I filed bankruptcy in NJ; why aren't I getting monthly statements on my mortgage, car loan or car lease?

A:

It is not unusual for people to stop receiving monthly statements from their mortgage company or car loan bank after filing a bankruptcy (either chapter 7 or 13). This is because of something called the Automatic Stay in Bankruptcy, which protects you from attempts by creditors to collect a debt from you. Although this is certainly what you want, and one of the big reasons you filed bankruptcy in the first place, it can present a small bump in the road when it comes to these particular creditors.

In an effort to avoid the appearance of demanding payment from you, mortgage companies and car loan banks will stop sending you these monthly statements. You are not in trouble, and nothing has gone wrong; it is just that certain things have to happen before you can start receiving them.

In a chapter 13 in New Jersey, plans of repayment contain language that allows these creditors to send monthly statements. Thus once the plan is confirmed, the statements should resume. I say "should" because some creditors are skittish on this, and not all bankruptcy courts like New Jersey's have this language in their plans. You may end up just having to set a reminder for yourself every month to make the payment and not rely on something in the mail.

In a chapter 7, it depends on the loan. If it is a car loan or lease, statements should resume once you sign and send back the reaffirmation agreement. If it is a mortgage, they may want to wait until your bankruptcy is over, and the discharge has been issued. Even then, they may not because in most chapter 7s your personal obligation to pay the mortgage has been discharged (although the lien is still in place and can be foreclosed upon if you do not pay), and monthly statements could be seen as an attempt to collect a discharged debt.

The bottom line here is that, although a cessation in the sending of these statements is not an indication that you are in trouble on the loan, it may mean that the responsibility for reminders to pay may be all on you until the loan is paid off.

Have more questions about bankruptcy?  Get the answers to the most frequently asked questions by downloading my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey.  It will give you the answers you need all in one place.  Then call me at 888-857-8418 or contact me through this site for an appointment for a free consultation to discuss your case.