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Everything posted by Methuss

  1. The technical term is called "lien stripping." You can only do it in a chapter 13 bankruptcy. The basics of it is that if you house is worth less than what you owe on your 1st mortgage then the second mortgage is considered "wholly unsecured" by the property. Since there is no value available in this circumstance to secure the loan, the second (or any other junior liens) are treated as unsecured personal loans for the purposes of the bankruptcy. They get paid out of plan as if they are a credit card. After you complete the plan the remaining balance is discharged. The real trick to it is you need a bankruptcy lawyer that is willing to litigate, not just file forms with the court. Second (and junior) lienholders fight like hell to keep their lien in tact because it is their only guarantee of payment. The lien is not stripped automatically. The lawyer has to file a motion with the court and you can be darned sure that the junior lienholder is going to object and ask for face-time with the judge to try and stop it from happening. Your lawyer will need multiple appraisals to show the value of the house is unsecured by the junior liens which you will have to pay for; as well as his/her court time to argue any objections. This will increase your costs in filing. But if it costs you an extra $3000 to shed $50,000 it may be worth the effort and time. Just be sure to get the right attorney to handle it.
  2. If you already paid this to BankOne years ago and have proof of that payment then this is relatively easy to deal with. Send a certified letter to the CA and to Chase both telling them this debt obligation was paid and include a copy of the payment record. That should end it. As for any threat to "ding your credit," the CA is either stupid or grossly misinformed. They cannot put anything on your credit report that exceeds the 7 year reporting period. The 7 year limit begins with the date of the delinquency in 2004. Since it is now 2011 they should not be able to report anything. The very threat to do so is illegal once the 7 year limit has passed. Threats to sue you are also illegal under the law at this point since the statute of limitations is 6 years maximum in Arizona. I suggest you speak with the JAG about what to do about them threatening you over something long since paid for. The JAG offices are taking these sorts of collection issues more seriously now than in the past because private CAs are abusing our service members.
  3. Equifax and Experian toe the line all the time. As a matter fo fact if you search through this subject here in the forums you will find advice from me and other long time members that you do not call, write or communicate further with the CRA at all until the 30 day period has fully passed. Why? Because the FCRA is rather vague on what "additional information" means. Equifax in particular likes to call any contact "extra information" to trigger an extra 15 days off of, even if all you did was call for status. The real problem is the FTC doesn't consider this to be a big enough deal to hammer them over.
  4. No kidding. The one that really makes no sense, even to some judges, is how creditors that have had their accounts discharged in bankruptcy are able to sell them to JDBs. The debt was legally expunged and has no further value... plus what does the buying JDB think they are going to do with it? The only explanation is they intend to collect on discharged debt and the seller intends that collection continue despite the discharge injunction.
  5. Hold the truck here.... Do not buy a house with your fiancee. Wait until you have been married for at least a little while first. The last thing you need is to buy a house with another person and then have to sell at a loss if the wedding never happens. That sort of thing gets very messy. I know you have an emotional component here, but all big purchases must be handled as business. The lender certainly will. As for qualifying on your income alone. It may not be so hard. Check out FHA. And if you find a house in the right area you may be able to get one under USDA Rural which has even better terms (at least until October). With USDA your income actually has to be below certain levels to qualify for the program - which has no down payment, no PMI, and the same rate as FHA. They even offer grants that you never have to pay back in certain circumstances.
  6. After. The reason is simple: If you are being divorced, you won't know what your liabilities are under the divorce decree until that is finalized. Then you file BK after the divorce to jettison those liabilities and make a clean break financially. You cannot discharge child support by and large. But other joint consumer debts that the divorce judge orders you to pay get snuffed out by a bankruptcy.
  7. As am I. All the advice given seems like trying to shortcut at the expense of his client. At the least he is violating his fiduciary duty by telling his client to do things that would cause serious financial harm...on the far end it may be flat out malpractice.
  8. In the first statement, not correct. Since time barring is an affirmative defense, there is no violation for taking an action that cannot be legally taken if the CA sues (or threatens to) on time barred debt. They are allowed to sue. It is up to the consumer to raise the defense. Therefor no violation occurs. The argument that a CA does not know, however, is a valid one. The FDCPA, being a strict liability law, requires the CA to do their homework so they are not going after the wrong people or for things they are legally unable to collect. This is equally important in the case of debt discharged in bankruptcy. The FDCPA gives a bonafide defense ONLY if the CA has procedures in place to prevent the violation and those violations failed due to no fault of the CA. As such any CA that claims not to know the SoL on a debt is statutorily in violation of the FDCPA for not having procedures in place to prevent the violation. There may be something to counterclaims regarding misrepresenting the legal status of a debt if the CA files a lawsuit claiming a debt is collectable when it is past SoL. So collectors should be very careful how they word their complaint to the court.
