One woman defaulted on her mortgage in 2003. Seven years later, in 2010, she agreed to modify the loan in a loan modification agreement. She was to begin paying the loan servicer in March 2010 according to an April 23, 2014 New York Law Journal article. However, in 2007, the debtor started a bankruptcy, which was not finalized until May 2010 when she got her discharge. Consequently, she did not pay the loan servicer. However, the loan servicer claims that not paying after the bankruptcy was a breach of the terms of the loan modification agreement. The loan servicer, the Federal National Mortgage Association, was asking for $3,494. The debtor claimed that this was a breach of the Fair Debt Collection Practices Act (FDCPA) and New York’s General Business Law. The FDCPA is a federal law that governs how debt collectors can and cannot collect money. For example, they can only call one’s residence during certain hours. If the collection firm breaks these laws, then they may be subject to fines and be ordered to pay debtors to compensate them.

The court decided that the debtor must pay the loan servicer as the bankruptcy relief was technically filed in May 2010–after the loan modification agreement was signed. That was because the debtor modified her bankruptcy filing to change its date even though she commenced it in 2007. Consequently, the debtor was in default and would also have to pay late fees.

If you are considering bankruptcy or have any questions about how bankruptcy may affect you, then you should speak to an experienced attorney. Jayson Lutzky is a lawyer with over 31 years of experience. He has an office in the Bronx, New York, where he offers free in person consultations. To set up a confidential appointment, call 718-514-6619 or visit for more information.