Court Finds M&T Bank in Contempt for Violating Discharge by Failing to Properly Credit Mortgage Payments Made under Confirmed Plan

Court Finds M&T Bank in Contempt for Violating Discharge by Failing to Properly Credit Mortgage Payments Made under Confirmed Plan

Debtor filed Chapter 13 petition in 2011, finished his plan, and received a Discharge in 2015.

The Chapter 13 Trustee filed his Notice of Final Cure Payment.  Bank filed its Statement in Response to Notice of Final Cure Payment (the “Statement in Response”) wherein Bank stated it agrees that the Debtor was current with regard to all pre- and post-petition default payments. The Statement in Response states that $0.00 is due for both pre- and post-petition default payments.

Following completion of his Chapter 13 Bankruptcy case, the Plaintiff made each of the post-completion payments from November 2015 to December 2016.

Bank has attempted and continues to attempt to collect from the Plaintiff Fees, Charges and Expenses that were not disclosed in the course of the Plaintiff’s Chapter 13 Bankruptcy as required by F.R. Bankr. P. 3002.1.

Despite receiving payments sufficient to pay the pre-petition arrearage, the post-petition Mortgage Fee, and the regular monthly mortgage loan payments,  Bank has, following the completion of the Plaintiff’s Chapter 13 bankruptcy, continued to show the Plaintiff delinquent on his mortgage loan.

On October 3, 2016, Bank sent a letter to Debtor notifying him that his mortgage loan was in default. It advised him to contact its “Homeowner Assistance Center Team” to consider a repayment plan, loan modification, short sale, or deed in lieu of foreclosure. The October 31, 2016 Mortgage Statement included additional Foreclosure Attorney Fees, and an Insurance Inspection Fee. 23. The last statement Debtor received before trial was dated January 17, 2017. It listed the total amount due as $ 2,839.09, and included a Recoverable Corporate Advance charge of $ 1,450.19. Debtor received calls from Bank every other week reporting that he was one month delinquent in his payments. Debtor believed that Bank was planning to foreclose on his home.

Debtor alleges that Bank violated the automatic stay by failing to properly credit payments received during his bankruptcy and assessing additional fees. He also alleges the Bank violated the discharge injunction and 524(i) by continuing to show him in default on his home mortgage, and attempting to collect late fees and other charges after completing his chapter 13 plan and being declared current on his mortgage. He asks this Court to use its civil contempt powers under §105(a) to sanction Bank and award him damages for its actions. Bank defends against these charges by arguing that any errors in its records were inadvertent. It acknowledges that it did send statements showing Debtor’s account past due and in default, and added fees based upon the delinquency, but those fees were not actually due to be paid until the note reached the end of its term. It has now corrected its records to reflect that Debtor is current, it has waived and removed the additional fees, and Debtor suffered no harm from its actions.

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