{"id":368864,"date":"2022-06-14T15:48:33","date_gmt":"2022-06-14T20:48:33","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/litigation\/filing-a-lawsuit\/can-i-sue-a-bankrupt-loan-company.html"},"modified":"2024-01-04T17:27:33","modified_gmt":"2024-01-04T22:27:33","slug":"can-i-sue-a-bankrupt-loan-company","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/litigation\/filing-a-lawsuit\/can-i-sue-a-bankrupt-loan-company.html","title":{"rendered":"Can I Sue a Bankrupt Loan Company?"},"content":{"rendered":"\n
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Can I Sue a Bankrupt Loan Company?<\/h1>\n\n
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\n By Steven Ellison, Esq.<\/a> | Legally reviewed by FindLaw Staff<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Yes, you can sue a bankrupt mortgage lender or servicer. Yet, chances are you won’t recover much if you win. <\/p>\n\n <\/div>\n\n\n\n

When a company goes into bankruptcy, all collection efforts, including lawsuits against the company, get put on hold. The company’s assets get divided among the people the company owes money to in order of priority determined by law.<\/p>\n

Unfortunately, chances are good that you would not be one of the people entitled to priority. So you could only collect leftover money, which might be nothing.\u00a0<\/p>\n

Even if you aren’t the one filing for bankruptcy, a bankruptcy lawyer<\/a> may help. They can provide legal advice about where your case would have priority in the bankruptcy proceeding. They can advise you whether pursuing it makes sense.<\/p>\n

How Mortgage Servicing Works<\/h2>\n

When buying a house, most people do not pay cash out of their bank account. They get a home loan<\/a> from a mortgage lender (typically a bank or a credit union) in exchange for an interest in your property.<\/p>\n

Mortgage lenders like Wells Fargo and Bank of America often sell the loan to a mortgage servicer. Mortgage lenders<\/a> have legal limits on how much they can loan, so selling the loan lets the lender start new loans. Lenders can make more money initiating loans than they can servicing them.<\/p>\n

Mortgage loan servicers help process loans. Mortgage loan processing includes:<\/p>\n