The Short Answer
When you file bankruptcy, your mortgage company may stop sending monthly statements to avoid violating the automatic stay — the federal protection triggered by your filing that halts most collection activity. Whether and when statements resume depends on whether you filed Chapter 7 or Chapter 13, and whether you're keeping or surrendering your home. In Chapter 13, the trustee may actually be making your mortgage payments, so don't send payments directly without checking with your attorney first. In Chapter 7, submitting your Statement of Intention — which tells the court and your lender whether you plan to keep or give up the home — is usually enough to get statements flowing again.
Once your case is filed with the U.S. Bankruptcy Court and the creditors are notified of the filing, your mortgage company may stop sending you the monthly statements for your house payment. This is a protective measure on their part. The mortgage company may be in violation of the federal bankruptcy automatic stay if they send a statement attempting to collect a payment on your mortgage after you have decided to surrender or give up your home in bankruptcy. This violation carries severe penalties against the mortgage company including fines, so they do their best to avoid this violation.
A few days after your bankruptcy is filed with the Court, a notice will be sent to the mortgage company and other creditors notifying them of your intention to retain or surrender your house and other secured items including automobiles and furniture. If you filed Chapter 13 bankruptcy the creditor will receive a copy of the Chapter 13 plan. If you are keeping your home they will usually resume sending monthly statements to you. However, in many cases the Chapter 13 bankruptcy Trustee will be paying the mortgage on your behalf so contact your attorney prior to sending any payments to the mortgage company.
If you filed Chapter 7 bankruptcy the secured creditors including the mortgage company will receive the Statement of Intention. Often this is sufficient notice for your mortgage company to resume sending you the monthly statements. In other cases the mortgage company may send a letter requesting that you and your attorney sign a notice requesting that statements be mailed to you, while other mortgage companies may wait until after your bankruptcy is discharged before sending statements. Regardless of whether you receive the monthly statement from your mortgage company, it is extremely important that you continue to make your monthly payment to the mortgage company if you wish to retain or keep your home after filing Chapter 7 bankruptcy. If you wish to keep your home but fail to make your monthly mortgage payments after filing bankruptcy, the mortgage company may file a request within the bankruptcy court to foreclose on your home. Should this occur, you would be required to pay the amount you are behind on your home plus additional cost incurred by the mortgage company.
Key Takeaways
- Filing bankruptcy triggers the automatic stay, which causes many mortgage companies to stop sending statements as a precaution against violating federal law.
- Whether you receive statements again depends on your chapter of bankruptcy and whether you intend to keep or surrender your home.
- In Chapter 13, the bankruptcy trustee may be paying your mortgage directly, so contact your attorney before sending any payments to the lender yourself.
- In Chapter 7, providing your Statement of Intention to the mortgage company often restores normal statement delivery, though some lenders wait until after discharge.
- Regardless of whether you receive a statement, you must continue making mortgage payments if you want to keep your home — missing payments can lead to a foreclosure motion filed inside the bankruptcy court.
- Some mortgage companies will ask you and your attorney to sign a written request before resuming statements, so follow up with your lender if statements don't restart within a few weeks.
Attorney Insight
The mistake I see most often is clients assuming that because they stopped getting a statement, they don't owe the payment — or that they should wait until they hear from the lender before paying. That assumption can cost you your home. In Chapter 13 cases here in North Carolina, whether your trustee — Anita Jo Kinlaw Troxler in Greensboro or Al Overcash in Charlotte — is forwarding your mortgage payment depends entirely on how your plan is structured, and getting that wrong creates a delinquency that's very hard to dig out of mid-case. Call your attorney before you skip a payment or double-pay; a two-minute conversation prevents a serious problem.
