Prior to 2011, many consumer would emerge from their Chapter 13 cases thinking they were debt free but instead would soon be hit with a foreclosure notice due to undisclosed and unpaid post-petition charges and fees. The rules were updated in 2011 so that debtors were provided ample notice of any changes to payment and/or post-petition fees.
According to Federal Bankruptcy Rule 3002.1, holders of secured claims on a Chapter 13 debtor’s primary residence are required to file a detailed notice with the court for recovery of all post-petition fees, expenses, and charges it seeks to recover from the debtor. The purpose of this requirement is to promote further transparency and more emphatically safeguard debtors’ fresh starts.
Mortgage companies now have an obligation to notify consumers who are in a bankruptcy case to provide the following notices:
- That their mortgage payments have changed (this typically happens every year since escrows change)
- Provide notice if there have been any fees, expenses or charges added to their mortgage account or balance.
- At the end of the case, file a notice as to whether the debtor is current or not on the post-petition mortgage payments.
If you are in a Chapter 13 Bankruptcy bankruptcy case and you have a mortgage you should be aware of these requirements and make sure that your lender is compliance with these rules. Federal Rules of Bankruptcy Procedure Rule 3002.1 allows the bankruptcy court to award appropriate expenses or attorney fees to debtors who do not receive these notices.