In the bankruptcy case of (Moffitt, Donald E. and Phyllis J.; In re (Mof¬fitt v. America’s Servicing Co.)), the bankruptcy court allowed the debtor to file a claim against a mortgage servicer because of undisclosed fees and charges.

The details of the bankruptcy case:

In this Chapter 13 bankruptcy case the debtor’s bankruptcy plan included measures to repay back mortgage payments over the life of the 5 year plan. But the payoff figure revealed that the loan servicer included attorney’s fees that were not approved by the bankruptcy court and that the loan servicer used a $10,000 payment from the debtor made to pay undisclosed fees and charges.

The bankruptcy court ruled that the debtor had a right to file a claim against the creditor because of unapproved fees and that the bankruptcy court had the authority to recover any money (the $10,000) that was improperly used for unapproved and undisclosed fees and charges. Furthermore, the bankruptcy court ruled that the undisclosed fees and charges may be subject to a bankruptcy discharge because they may have violated the automatic stay.

Mortgage servicers’ hidden fees and charges are currently under the microscope of many government officials and consumer advocates who are taking a closer look at the behavior of an industry that continues to profit off of struggling homeowners while engaging in questionable practices. Fortunately for homeowners who file bankruptcy, the bankruptcy court has the power to penalize mortgage servicers for misapplying debtor payments and/or failing to disclose fees and charges. If you suspect that hour mortgage servicer is charging you undisclosed or unnecessary fees speak with your bankruptcy attorney.