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Banks are hassling borrowers about discharged debts

Early last year, five banks agreed to pay $25 billion to settle allegations of unscrupulous practices and abusive foreclosure policies. Unfortunately, as many New Jersey homeowners are aware, the banks have not gotten their act together in the aftermath of that settlement. Many New Jersey homeowners are up against aggressive and deceitful tactics as the banks try to evict them from their homes.

In a recent case, a couple that had been relieved of a $227,000 home loan by filing Chapter 7 bankruptcy was subjected to repeated badgering from Bank of America to repay the loan. Because their liability for the loan had been discharged in bankruptcy, Bank of America lost the right to collect the debt, but nonetheless the company continued to call the couple and send them letters.

A judge has recently ordered Bank of America to pay $10,000 for every month that it continues to hassle the couple about the discharged debt.

In another case, Bank of America violated a loan-modification arrangement with a borrower - failing to apply the borrower's payments to the loan while continuing to ask for additional payments for invalid amounts and inflating interest charges. In that case, the lender was fined $220,000 by a judge.

Financial institutions do not always respect the rights of New Jersey consumers. Consumers who are struggling with their mortgages, or who are facing foreclosure, should be aware that they do have rights and options. Homeowners who would like to learn about opportunities for debt relief and debt management should talk to experienced consumer bankruptcy attorneys.

Source: Wall Street Journal, "Bankruptcy Judge Sends a Message to Bank of America," Peg Brickley, Oct. 4, 2013

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  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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