Late Creditor Claim?

  • 3 Replies
  • 2881 Views
*

DPJ

  • Guest
Late Creditor Claim?
« on: September 03, 2014, 09:23:16 PM »
I filed a CP back in June, 45 days came and went in early August, and a creditor meeting was arranged shortly after that based on one creditor's rejection (RBC).   An email from my trustee explained RBC didn't represent a significant part of the vote in order to sway things on their own, and they expected the proposal to go through as filed.  I later contacted my trustee and they explained no one had shown up to the meeting of the creditors.  At this point I understood everything was done, and I breathed a big sigh of relief.  Today, about a week later I got a call from a credit union looking for payment on my line of credit, which I understood was unsecured and absorbed in the CP.   She explained my line of credit was attached to my mortgage.  I explained to the lady on the phone that my statements state clearly each month the the line of credit is unsecured.   Also the original document I signed regarding the line of credit lists nothing in the box regarding Security.   There is some odd clause in the small print that expresses loosely that the credit union can basically, when they want apply any asset they hold of mine (my mortgage) to the debt.   It is an odd clause and seems loosely worded.   I always understood the line of credit was unsecured.   I have called my trustee to express my concern about this and they stated they had received a claim from the credit union.   I guess my question is can a creditor present a claim after a meeting of the creditors?   Why wouldn't they have shown up at the creditor meeting, and why would this not been mentioned by them earlier?  My trustee didn't have answers for me at the end of the day, and said they would have the legal team look into things and reply tomorrow.   I'm pretty anxious about this as this would be $10000 that would not be absorbed into my CP.   I would need to pay this off some how in addition to my CP, and that was not part of my budget.   Would I be able to redo my CP with knowledge now I need to pay this off on my own?  Also who will help me argue the line of credit is unsecured?  Can I count on my trustee to do so?   They seemed to have not experienced my scenario and it leaves me feeling uneasy.   I'm super anxious to hear from them tomorrow.

*

DPJ

  • Guest
Re: Late Creditor Claim?
« Reply #1 on: September 04, 2014, 11:28:24 AM »
Well, I got bad new from my trustee today.   They clarified that back in 2008, the first time I renewed my mortgage, I signed a document as part of a second mortgage that blanketed all my current and future debts with the credit union.   I had real understanding of I had done this (secured an future credit union debts up to $150000 against my property).   They gave me the line of credit free and clear (so I thought) in 2011.   The  line of credit lists nothing as security, is stated as unsecured on my statements, and is the unsecured rate at 7% (vs 3 or 3 plus prime for secured lines of credit).    It looks like when I renewed my mortgage in 2011, when they gave me the line of credit, there probably wasn't any equity in the property to give me a secured line of credit and the 3% rate.   So, in order for them to give me more credit (increase their sales!), they gave me a $10000 line of credit, unsecured (based on my great credit rating at the time), but actually secured by a document I signed in 2008 (which I only understand really now, guess my bad).   What feels really bad here is how they gave me an unsecured line of credit, that was actually secured, and I pay the unsecured rate, for a secured line of credit.    Seems like the credit union gets their cake eats it too.  My trustee explained to me their lawyers looked at the credit union's claim - and it is valid.   So I'm left with redoing my proposal and reducing the payment based on not having the line of credit included (and still having the debt with credit union - who also will not allow me to consolidate with my mortgage at this time), or, getting a lawyer and arguing what I signed with the credit union.   My trustee said I wouldn't have an argument with the document I signed likely (the second mortgage), but I might be able to argue the extra interest of paid over the years as I technically am paying the unsecured rate on a secured line of credit.   Whether it is worth it I guess seems questionable and I feel I'm going to be stuck with it in the end.   My trustee explained this is only the second time they have come across something like this.   Also the timing does not matter.   The credit union did not have to be at the meeting of creditors to state their claim - and even years from now they could have stated their claim.   I've really come to learn over the past few years to note the details with all agreements from anything from utility companies to banking.   I only wish I had better understanding of this before then.   But then no one in good faith expects to be in the future doing a consumer proposal or bankruptcy as they renew their mortgage or take on new debt. 

*

TreeFrog

  • Sr. Member
  • ****
  • 379
  • +2/-0
    • View Profile
Re: Late Creditor Claim?
« Reply #2 on: September 05, 2014, 10:09:33 AM »
Hi DPJ,

Sorry you've had this difficulty. It sounds as if you have formed a pretty realistic picture of the scenario. Indeed, it is dirty dealing by the credit union, but you are correct that it is likely not worth it to fight it. There was one other instance of this on this forum some time ago - someone in a more complicated situation, but this fishy "unsecured-but-really-secured" credit clause in a mortgage was part of his concern. He was left with the advice that he would need a lawyer to fight that one, and I don't think we heard if he did. Again, I doubt it would have been worth it.

Sorry I have no practical advice on this. Like you, I just read all my documents extra carefully now, and advise others to do the same.

Best wishes,
~Wendy
-completed 5-yr CP in 2013

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
Re: Late Creditor Claim?
« Reply #3 on: September 05, 2014, 09:49:26 PM »
As your trustee said, a creditor can put in a claim up until the last distribution is made in a proposal.

You can always attempt to amend your proposal to reduce the amount payable, but your creditors (especially RBC) can reject it, which would mean that the whole proposal would fail.
 

 

Sitemap 1 2 3 4 5