  9. Speaking to the Trustee would do no harm. And in my opinion it may help. The reason being, if she can show that the refund went towards paying her debt anyways then the Trustee may be satisfied. It may not have gone through his hands but it went where it was intended to go. The Trustee may also be understanding of the issue since the lawyer didn't turn over the letter. It can't hurt to ask. And if the Trustee says no, you can always appeal to the BK judge by filing a pro-se motion to have the judge hear the issue and make a decision. It's not the debtor's fault that the lawyer withheld critical information. As for taking funds out of 401k... my opinion is no. Find some other way to deal with it. 401k funds are completely off-limits to all creditors including the bankruptcy court Trustees. That ruling is from the US Supreme Court quite a while ago. But as soon as you dislodge those funds from a protected account then the money becomes fair game to anyone. And taking $4000 out now if you have 30 years to go to retirement is a whopping average $90,000 loss in retirement.
  10. The short answer is no. It doesn't matter if it is a personal guarantee or not. The underlying debt was created in the course of business and is therefore NOT covered by the FDCPA. The same thing applies to collections on things like parking tickets and library fines. They are not consumer debt.
  11. AMEX has a policy with settlements that doesn't appear until they get that final payment out of you. After they get all the agreed upon money they will send you a letter that says the account has been settled; BUT it includes a paragraph that says if you ever want a card with them again, you have to pay the full amount you owed. Basically, if you settle with AMEX they forever bar you from their card again unless you pay in full what you owed. Statute of limitations be damned, they expect you to pay if you choose to do business with them in the future. Frankly most people can do without them.
  12. Not really. And by that I mean you don't have to "play the game" to get to home ownership. The credit rating system IS stupid. If you add up all the interest you are paying over years or decades to creditors you will find that pretty much is your 20% to 30% downpayment on a home. Why not save that money instead of giving it away? You don't have to have a credit score to get a mortgage. It just takes a little longer if you have "no file" with the big-3 for underwriting to get their work done. They look at "alternative credit" such as copies of utility bills, insurance payments, and bank statements to show you are responsible enough to lend to. So expect underwriting to take 60 days to complete instead of 20 to 30. Know that up front and it's easy to negotiate a purchase with those stipulations.
  13. If the value of the home is less than the balance on the first mortgage then there is an option in Chapter 13 to "strip the lien" of any junior mortgages. In other words a 2nd or 3rd mortgage would be treated just like an unsecured credit card in the bankruptcy. You'd pay the plan payments against the 1st mortgage and the 2nd would get anything left over for a couple years; then the second is gone...forever...and they have no claim on the home. Now understand that filing a motion to strip lien is serious work for the lawyer. The junior lienholders are not going to just roll over and loose their security interest without a fight. So you need a bankruptcy lawyer that is willing to go into court and actually litigate, not just file papers and show up for the meeting with the trustee. This may cost you extra in legal fees. But if you think about it spending five thousand in legal fees to drop forty thousand in debt and still keep the house may be worth it. Now the above also assumes your available funds won't be eaten up by other secured assets. It's hard to get a lien strip on a mortgage if you also have a pair of $400 car payments competing for resources. But if your goal is to keep the house you may have to jettison other secured debt and their secured property to do so.
  14. If the collector is asking for $1000 more than the amount on the last statement without explaining how they came to that amount, then there may be an FDCPA claim. However the statutory damages would not knock much of a dent in the balance owed through offset. The collector may even be willing to be dragged into court on FDCPA violaitons if it gives them the chance to counter for the amount of the debt and have you there face to face. I suppose this really comes down to what your income is like. If you are judgment proof -- meaning you have no income they can legally take -- then it would not be worth their time. But if you have some income they can attach, then you may want to talk to a consumer attorney and have a lawyer negotiate a settlement for you. This is not a small amount you are dealing with so a hundred bucks or so to a lawyer to reduce your cost and get an enforcible, written settlement (preferably with pay-for-delete) would be worth it...and they can't weasel out of their end of the agreement down the road.
