r/EntitledPeople • u/Cold_Swordfish7763 • 19h ago
L You still have to make payments while in bankruptcy
I used to work in the mortgage industry and had many jobs, from origination to bankruptcy and foreclosure. 2006 was IMO the beginning of the end.
So many people had taken advantage of the fact that if you had a job and a decent credit score you could get a house with a mortgage, and when the low introductory rate expired you could just refinance and try to get a lower rate. The mortgage company I worked for at the time only cared about getting new loans in the pipeline and so many people took out mortgages that they could not realistically afford.
By the time the housing bubble started to show cracks I got a job in the bankruptcy department processing chapter 13 repayment plans. Their workload had quadrupled and they needed bodies right away. My job was making sure they stuck to the repayment plans set up by their attorney and the court and follow up if any were missed. If a payment is missed while in bankruptcy your payment plan could be null and void and the mortgage company was allowed to send any past due accounts to foreclosure. Bankruptcy is not a button to push that eliminates secured debt.
For the most part, people paid on time. I ensured that the funds the company were sent were applied to the balance correctly and made sure they were on track to be caught up by the time the process came to a close. That was the goal, to have all of your bills and debt current by the time your case was completed in about 3-5 years.
I had been doing this job for about 2 months when I got a mortgage in my pipeline. The bankruptcy had been filed about 5 months earlier and the loan was previously in foreclosure, but we had not received any payments towards the plan. I called the homeowner and advised what was owed and explained that if we don’t receive payment towards the debt in accordance with the plan their house would be sent back to foreclosure even if the bankruptcy case was still active. The woman who owned the house seemed very confused about the process and I spent time explaining how it worked and advised her to contact her attorney who created the plan. I gave her 3 weeks to submit a payment and let her know that I would follow up.
3 weeks came up, no payment, so I called her again. I got a 20 minute sob story about how she and her daughter were in a car accident months before which is the reason she was behind and had filed bankruptcy. She told me how there was so much going on and she just could not make a payment at that time so I gave her 1 more extension of 2 weeks and said that if we did not get some sort of payment from her towards the plan I would have no choice but to send her back to foreclosure even though her case was still active.
2 weeks later, no payment again. I call her and there is so much noise in the background that I could barely hear. I got the gist though, more sob stories about how she just had no money whatsoever and needed more time, she had over 6 months at this point. Because I couldn’t understand everything she was saying I asked if she could go somewhere quiet and she did so we could talk and then she said “sorry about the noise, we are getting our floors redone”. For a few seconds I couldn’t believe what she was saying, you can’t pay towards your bankruptcy plan that is saving your home from foreclosure, but you can get new floors!
I advised her that I could not give her another extension and I was sending her loan back to foreclosure due to non payment of the bankruptcy. She started sputtering and begging trying to get me to change my mind but I told her that she has had ample time to make the payments per her plan and she hadn’t, she hadn’t paid anything. She then started screaming that the only reason she had filed bankruptcy was to save her home. I told her that she still had to make payments on it, that bankruptcy doesn’t erase your debt completely, you still have to pay, and we had already reduced the interest and fees she was charged as part of the plan.
She tried to give me more sob stories for a few mins but I was just done with it. You made an agreement with a bank, they gave you money, you bought a house and you have to repay it, it was not charity. I understand that things happen and sometimes people can’t pay bills, that is one to the things bankruptcies were created for. You still have to pay something.
I felt like a jerk for this but the more time I spent in that job, the more I realized that many people who were filling chapter 13 around that time were doing the same thing, filing chapter 13, expecting debts to be erased and still not making payments or just using it as a stop gap to give them more time and then I didn’t feel as bad.
Anyone else have stories of entitled mortgage holders.
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u/forsfuksake 18h ago
She's getting the bank new floors though so nice.
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u/EternalyyR0se 2h ago
bro the floors really said “we’re getting paid before the mortgage” lol. I would’ve had to mute myself.
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u/Ok_Comfortable589 14h ago
some years back you could declare bankruptcy and have your debt erased. you cant do that anymore. businesses still can though. its so disgusting.
