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Good News: Fannie Mae Announces New Shorter Waiting Period for After Bankruptcy Mortgage. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three […]
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Good News: Fannie Mae Announces New Shorter Waiting Period for After Bankruptcy Mortgage. Here’s the most important question for people who file bankruptcy because they can’t make their house payments: How soon can I buy a house again? Since the housing crisis, there have been two waiting periods: Two years after the bankruptcy; but three […]
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Editor’s Note: Each state has different laws when it comes to enforcement of money judgments, including those relating to private student loans. This article works with the laws of the State of California; if you live anywhere else, talk with a lawyer in your state about your individual situation.
After the private student loan lawsuit comes the judgment. For California residents, this could be better or worse – depending on your situation.
We’ve talked about why a student loan lawsuit may not be a bad thing, but you should weigh your options before allowing the private student loan debt go to judgment.
How Long Is A Judgment Valid?
Under California law, a money judgment is valid for a period of 10 years from the date of entry.
The judgment may be renewed for an additional 10 years, but only if the application for renewal of the judgment is filed before the expiration of the 10-year period of enforceability.
Once the first renewal is made, the creditor can renew again for successive 10 year periods of time.
All in all, the private student loan judgment can be renewed for as long as you live.
The Debtor’s Examination
The first step towards enforcing the judgment is called the debtor’s examination.
This is the private student loan company’s opportunity to call you to court to answer questions about your assets. You may also be required to bring copies of bank account statements, paystubs, and tax returns to show your income.
You may be tempted to throw the Order for Appearance and Examination in the garbage, or to treat it as an optional trip to court. This is a terrible idea, because failure to appear for the examination may result in you being arrested and cited for contempt of court.
Enforcement Begins
Once the debtor’s examination is completed, the private student loan lender’s attorneys have all the information they need to move ahead with enforcement of the judgment.
They know where you live, where you work, where you bank, and how much money you’ve got.
With that information in hand, the private student loan lender can take all of the following actions:
- file a lien on any real property you own in the state of California;
- file a lien on your personal property by filing a notice of judgment lien in the office of the Secretary of State. The lien attaches to all of the following:
- Accounts receivable for a business you own;
- Tangible chattel paper;
- Equipment located within this state;
- Farm products located within this state;
- Inventory located within this state; and
- Negotiable documents of title, located within this state.
- begin a wage garnishment against you;
- levy against your bank account (in other words, take you money out of the bank);
- levy against your automobile; and
- levy against the cash register or the business that you own.
Talk With Your Spouse
Married? If so, you’d better have a talk with your spouse right away.
California is a community property state, which means that the community property of a debtor’s spouse may be subject to garnishment and levy as well.
It doesn’t matter if the private student loan debt was incurred before the marriage, either. Once you’re married, the community property interests of the debtor and nondebtor spouse are usually liable for debts incurred by either spouse.
That means your private student loans, taken out years before you got married, suddenly become your spouse’s problem.
How To Avoid The Problems
Luckily, the judgment may not be the end of the world.
You’ve got exemptions you can claim under state law, so you may be able to protect some of your wages and property.
You may be able to negotiate a deal with the judgment creditor in exchange for leaving your property and wages alone.
In a pinch, you might want to consider Chapter 13 bankruptcy as a way to restructure payment of the private student loans because it will stop a garnishment and levy against you as well as your spouse and any cosigners.
Taking quick action is definitely your best move. Sweeping it under the rug won’t do you, your spouse, or your wallet any good.
The majority of clients we work with in our bankruptcy practice would be considered “consumer” debtors. Credit card debt, home equity loans, car loans, and medical bills often make up the majority of what they owe to creditors. Bankruptcy laws are written to allow consumer debtors to exempt much of the property they have acquired. The ability to retain property is often a major factor in deciding to file bankruptcy. How much property is exempt under the bankruptcy law is also one of the determining factors in deciding whether to file chapter 7 or chapter 13 bankruptcy.The post Property Exemptions in Bankruptcy appeared first on Tucson Bankruptcy Attorney.
The majority of clients we work with in our bankruptcy practice would be considered “consumer” debtors. Credit card debt, home equity loans, car loans, and medical bills often make up the majority of what they owe to creditors. Bankruptcy laws are written to allow consumer debtors to exempt much of the property they have acquired. The ability to retain property is often a major factor in deciding to file bankruptcy. How much property is exempt under the bankruptcy law is also one of the determining factors in deciding whether to file chapter 7 or chapter 13 bankruptcy.The post Property Exemptions in Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Until a private student loan lender decides to file a lawsuit against you, there’s nothing but chaos and uncertainty. That’s all replaced, for better or worse, the instant the case is filed.
