The seven mistakes below recur in seller-carry bankruptcy practice. Each one creates a specific risk — §362(k) stay-violation sanctions, disallowed proof of claim, lost cure arrearage, or §524 discharge-injunction exposure. The fix on every one runs through disciplined first-week protocol and qualified bankruptcy counsel.

Mistake one — sending a collection letter after the filing date

The holder mails the routine late notice, payoff demand, or default letter after the bankruptcy filing date. The communication violates the §362(a) automatic stay. Sanctions under §362(k) run actual damages, attorney fees, and punitive damages where the violation is willful. The cure is a communication freeze the day the holder receives the §342 notice or learns of the filing through any channel.

Mistake two — proceeding with foreclosure after the filing date

The holder lets a scheduled foreclosure sale run after the borrower’s filing date, or records a notice of default on the carry after the filing date. The act is a stay violation regardless of holder knowledge at the time of the act. The cure is a notification protocol to the foreclosure trustee and the title company the day the filing surfaces, with written instruction to halt the sale.

Mistake three — missing the proof of claim deadline

The holder receives the §342 notice with the FRBP 3002 claim deadline and lets the deadline pass without filing the proof of claim with Form 410A loan history attached. The claim is at risk of disallowance, and the secured position on the carry runs without representation in the estate. The cure is a calendared docket the day the §342 notice arrives.

Mistake four — filing the proof of claim without Form 410A

The holder files the bare proof of claim form without the Form 410A loan history attachment required for claims secured by a principal residence. The trustee or debtor’s counsel objects, and the holder runs the cure on a short court timeline. The cure is the loan-history attachment with the §1026.41 statement records and the trust-account disbursement records prepared at filing.

Mistake five — ignoring the Chapter 13 plan in the cure-and-maintain window

The Chapter 13 plan confirms with a cure of the pre-petition arrearage across the plan term and post-petition maintenance on the contract installment. The holder treats the post-petition payments as ordinary collections without tracking the cure schedule. The cure is a sub-ledger split between pre-petition arrearage cure, post-petition maintenance, and trustee disbursement records.

Mistake six — sending a §1026.41 periodic statement during the case

The holder sends the routine §1026.41 periodic statement to the debtor during the active bankruptcy case without the §1026.41(e)(5) bankruptcy modification. The statement is a communication that risks a stay-violation finding under §362 or a discharge-injunction finding under §524 after discharge. The cure is the modified bankruptcy statement or suspension of statements during the case window.

Mistake seven — pursuing the borrower after Chapter 7 discharge

The holder pursues the borrower personally after Chapter 7 discharge on the personal obligation. The §524 discharge injunction bars the personal collection action. The lien survives the discharge and runs against the property in rem, but the personal action is barred. The cure is the reaffirmation analysis under §524(c) at the case stage and the in rem-only posture after discharge.

Frequently Asked Questions

Which of the seven creates the largest dollar exposure?

The §362(k) stay violation. Actual damages, attorney fees, and punitive damages on a willful violation run into six figures on a single case in published decisions. The cure cost is a single-day communication freeze.

Which of the seven creates the longest tail of risk?

The post-discharge collection. The §524 discharge injunction runs for the life of the borrower and the lien. A holder who pursues personal collection after Chapter 7 discharge runs sanctions exposure on every contact for as long as the holder retains the file.

What single discipline addresses all seven?

Engaging bankruptcy counsel the day the filing surfaces, and engaging a licensed servicer at origination who runs the bankruptcy protocol as a baseline. The servicer executes the communication freeze, the proof-of-claim filing with Form 410A, the §1026.41(e)(5) statement modification, and the post-discharge in rem-only posture.

This article is educational and does not constitute legal advice. A bankruptcy filing on a seller-carry borrower involves federal bankruptcy statutes under Title 11, federal procedural rules, local court rules, and state-law foreclosure provisions that vary by jurisdiction. Consult qualified legal counsel on the bankruptcy requirements that apply to any specific seller-carry matter.

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