Case Study: Bankruptcy
Steve bought a loan from Company X, who had been servicing the loan for 2 years without any results.
When Steve did his due diligence, he found the borrower had filed Chapter 13 a year before Company X purchased it.
Company X didn’t make any notation of that on the tape, because they weren’t aware of it.
And, when Steve checked PACER, Company X wasn’t listed as a Creditor.
Upon further research, Steve found out the borrower was in a Chapter 13 Wage Earner Plan.
The pre-petition arrears were to be paid by the trustee, but a Proof of Claim was never filed by Company X.
Steve filed the Proof of Claim and was added to the List of Creditors.
He then spoke with the Trustee, and within 60 days the monthly pre-petition arrears payments began.
Additionally, the borrower started making regular monthly mortgage payments.
Company X might have not wanted to sell this loan if they’d been aware of the BK filing and the subsequent payments that followed.