Summary:
Judge Harner of the Maryland bankruptcy Court evaluated whether CitiMortgage Inc. and its servicer Cenlar FSB violated the automatic stay under 11 U.S.C. § 362(a)(3) by denying debtor Ms. Klemkowski access to her online payment portal after she filed for bankruptcy. Before the bankruptcy filing, Klemkowski had used this portal to make mortgage payments, but her access was revoked upon her filing. She argued this change impeded her ability to comply with her repayment obligations.
The court ruled that the right to use the online portal (just another twig in the bundle of sticks), as per the prepetition agreements, became part of Klemkowski's bankruptcy estate, and that the servicer’s unilateral denial of access post-filing effectively violated the automatic stay by altering her contractual rights. However, the court found no sufficient evidence to award monetary damages since Klemkowski continued to make payments through other means, though less conveniently. The stay violation was deemed void ab initio, and the court allowed further proceedings to determine appropriate remedies, potentially including restoring portal access to uphold the debtor’s contractual rights within the bankruptcy framework.
To read a copy of the transcript, please see:
The court ruled that the right to use the online portal (just another twig in the bundle of sticks), as per the prepetition agreements, became part of Klemkowski's bankruptcy estate, and that the servicer’s unilateral denial of access post-filing effectively violated the automatic stay by altering her contractual rights. However, the court found no sufficient evidence to award monetary damages since Klemkowski continued to make payments through other means, though less conveniently. The stay violation was deemed void ab initio, and the court allowed further proceedings to determine appropriate remedies, potentially including restoring portal access to uphold the debtor’s contractual rights within the bankruptcy framework.
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