Q. This past summer we completed a short sale on our home. There was a first and second mortgage holder, and the first mortgage holder (major financial institution) assumed the second during the final negotiations. It was our assumption all debt was satisfied (and you know what you get when you assume).
Since the time of the closing, we have been forced to relocate out of the US due to the severe economic situation, and our dire circumstances requiring the necessary support of family/friends. It now appears the debt has been turned over to a collection agency located in Nebraska. They’ve contacted us and told us that they will be pursuing a judgment if the debt is not satisfied. Not sure how to deal with this and what the appropriate legal recourse should be.
We contacted the original creditor (major bank) and they refused to discuss the debt, stating “they have too many of these on their books” and referred me back to the collection agency. From everything I have read, it is iterated NOT to send any funds to the collection agency, nor give them any additional info. Any thoughts or ideas would be greatly appreciated.
A. First and foremost, it’s common practice for a collection agency to tell you they will be suing you; this could be the $10/hr collection agent saying whatever they think might be scary enough to get you to pay. Don’t worry about a lawsuit until it actually happens. Note: This can be a violation of the Fair Debt collection Practices Act if they don’t actually follow through, just FYI. Take note of what they tell you and file this information away carefully.
Yes, your second mortgage is now unsecured because the house was sold and the second mortgage was unsatisfied, even if the original lender assumed the debt. The second mortgage becomes a debt similar to an unsecured credit card debt. The bank can sell or assign this debt to a collection agency or junk debt buyer. So, yes the collection agency may sue you for it and if they win, get a judgment.
A defense often used by debtors is the statute of limitations, meaning the legal time a creditor has to sue you after the debt is charged off. What if you return after 10 years and the statute of limitations is 6 years? You’re home, free, right? Not so fast.
You should consider a how the statute of limitations is tolled, depending on your state, meaning that the statute of limitation on a debt is put into a timeout until you return to the US. We published a post on the tolling of statute of limitations July 27.
If you are sued while out of the country? Since you live out of the country, you could argue improper venue or move to dismiss based on the fact that it would be a hardship for you to return for a court date. But that’s a story for another day.
Have you left the country with unpaid debts? Have you returned from your time abroad to face these debts? Tell us about it by leaving a comment!
Related posts:
- Statute of Limitations on Debt When You Move The statute of limitations (SOL) on debt is an important...
- Year-End Creditor Write Offs May Hasten Debts into Collection Here’s the latest situation that’s come across my desk, but...
- If Agency Isn’t Suing – Is Collection on Old Debt Legal? We talked in this post about the recent round table...
- FTC Report: Deceptive Collection Practices on Old Debt A great round table was held recently on December 4...
- NY State Attorney General’s Office Shuts Down Two Collection Firms What goes around…. New York State Attorney General’s Office shut...
No Comments so far ↓
There are no comments yet...Kick things off by filling out the form below.