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It seems like a lot of people are shocked to learn that they have been sued or that judgments have been registered against them.  I remember speaking to a new client recently and it was unclear how much she owed and from what she was saying her total debts were less than $5,000, an amount clearly not worth filing bankruptcy over.  While we were talking I checked the Nebraska court’s online records to see if any judgments were filed against her, and to her great surprise a $30,000 judgment lien had been filed against her residence!  Needless to say, she and her hubby had a fun chat that evening.
When debt problems get bad, sometimes we stop opening the mail. People move from town to town seeking better jobs, housing or schools, and it is common for creditors to serve notice of lawsuits on former addresses.  One client was shocked when I informed her a judgment had been issued against her after the Sheriff served notice on her 10-year old daughter who forgot to give her mother the paperwork when she arrived home for work.  Clients commonly have no clue who they owe or if they have been sued, but they have a nagging sense they owe a lot and they need help. Figuring out who you owe and how much you owe is the first step in crafting a plan to get out of debt.
A new system developed by the Nebraska Court Administrators office allows anyone to search for lawsuits and judgments online for a small fee (currently set at $15).  Here is the link to the Nebraska Justice Search system.  This same information is generally available at the local county courthouse for free.
How do I pay a judgment I find online?  
If you discover that you owe a judgment, there are several ways to pay it.

• Pay Online:  Another new service offered by the courts is to pay the judgment or fine online by going to this link.  Payment can be made by credit cards, debit cards or with e-checks.
• Pay the Clerk of the Court:  Don’t like sending money over the internet?  No problem, just send a check or money order to the Clerk of the Court.  Many courts also accept cash payments made in person.  To find out how much you owe on the judgment, including interest, call the Clerk of the Court.  Here is a link to each County Court Clerk in Nebraska.
• Pay the Creditor’s Attorney:   Sometimes you cannot pay the full balance all at once or perhaps you want to negotiate the balance owed.  The court record will have the name and phone number of the attorney who sued you. Call them and make payment arrangements if necessary.  Remember that when you send payment to their attorney you are also giving them information about where you bank or work, and unless you are paying the balance in full you are giving them clues as to where to send a garnishment. Be careful in what you share with the creditor’s attorney.  Email seems to be a great way to bypass the secretary to negotiate directly the attorney. Here is the link to get the email address of the creditor’s attorney.  Remember that you should never send money to a creditor when negotiating a debt until they send you something in writing agreeing to the settlement.

If a judgment has been entered against you it is important to get a Satisfaction of Judgment filed in the court record after payment.  Once the judgment is paid or settled, you want the public records to show the debt is satisfied so that you may update your credit report.
Image courtesy of Flickr and lemonjenny.

As the old saying goes, if you don’t use it you lose it.  The “it” in this case is the right to sue someone for an unpaid debt. Every state has a set of laws that create a deadline for creditors to sue for an unpaid debt.  In Nebraska there are two key laws that govern debt collectors when it comes to suing for an unpaid debt.

1. Written Agreements.  An action upon a written contract can only be brought within five years.  Nebraska Statute 25-205. This law covers most credit card agreements, bank loans, and other written agreements to pay money.  A voluntary payment of any amount basically “resets” the statute, so we measure the five years from the date of last payment.
2. Oral Agreements.  An action upon a verbal contract can only be brought within four years of the date of last payment.  This provision covers most medical debts.  Nebraska Statute 25-206.

In recent years there has been a dramatic increase in sale of these time-barred debts to junk debt buyers who call to collect debts that are 5, 10, 15 or even 20 years old.  Very often they lack any real documentation of the debt owed and they try to trick the debtor into making a voluntary payment, thus resetting the statute of limitation.  I am frequently hearing clients and former clients call about abusive phone calls where the debt collector threatens to have the debtor arrested that very day if a payment is not made.
WHAT SHOULD YOU DO IF YOU ARE SUED ON AN EXPIRED DEBT?

• Answer the Lawsuit.  If you are sued on an expired debt is it important to (1) file a written answer to the lawsuit with the Clerk of the Court and (2) specifically state in the written answer that the statute of limitations has expired.  The statute of limitations is an Affirmative Defense.  What that means is that you must affirmatively claim the defense in your written answer.