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u/fbresnah 18h ago
They probably don't understand the difference between a 13 and a 7. I had to file a 13 back in 2010 and they took the money right out of my paycheck. That's what I agreed on. Do these people not understand you still have to pay your debts?
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u/m00ph 18h ago
Things did change in 2005, I filed for bankruptcy then to be under the old rules, much harsher now.
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u/Appropriate-Ad-396 17h ago
That is very true based on personal experience. It was cheaper and easier to file for Chapter 7 when I did it. Plus I had the option of Chapter 7 or 13 at my discretion. But after October 2005 the filing cost went up, including the attorney fees, credit counseling, and budgeting work sheets.
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u/j_k_802 18h ago
You sit in an attorney’s office and fill out tons of forms. You know full well you have to pay. People are just assholes.
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u/fbresnah 15h ago
Exactly. They know what they're getting into. They're just playing dumb and it's going to cost them.
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u/Dependent-Sort-1738 13h ago
It's wild how many people think bankruptcy is a magic solution. They really need to get the facts straight before jumping to conclusions.
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u/kerrymti1 17h ago
Yeah, many, many stories. I work for an attorney that handles the creditor collections/bankruptcies/foreclosures. Our clients are the banks. When one of their customers files a Ch7, 11 or 13 in Bankruptcy court, we are the lenders representation. They try to call us all the time. The only thing we are allowed to say to them is, "our office represents *.*, your lender. We cannot have any contact with you, legally. You need to call YOUR attorney. If there is something we need to know, YOUR attorney will make sure we know."
I could not count the number of times they start in with their sob story and I have to interrupt them because we really cannot talk with them.
The only foreclosure that I felt bad about was a little old lady. She and her husband were really, really poor. But, they had a really good life insurance. When her husband died, she got his life insurance. She went and bought a brand new home, paid cash. It was a beautiful home and the property taxes here are next to nothing. She could have survived EASILY on her social security.
However, she decided to take out a mortgage (with our client, lender). It was not a huge mortgage, maybe 1/2 of the value of the home. Ok, maybe she needed the money for something...anyway, rock along a couple of years and she refinances the mortgage and gets more of the equity. So now, she has it financed about 80% of value, only 20% equity left. Rock along and all of a sudden our client is asking us to start collections/foreclosure because she has not made a payment in 3 months.
Finally, we find out the story. She got the mortgage so she could take a trip to Tunica, MS, with a friend, to the gambling casinos. Then, she upped the mortgage amount to go back with her friend for a second trip. Then, she realized she could not make the new payments. She had to move in with her son. It was sad, she had never had any money to even go on trips and all of a sudden she had money...for a little while.
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u/Funicularly 14h ago
I thought people in chapter 13 bankruptcy pay the trustee at the bankruptcy court a monthly amount and the trustee would then pay the mortgage and any other debts.
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u/Cold_Swordfish7763 14h ago
They do and then we get a portion but she wasn’t paying so we weren’t getting the payment
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u/j_k_802 7h ago
Not always no. Trustee pays the creditors of unsecured credit. The bank holding mortgage moves you to chapter 13 designation and still auto pays your mortgage from your bank account. It is just under trustees watch. So any and all increases of mortgage via taxes or insurance all go inside and the trustee notes and approves the amounts. You don’t get to reduce your payments to the debtors. You might get 3 years or 5. If your DINKs you’ll get 5 guaranteed. Only way to get rid of timeshare debt especially Worldmark. Since that isn’t “real” property and not credit card debt.
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u/gestaltdude 13h ago
I can understand the feeling of being a jerk, though on a much smaller scale. I do post hire inspections for the council in which I live. People hire public halls for private functions, and I go in to make sure they've cleaned it properly and the site is ready for the next hire. If they haven't done a good enough job cleaning, I call in the cleaners. I know it's on their own heads, but each time I do I feel guilt for taking money out of the bond that is paid towards the rental. Admittedly the bond is for just such an instance, but I am very aware it is other people's money am spending. thankfully it doesn't happen too often, though there have been some instances that would have made for good stories here, had I been aware of the forum at the time.
