Georgia Bankruptcy Blog

On February 28, 2008, in an unusual filing, the United States Trustee for the Region that includes Georgia filed a lawsuit against Countrywide for a multitude of alleged offenses in a Chapter 13 case pending in the Northern District. See Walton, United States Trustee v. Countrywide Home Loans, Inc., Adv No. 08-6092, filed in the Chapter 13 case of  In re Atchley, Ch. 13 Case No. 05-79232.  The Complaint seeks injunctive relief and sanctions for, inter alia, the following alleged conduct  (with paragraph numbers) -

42. Countrywide is a national lender and servicer of secured loans. Countrywide regularly appears before this and other United States bankruptcy courts around the country, asserting claims seeking the payment of money from bankruptcy estates and/or prosecuting motions seeking relief from the automatic stay to foreclose on consumer mortgages.

43. In this case, Countrywide failed to ensure the accuracy of two motions for relief from the automatic stay that contained allegations that were inaccurate and/or misleading concerning the existence and amount of the Atchleys’ postpetition default.

44. Countrywide failed to properly account for moneys paid by the debtors. As a consequence, Countrywide accepted payments from the chapter 13 trustee after the Atchleys paid Countrywide’s claim in full. By executing the “Satisfaction of Mortgage,” Countrywide had previously acknowledged that there was no longer any legal basis for it to receive such payments.

45. Countrywide failed to return the estate funds to which it knew it was not entitled and withdraw its Proof of Claim until three months after the Atchleys commenced a contested matter before this Court with respect to the Proof of Claim.

46. Countrywide failed to provide information sufficient to determine whether the various fees and escrow charges assessed by Countrywide and collected from the Atchleys were properly recoverable under applicable state law and the Bankruptcy Code.

47. Countrywide’s failure to ensure the accuracy of its pleadings and accounts in this case is not an isolated incident. In recent years, Countrywide and its representatives have been sanctioned for filing inaccurate pleadings and other similar abuses within the bankruptcy system.

Perhaps more importantly, the Complaint alleges that the above-referenced conduct may be part of a larger pattern of conduct with Countrywide -

48. Cases in which bankruptcy courts sanctioned Countrywide and/or its representatives include: In re Robert and Kathleen Ennis, Case No. 05-11985 (Bankr. W.D. Pa. July 31, 2006) (sanctioning Countrywide and its counsel for failing to make reasonable inquiry prior to filing factually inaccurate motion for relief from the automatic stay); In re James Allen, Case No. 06-60121 (Bankr. S.D. Tex. Jan. 9, 2007) (sanctioning Countrywide’s attorneys based upon finding that Countrywide’s objection to a chapter 13 plan “had no basis in fact or law and was materially disruptive to the efficient and effective operation of this Court”); In re Paul Mann, Case No. 03- 82973 (Bankr. M.D.N.C. March 8, 2004) (awarding punitive damages against Countrywide for repeated violations of the automatic stay and finding that Countrywide’s conduct was “aggravated and egregious”).

 

49. Countrywide’s failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process and has prejudiced, and will continue to prejudice, parties in interest in the bankruptcy cases in which Countrywide participates. Absent injunctive relief by this Court, Countrywide’s practices and conduct are likely to continue to prejudice parties in interest and result in additional abuses of the bankruptcy process.

50. United States Trustees have simultaneously brought complaints, including the instant action, against Countrywide in Ohio and Florida to address Countrywide’s sustained bad faith conduct in failing to ensure the accuracy of its claims and pleadings in attempting to obtain money or property from debtors and/or the bankruptcy estates.

I have paid over $18K into a chapter 13 plan. My original debt was only 6K, but they projected 5 years of interest into my plan. I have repeatedly tried to get my case paid out and have been denied each time. My lawyer keeps telling me to file a chapter 7 and dismiss my chapter 13, but that makes no sense to me. I had no unsecure debt in my plan when I filed. I need legal advice on what to do, everytime I apply for outside loans, they deny me.

Looks like the U.S. Trustee has been reading the news and analysis pages from the bankruptcyMisconduct dot com website regarding bankruptcy fraud in the form of organized crime in Federal Bankruptcy Courts, such as the specific information about Countrywide. Perhaps the DOJ will read about our insight, apparantly unique, into the undeniable relationship which Eliot Spitzer had with at least one wing of the Neo-Mafia. A reminder of Mr. Spitzer's cover up of a death threat against a businessman who pushed to expose violations of conflict disclosure and pro rata treatment of similarly situated creditors in the Worldcom case.

Who’s watching the HENHOUSE? THE WOLVES? Why is unscrupulous activity to prosper from cancelled discharged debt such big business? We filed Chapter 13 Bankruptcy in 1995, we faithfully and timely made all our payments. We surrendered a piece of property and included on Schedule F, that loan showed up on our credit as active it was sold and re-sold. To this very day the new creditor holds us responsible, even though it was legally discharged in 2000. Has this happen because of poor oversight of bankruptcy laws? This came to light when we saw a front page news atricle in Business News Week entitled “Prisoners of Debt”“ dated November12, 2007. Our lawyer filed suit two months ago in Galveston County Texas District Court 405, we have 12 years of documented evidents