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Shellpoint Mortgage Attempt to Collect from Person in Bankruptcy Class Action

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When individuals or companies are in bankruptcy, the law protects them from attempts to collect on debts that were undertaken before the bankruptcy case. Debt collectors may also not attempt to collect debts that have been settled via a bankruptcy. The complaint for this class action claims that Shellpoint Mortgage Servicing ignored a bankruptcy plan that included a property it believed it was servicing. The complaint claims that Shellpoint violated the Fair Debt Collection Practices Act (FDCPA).

The class for this action is all natural persons living in the US who (a) between January 31, 2018 and the pendency of this case, (b) received correspondence containing language identical to that in the collection letters sent to the plaintiff in this case (c) in order to collect a consumer debt (d) during a pending Chapter 7 or Chapter 13 bankruptcy (d) in which the consumers were surrendering the collateral for the debt.

Plaintiff Eileen M. Abat took out a mortgage on February 21, 2013 with Quicken Loans in order to buy an apartment in Chicago, Illinois. The promissory note was in the amount of $183,850.

Later, Ditech Financial, LLC was given servicing rights for the mortgage. 

About five years after the purchase, on May 21, 2018, Abat filed for Chapter 13 bankruptcy. Under federal law, this invokes an automatic stay that forbids “any act to collect, assess, or recover a claim against the debtor that arose before the commencement” of a bankruptcy case.

On August 3 of that year, Abat filed a Modified Chapter 13 Plan. Abat was in default on the mortgage, and under this plan, she would hand the apartment over to Ditech and not make any further payments. Ditech did not object to that plan and the court confirmed Abat’s plan on August 27. 

Later that year, on December 17, New Penn Financial, LLC, doing business as Shellpoint Mortgage Servicing, acquired the rights to service her mortgage. On December 24, it sent Abat a letter attempting to collect on the mortgage. The letter is attached to the complaint as Exhibit A. It sent her a second letter just three days later, again trying to collect the debt. This is attached to the complaint as Exhibit B. 

The FDCPA prohibits debt collectors from making false statements, among other things. The complaint quotes an earlier legal case as saying, “A demand for immediate payment while a debtor is in bankruptcy is ‘false’ in the sense that it asserts that money is due, although, because of the automatic stay … or the discharge injunction … it is not.”

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