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Can My Mortgage Lender Refuse Payment While In Bankruptcy?

Posted By Allmand Law Firm, PLLC || 10-Apr-2013

When Mortgage Companies Refuse Payments While Your In Bankruptcy

Some debtors claim their mortgage lender refused payment after they file bankruptcy protection. While this may sound unusual, the lender may decide not to accept payment from you in order not to violate the automatic stay that goes into effect when your petition is filed. When bankruptcy is filed the automatic stay goes into effect. This is legal protection the debtor receives that prevents creditors from continuing collection attempts.

This also stops any legal action from lawsuits, wage garnishments, foreclosure and repossession. Usually, if a creditor continues to collect from a debtor in bankruptcy they can be punished if found in violation of the stay. So if you submit your mortgage payment while in bankruptcy to your lender and they refuse it, this may be the reason. There are a few simple steps you can take if this happens.

What to Do if Mortgage Lender Refuses Payment

Contact your mortgage company by phone when you make your payment. Sometimes a phone call alone is enough to clear the situation. If you do submit your payment, keep a record with receipts, bank statements or certified mail receipts (if you mail payments). You should have some sort of record or paper trail to show you are making attempts to pay your mortgage. In other words, this becomes your proof if the lender claims no payments have been made. Contact your attorney; they may contact the lender on your behalf to make payments acceptable. Save the money when the lender refuses payment until the matter is resolved.

Have Any Questions About Mortgages and Bankruptcy? Let us Know

If you happen to have any more questions regarding mortgages and bankruptcy you can always submit your questions to us. If you would also like to set up a free consultation with one of our bankruptcy attorneys you can contact us here.
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