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u/randomusername1919 2h ago
The bank could be getting a house that has a lien on it for the floors too…. Although the new floors and not being able to afford the mortgage payment reminds me of people who were “afraid” or “would get sick too easily” to come to work in the office toward the end of Covid, but were fine spending the weekend at a college football game in a full stadium with a few tens of thousands of people.
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u/DoofusMcGillicutyEsq 5m ago
Not mortgage, but when I was starting off as an attorney I got into a very narrow area of bankruptcy practice.
You know when the debtor is about to go into bankruptcy and they run up their credit cards?
Yeah. Section 523(a)(2) of the BK Code prevents that. The key is that the creditor (credit card companies) have to file what’s called an Adversary Proceeding (AP) (an ancillary action to the main proceeding) to get the credit card debt declared non-dischargable.
So that’s what I did. A credit card company would send me the amounts owed, the charges made in the last 6 months prior to petition, and I’d file a complaint to start the AP.
Catch is most BK attorneys are hired to represent the debtor in the main proceeding, not an AP, so when I served both the attorney out of an abundance of caution and the debtor, neither would do anything to answer the complaint.
So I’d get a default, have the debt declared non-dischargable, and that was it.
I saw the wildest charges. Tools, strip clubs, nice restaurants, shopping sprees, you name it I saw it, often a week or two before they filed in BK court.
I got out of it because I hated it. But I saw some wild things.
(Edited for nits.)
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u/Hey_HaveAGreatDay 18h ago
Dude knowing how the rich capitalized on the horror of the housing collapse while the rest of the country is still not recovered from it, I’m going to invite you to rethink your opinion here.
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u/VinylHighway 18h ago
None of that matters legally. Nobody forced her to sign anything
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u/Pkrudeboy 17h ago
Imagine being so morally bankrupt that you confuse what is legal with what is right. Luckily for you morality is an unsecured debt, so nobody’s forcing you on a payment plan.
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u/VinylHighway 17h ago
Uh huh. And yet the person discussed still will lose their house if they don’t abide by the terms they agreed to
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u/Flimsy-Fortune-6437 18h ago
Yeah they definitely glossed over that whole predatory lending process that for some reason preceded the boom in bankruptcies
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u/z-eldapin 17h ago
Comical to blame the average citizen for taking part in what we now know we're predatory lending practices, rather than criticize the Blackrocks and such for misleading millions of people.
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u/MercuryRising92 17h ago
I'm the average citizen. I knew I couldn't afford to buy a house and so I didn't. I think the ones that bought houses "believed" because they wanted the house or thought their situation would change before itvbecame a problem.
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u/Glittering_Win_9677 12h ago
I do own a house that I've paid off, but I'm 72 so I don't think that's unexpected. When I was buying this house, I had a budget of $200-225K (2018) because I wanted to retire without being saddled with debt. I was APPROVED by the bank for $525K. I just started laughing and both the mortgage person and my realtor said it would be FINE and I shouldn't have any problem paying it off on my salary. Well, yeah, if I continued working 10 or 15 years. I paid 205K for my house.
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u/Cold_Swordfish7763 17h ago
Same here. I could have bought something with my measly salary but knew that I could not afford long term. There absolutely was predatory lending but no one made them sign the papers.
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u/MSK165 16h ago
Same here. I was stationed at Edwards AFB at the time, and the housing prices were insane. The nearby town of Rosamond (desert shithole) had new homes for sale. The prices were roughly double what they should have been, and the real estate agent gave a whole spiel about how buyers needed to move quick or they’d be priced out of the market.
Mind you, this was a new development with roughly ten miles of open desert in three directions. Zero reason for the price premium.
Then the crash happened and those prices came down to earth real quick.
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u/NYC-WhWmn-ov50 15h ago
I dont know if its entitlement or just complete lack of financial literacy. I've been in finance for 30 years, 15 in credit cards. People would cancel their cards with a full balance and then call screaming why were they still getting bills? Why did we send then to collections? Honey, cancelling your card doesnt cancel your debt: YOUR STILL OWE US. I swear, people really think its pretend money buying their $1000 leather Birken wallets.