Loan restructured one year ago but now in default according to collector

[ShayShay1]

What is the name of your state (only U.S. law)?

GEORGIA

Roughly three years ago, my husband declared bankruptcy to help us recover financially after a move for a better paying position. Our house did not sell for over a year. Our family of 6 moved back to our home, and worked to build our finances back up after paying a lease and a mortage for almost a year. After nearly two years paying into the bankruptcy, and having a higher income (has worked in same field for 17 years) he had the bankruptcy voluntarily dismissed in order to work with our creditors. We thought we were doing the right thing by dismissing the protection to pay down on our loans and get the bankruptcy off his credit as soon as possible.

Our mortgage had been sold by Ameriquest to a collections company ( Litton Loan) who had been our mortgage servicer prior to the bankruptcy. We had a difficult time working with the mitigation department at Litton however, after involving the GA Banking Commission, Litton rewrote the loan ( three days before auction) to include the $40,000 in interest payments they said we owed from late payments since we dismissed the bankruptcy and per diem rates applied to the amount of the loan during that time. The loan was rewritten and with a 7.5% fixed rate ( originallly adjustable) and given terms that our payment was due on the first of each month or we would be in default with the new contract. Given the time frame before auction, we didn't have much choice and accepted the new provisions and felt relieved.

Several months ago, we had to pay later than the first due to travel reimbursements comng in late from my husband's company. My husband immediately called Litton, explained his concerns and the rep said just send payment in by the 15th and if ever after that, apply applicable late fees. He has done that and payments have been accepted. However, we were just contacted this month (June) and told we were in default to our loan conditions since we had paid after the 1st.

At this point, we are questioning 1) why payments were accepted especially after we contacted Litton to make sure this was not going to cause a problem as long as we were never over 30 days late... and 2) is our only option to declare bankruptcy again in order to save our home? We received the foreclosure notice from the lawyers for Duetshe Bank ( underwriter of the loan) just today and auction is set for August 5th.

The acceptance of the new contract was the only way to keep our house from being sold a year ago. Our home appraised well at that time and we had two options to refinance with other mortagage companies a year ago, but the $40,000 in retroactive interest Litton said we owed in per diem charges after dismissing the bankruptcy, made it impossible to get new financing since the total Litton says we owe on the loan including interest is 12,000 over the appraised value fo the house.

Do we have any recourse with Litton since they have been accepting payments even though some were made after the first of the month and accepted? We are aware this a a collections agency and when it comes to the new contract, we think our hands are probably tied.

[FlyingRon]

As you probably had it explained the first time you declared bankruptcy, bankruptcy will not wipe out the secured debt. It will put a hold on the foreclosure action until things are settled, but if you don't start paying coming out of bankruptcy, they will foreclose.

Does because they accepted some payments, doesn't mean they're modifying the loan. If you miss payments, expect foreclosure.

[ShayShay1]

Completely understand how a 13 works. We are one year out of the original bankruptcy and we dimissed it ourselves because we could pay the debts and the deficiencies at the time of the bankruptcy. To file a 13 was a big deal for us and we tried everything to avoid it, so dismissing it ourselves was something we thought was a good thing. Wrong. Again, the retro active per diem rate from day one of the bankruptcy was added. We were ignorant that this would be the case...$40,000 ( $75.00 a day per the length of the time we were under the 13) worth of interest added to the loan to get it out of default. The original deficiency we had no problem paying.

That's why we had to rewrite the loan and add this on the back end to keep the house.

We didn't miss any payments in the past year since the remodification. HOWEVER... The re-write said our payment was due on the first of each month. Since three months ago, we had to pay on the 15th and after contacting the servicer regarding this concern and being given the go ahead, we were quite surprised to get the notice we were in default two and a half months after paying on the 15th. Nevertheless, we understand pretty much what we have to do. We have a lawyer handling the situation next week. Just wanted to put out the question for any interesting responses.

Ultimately, some things can be handled without a lawyer, but this is certainly not one of them. Thanks for the reply.