A western Pennsylvania woman's Chapter 13 bankruptcy case raised a big red flag for bankruptcy lawyers and those facing foreclosure, according to The New York Times.

Ms. Sharon Diane Hill filed for Chapter 13 bankruptcy protection in 2001 in an effort to protect her home from foreclosure.

Her 5-year case ended officially in March, 2007, at which point she was current on her mortgage.

Countrywide, the company servicing her loan, recognized that she did not owe the company any money.

But a month later, Hill received a letter from Countrywide insisting that she owed more than four thousand dollars for various charges on her mortgage!

According to the letter, the charges had been racked up while she was making regular payments under her filing bankruptcy plan.

Bankruptcy Lawyer Questions Charges

When Hill's bankruptcy lawyer questioned the legitimacy of the charges, Countrywide sent copies of three letters--dated 2003, 2004 and 2007--to the lawyer.

According to Countrywide, the original copies of the letters had been sent to not only Ms. Hill, but also her lawyer and bankruptcy trustee.

No records showed receipt of the letters, however, and Hill's lawyer noticed that one of the "copies" of the "originals" contained an address that he hadn't moved to until well after the date printed on the letter.

This alerted him to the fact that something was amiss.

Countrywide's lawyer said that the letters had been "recreated" to reflect mortgage charges, which basically means that Countrywide fabricated evidence for its case.

The bankruptcy judge in charge Ms. Hill's filing expressed shock that something of this nature could take place.

Apparently, this isn't the only problem that's arisen with Countrywide during bankruptcy hearings. Stay tuned for more updates.

Tags: bankruptcy, Countrywide, foreclosure