Legacy Mortgage Faces Lawsuit Over Alleged Collection of Discharged Debt
Legacy Mortgage, LLC and a law firm it hired face a lawsuit in Puerto Rico over allegations that they tried to collect a debt already discharged in bankruptcy and threatened the homeowners with foreclosure.
The lawsuit was filed on August 13, 2026, in the U.S. District Court for the District of Puerto Rico. A married couple who own a home in Ceiba brought the case against Legacy Mortgage and Rivera-Munich & Hernández Law Offices, P.S.C. The couple claims the collection effort violated the federal Fair Debt Collection Practices Act (FDCPA) and the bankruptcy discharge injunction.
Debt Was Discharged After Chapter 13 Bankruptcy
According to the lawsuit, the homeowners filed for Chapter 13 bankruptcy in August 2019. During the bankruptcy case, they challenged a claim connected to the debt, arguing that it was not secured by a valid mortgage lien on their home.
The bankruptcy court sustained their objection, according to the filing, meaning it did not allow the claim as a secured claim. The couple later completed their Chapter 13 repayment plan. In October 2022, the bankruptcy court entered a discharge order that the lawsuit says released the homeowners from personal liability for the debt.
Collection Letter Warned of Foreclosure
More than three years later, the homeowners allegedly received another attempt to collect the debt.
Around February 20, 2026, Rivera-Munich & Hernández Law Offices sent the couple a letter after Legacy Mortgage retained them, according to the lawsuit.
The letter allegedly told the homeowners that their loan had been accelerated and that judicial foreclosure could follow. It also listed an outstanding balance, said the couple had defaulted, and described the debt as being secured by a mortgage on their property.
The homeowners dispute those statements. They allege no valid mortgage secured the debt and that their personal liability had already been discharged through bankruptcy. Based on those allegations, the couple claims the collection letter misrepresented the character, amount, or legal status of the debt and threatened legal action that could not legally be taken.
Lawsuit Raises Concerns Over Collection Envelope
The case also includes allegations about the envelope used to send the collection letter. According to the lawsuit, wording referring to residential foreclosures appeared on the outside of the envelope. The filing also alleges that one homeowner’s full Social Security number was visible on the outside, potentially exposing the information to postal workers and others who handled the mail.
The plaintiffs are seeking to turn the envelope-related claim against the law firm into a proposed class action.
They want to represent people in Puerto Rico who received collection envelopes from the firm during the previous year that displayed language suggesting foreclosure or personal identifiers such as Social Security numbers. The lawsuit alleges that the law firm uses standardized mailing practices and templates and says the proposed class could include hundreds or thousands of people.
Debt Collection Due Diligence at Issue
The lawsuit also raises questions about the checks debt buyers and collectors perform before attempting to collect an account.
The homeowners argue that a routine review of publicly available bankruptcy records would have shown their bankruptcy case and discharge. They claim experienced debt buyers should have known that the debt had been discharged and was not secured before collection activity began. The couple is seeking actual, statutory, and punitive damages, as well as attorneys’ fees, costs, and sanctions.
The claims remain allegations for now. No court has ruled that Legacy Mortgage or Rivera-Munich & Hernández Law Offices violated the law.
