Rule 3002.1: The Mortgage Watchdog
Chapter 13 bankruptcy lasts 3 to 5 years. During that time, you are paying your mortgage (either directly or through the Trustee). Historically, servicers would tack on hidden fees during these years and hit the homeowner with a massive bill the day they exited bankruptcy.
Federal Rule of Bankruptcy Procedure 3002.1 was created to stop this.
The Transparency Requirement
The rule requires servicers to file specific notices with the court:
- Notice of Payment Change: Must be filed 21 days before a payment change (e.g., escrow adjustment).
- Notice of Fees: Must be filed within 180 days of the fee being incurred.
The Penalty
If the servicer fails to file these notices:
- Fee Stripping: The court can prohibit the servicer from collecting the fees. They are wiped out.
- Sanctions: The court can award attorney’s fees and damages for the failure to comply.
The End-of-Case Audit
At the end of your Chapter 13, the Trustee files a “Notice of Final Cure.” The servicer must respond. This is our opportunity to audit the entire 5-year history. If we find they misapplied payments or added secret fees, we attack them under Rule 3002.1.
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