  15. To answer your original question, no the bank didn't do anything wrong. As a matter of fact the right of offset is laid out in the Uniform Commercial Code. This is why Wells Fargo and many other "banks" incorporate in one of the friendly to creditor States such as Delaware so they can execute right of offset based on laws that favor them most. I think in the context of the bankruptcy, the attorney may have been correct. But as soon as your case was dismissed that opinion goes out the window. Dismissal is pretty much the same as never filed when it comes to collection activity. The stay is gone as if it never was and you have no court order protecting anything any longer.
  16. I would amend the statute to per violation leaving it at $1000 per. This would make it easier to pass through. A simulataneous increase in amount plus compounding would be deemed too extreme. Most collectors mess up enough times that you'll get your $5k to $10k per case. I would add that suit for out of statute debt is an automatic violation. This is really just a formality since they are required in the current law to not misrepresent the legal status of the debt, which they already violate when they file suit on SoL debt -- they are swearing it is valid and collectable in the complaint. Just spell it out so there is no ambiguity. Lastly I would add violations for attempting to collect on discharged debt. This shadow industry of buying, selling, sitting on and attempting to collect debts that have been eliminated in bankruptcy needs to be formally shut down. It goes against the very principles of the discharge injunction. Make it actionable by the consumer without having to drag them into a BK court. Make it criminal in cases of rampant abuse so the AGs can lock up the offenders.
  17. I would send a letter to the CA telling them that they should have gotten a recall notice from the OC due to error and that no debt is owed. They received the file by mistake. It's not a lie. There was an error in mailing so you didn't know what you owed. You paid it directly as soon as you found out (but you don't have to tell the CA that). Based on that, if the CA doesn't remove the tradeline they would be in material violation of the FCRA and the in all likelihood it will be gone from your reports in short order.
  18. This happened to me with my prior BK filing. My wife and I were co-borrowers. I filed, she didn't. Mitsubishi basically stopped sending all statements and refused to start again until my wife threatened to sue them under unfair and deceptive trade practices and for violations of the Fair Credit Billing Act, the Truth in Lending Act. That got their attention.
  19. I had the same problem a last week. I called the number for the free report and went through the whole verification process only to get a letter a few days later saying they don't have my current address on file. Funny that since I've had my TU report pulled twice during my mortgage approval process. They wanted copies of my SS card, and copies of bank statements to prove my address. They can suck eggs. I don't give that out to anyone that does not have a legal reason to require it.... and they don't have such. They do, on the other hand, have a legal obligation to provide the free report when proper identification is presented and I did that by going through their verificaiton process sucessfully. At best they are entitled to a copy of a state issued identification; which is all that is required to prove who you are for identity theft purposes. I think TU is skating on thin ice again and trying to not have to give out free reports. I submitted a complaint to my AG and to the FTC. If enough people complain, they will get hammered again.
  20. Hold on a second. They may not have validated this debt. Validation requires that the debt collector obtain verification from the original creditor of the amount of the debt and then they forward that verification to the debtor. If the debt collector simply prints something from their own records that is NOT validation. The FDCPA is very clear on this: Seciton 809( If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. By the very nature of the language of the law "until the debt collector obtains verification" indicates that they must get it from a source outside of their own records otherwise there is nothing to "obtain" and "verify." Since only the OC can verify the original amount owed, the OC has to provide the verified amount. The rest is pretty straightforward; they then must mail the debtor a copy of what they obtained. The OC has to provide the verified amount in writing otherwise there is nothing to mail. Copies or print outs from the debt collector's own records do not meet the statutory requirements. But a copy of a last bill from the original creditor would satisfy that requirement.
  21. Correction. Rapid Reporting (part of Equifax) out of Fort Worth, Texas can pull income history from the IRS and the SSA.
  22. I seem to recall reading recently about two credit-bureau like companies that have started collecting actual payroll data and making individual salary history place is called "The Work Number" if I recall. They don't do it by collecting SS or tax info, but by collecting credit applications and payroll data from participating employers and creditors.
  23. Maybe, but only if he's doing it from his house.
  24. Very true, LearningasIgo. The one thing that must be taken into consideration when using this approach is how much risk you are willing to take. You may send such a letter to a CA that decides it isn't worth their time; or you may send it to a CA that simply isn't intimidated. You may be walking into the dragon's cave and kicking him in the snout. If you have the legal experience doing pro-se work then the risk is less. But if all you want is to be left alone and have no desire to see the inside of a courtroom, this can back fire in a big way.
  25. You missed this part: That's a pretty valid point. Although incarceration may be the letter of the law by not obeying the court order, it may violate the spirit of the law and therefore be unconstitutional. But that's up to a much higher court to decide on.