact During Bankruptcy By Mortgage Lender

By M. Stan Herring

We enjoy reading Chuck Newton's Stay Violation website as it contains a wealth of information about what is and what is not considered a stay violation in bankruptcy court. A recent post discusses how a court viewed numerous letters and phone calls by GMAC to a homeowner regarding the homeowner's mortgage. This was during the bankruptcy so GMAC should have been very careful not to violate the automatic stay which prohibits creditors from collecting against the debtors.

From this post:

Despite this Order lifting the automatic stay, GMAC sent the Debtors 11 different letters and called the Debtors approximately 22 times over a 6 month period without foreclosing on the home.

In a close review of the letters the Court found that none of the letters "clearly" constituted a prohibited demand for payment. Although, I think most attorneys would understand that 11 letters is excessive.

But, the Court could not excuse the 22 phone calls because phone calls to the Debtors are NOT required by other federal laws in order to proceed with a foreclosure. The Court found that "It may very well be that the lender was simply trying to contact Debtors were fully aware of all of their options to avoid foreclosure. However, it does not take 22 calls to do so, and many of the phone calls threatened to take legal action. Furthermore, Debtors (through their attorney) made it very clear that the lender should discontinue such contacts and the lender was fully aware that Debtors had vacated and surrendered the Property".

Chuck then provides this closing comment which has been proven repeatedly to be disturbingly accurate:

As shown time and again in these cases, once a large creditor organization has unleashed the hounds of hell, they cannot seem to control the situation. Computers take over and start directing calls and connecting them with the call centers.

If you have been the victim of a stay violation, please seek good legal advice to know what all of your options are in your particular situation.

Full post as published by Alabama Consumer Blog on February 09, 2008 (boomark / email).