The real estate and mortgage crisis that ensued since 2007 has resulted in hundreds of banks, mortgage companies and other lenders going out of business.
You may have received letters from your lender indicating they have filed for bankruptcy protection under chapter 11. What does this mean for you? According to Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A., the answer must be “very lawyerly: It depends.”
Is Your Loan Forgiven If Your Lender Goes Bankrupt?
Unfortunately, lender bankruptcy isn’t a magic potion for getting your monthly payments waived. There is always another company standing line to purchase a bankrupt lender’s receivables.
If your plans are not changing, (i.e., you are going to keep your home, or car or whatever the loan was for) then keep making your monthly payment, and mail it following the latest instruction received.
5 Steps To Protect Yourself When Your Lender Is Bankrupt
Companies that are involved in reorganizing during bankruptcy are in disarray. Usually there are layoffs, excess office space shut down and other chaos.
It isn’t out of the realm of possibility for your loan payments to get lost in the shuffle. To protect yourself, Dellutri offers these following steps:
1. Make all payments in certified funds, keeping track of the dates payments were sent, and to whom they were sent.
2. Send payments “return receipt requested.”
3. Keep all your documentation in a chronological order.
4. Save all the correspondence you receive regarding your mortgage and payments.
5. Remember, this is your home (or car, etc.) and it is up to you to protect yourself. The unfortunate truth is that mortgage companies and other lenders are not known for great record keeping.
If you are already not paying for the home or car, and plan on surrendering it in a bankruptcy yourself, please speak to a bankruptcy attorney, as your individual circumstances must be evaluated one on one before a plan of action can be determined.
Carmen Dellutri is the Founder and President of The Dellutri Law Group, P.A. He is Board Certified in Consumer bankruptcy law. He is also a Florida Supreme Court Certified Circuit Court and Family Law Mediator and a Qualified Arbitrator.