• Demand an Account History.  If you believe no payment has been made a debt in more than 4 to 5 years, demand that the debt collection attorney provide you with a copy of the account history showing all payments and charges to the account.  In legal terms, we call these demands Interrogatories and Motions to Produce Documents.  In simpler terms, this is basically a letter written to the debt collector’s attorney demanding that they answer basic questions and that they supply you with requested documents.  If the debt collector cannot supply you with information as the date of the last payment, the amount of the last payment, whether the payment was made with a bank check, credit card or cash, that is fairly persuasive evidence that the debt may have expired.
• Counter-sue for FDCPA violaiton.  It is illegal for a debt collector to file a collection lawsuit on an expired debt.  Such lawsuits violate the Fair Debt Collection Practices Act (FDCPA).  Under the FDCPA you may be entitled to $1,000 of punitive damages plus they must pay for your attorney fees if you prevail.  If you are sure the debt has expired, consult with a FDCPA attorney in your area.

 
IS THE STATUTE OF LIMITATIONS TOLLED DURING A BANKRUPTCY CASE?
This is a very important topic for attorneys practicing in consumer bankruptcy cases who represent debtors owing Private Student Loans.  Bankruptcy Code Section 108(c) provides that if a statute of limitation would normally expire during the administration of a bankruptcy case, the statute is tolled for an additional 30 days after notice of the end of the bankruptcy case.  The big question is whether the Nebraska statute of limitations is tolled during the administration of the bankruptcy case.  The answer to that question was provided by the Nebraska Supreme Court in the National Bank of Commerce Trust & Savings Ass’n v. Ham decision.  In short, the court ruled that the Nebraska statute of limitation is not tolled during a bankruptcy case except for the additional 30 days provided under Section 108(c) of the Bankruptcy Code.  This is a very key ruling for debtors owing substantial private student loan debts who may benefit by filing a Chapter 13 bankruptcy case to seek protection while the statute of limitation runs out on their private student loans.  More on this topic later.
Image courtesy of Flickr and Patrick Marlone.

Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures
The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against Green Tree Servicing, LLC, for mistreating mortgage borrowers who were trying to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers. Green Tree has agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty for its illegal actions.
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said CFPB Director Richard Cordray. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”
• Demanded payments before providing loss mitigation options.
• Failed to honor in-process modifications.
• Delayed short sales
• Harassed and threatened overdue borrowers
• Used deceptive tactics to charge consumers convenience fees.
This enforcement action covers Green Tree’s illegal practices prior to the January 2014 effective date of the CFPB’s new mortgage servicing rules.
Enforcement Action
If entered by the court, today’s order would require Green Tree to:
• Pay $48 million in redress to victims.
• Engage in efforts to help affected borrowers preserve their home.
• End all mortgage servicing violations.
• Adhere to rigorous servicing transfer requirements.
• Honor prior loss mitigation agreements.
• Provide access to quality customer service.
• Pay $15 million civil penalty: Green Tree will make a $15 million penalty payment to the CFPB’s Civil Penalty Fund.
Here is a copy of the proposed consent order and a copy of the complaint.

The post CFPB Takes Action Against Green Tree Servicing for Mistreating Homeowners appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

“Chapter 7 is not something that you can dip your toe into in order to check the temperature of the water.  It is something that you jump into and can only be rescued from it if you show cause”  In re Dreamstreet, 221, B.R. 724 (Bankr. W.D. Tex. 1998)
At least once a week I hear a report of someone filing bankruptcy and then trying to get out because they do not like the way things are going.  You can see from the quote above that this is not so simple.  Only a judge can release you from a chapter 7, and then only after you show good cause.  How hard is it to show “good cause”, some courts are not inclined to allow a debtor to dismiss their chapter 7, other courts are more lenient.  Why take that chance? Talk to an experienced bankruptcy attorney who will give you proper advice about the challenges and rewards of bankruptcy.
In the medical arena this would be similar to starting your open heart surgery only to have you try to leave the operating table halfway through the surgery.  Perhaps you should think about the surgery before laying down on the operating table.
I know this is a harsh sentiment, but bankruptcy, like open heart surgery, should not be taken lightly.  Please talk to an experienced bankruptcy lawyer, or two, before ever taking that first step off the cliff.

The post No You Cannot Get Out of Bankruptcy Just Because You Want To appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.