There’s a natural order to things. Up is above, and down is below. For every day there is night. That’s the concept of Tao, and it enables us to walk through the world with a sense of certainty.
That certainty, unfortunately, is thrown out the window when it comes to dealing with a past due private student loan. Consider all the points of uncertainty when your student loan goes into default:
- Will the student loan go to collections and, if so, when?
- Will the collectors call you at work?
- Will you get fired because your boss doesn’t want you to get non-work calls during the business day?
- Will the lender sue you, or let it go?
- If there’s a lawsuit, when will it happen?
- Will they settle, or will they play hardball with you?
- When will this all be over?
Wipe Away The Uncertainty
When you’re sued for a private student loan, it’s understandable to feel the rise of panic in your chest. You need to act quickly in order to avoid a default judgment, and beyond that you’ve got to deal with litigation.
But at least there’s certainty. If not of outcome, then at least of, “what happens next.”
Finally, we’re dealing with lawyers representing the private student loan lender. Gone are the cut-rate bottom-feeding collection agents, toiling in anonymity behind glowing computer screens in boiler rooms across the nation, sweating as they contemplate their meager existence and self-loathing between phone calls designed to scare the last few dollars out of your pockets.
Say farewell to the people who have no information about your student loan beyond what’s provided on their screen, powerless to give you copies of your documents or an accounting of how they arrived at the amount they claim is due.
In their place we’ve got lawyers with a direct line to the lender – usually a trust like National Collegiate Student Loan Trust or a “too big to fail” lending institution. They can provide copies of the Note you signed, an accounting of how the balance due is calculated, and proof that the entity suing you is legally entitled to collect the student loan debt.
There is a court system that provides deadlines and procedures for getting to the final decision. A judge to sort through evidence and make rulings.
Certainty.
Accept It – And Deal With It
Now that we’ve got some certainty, we need to accept the reality of the situation. The lawsuit isn’t going to go away, and ignoring it won’t make things better.
Once you’ve accepted that reality, you can deal with it. File a response, invoke the magic words, and be a part of the process.
It may not be fun or easy, but at least you know what’s going to happen next.
Did you know that two magic words can help you defend – and possibly win – a collection lawsuit?
Whether you’re being sued for a private student loan, a credit card debt gone bad, or a bank loan it’s unbelievable that the lender or debt buyer can be scared off so easily.
At least, that’s the sense Ira Glass gives in the prologue to the episode of This American Life that aired on August 15, 2014. Relaying a story by Jake Halpern, Glass tells of a Georgia couple who had fallen on hard times. They went past due on their credit cards and got sued by LVNV Funding – an entity they’d never heard of.
Rather than do what over 95% of people do – that is, nothing at all – the consumers went to court to try to make some sense of the lawsuit. They didn’t necessarily deny that they’d fallen behind on their American Express debt, but they wanted to figure out how LVNV Funding fit into the picture.
Standing before the judge, they demanded that LVNV’s lawyer prove the case and show evidence of their ownership of the debt. In response, LVNV’s attorneys (who had previously not been particularly nice to them) dropped the case.
Just like that.
Here’s a copy of the entire show, by the way. I’m a huge fan of This American Life and recommend that you listen to the entire episode, but if you’re here for the collection lawsuit stuff then you’ll find that at the very beginning.
So What Are The Two Magic Words?
The two magic words to help you defend a debt collection lawsuit more effectively are:
prove itWhen you make the collection company prove the case, that means you want the other side to provide you with the following:
- you signed the application
- the entity suing you purchased the right to collect on the debt
- the balance claimed as being due is calculated properly
- the loan has not been rendered unenforceable due to the expiration of the statute of limitations
Why It’s Magic
It’s only by using these magic words that the creditor is forced to do anything beyond filing the complaint against you.
Failing to utter those words allows a default judgment to be taken against you.
In that way, using these magic words when you’re being sued for a debt will instantly turn the tables on the debt collection lawyer. They go from a position of strength to one of being on the run.
Why The Magic Works
I’ve talked about the fact that debt collection lawyers often don’t get more than a name, creditor, and balance due before starting a lawsuit to collect an unpaid debt. If the creditor is a company that’s purchased the debt, that debt buyer hasn’t gotten any proof in the form of the Note, billing statements or an accounting.
In other words, more often than not the creditor doesn’t have a shred of legal proof to counteract your magic words.
They can’t prove the debt. And that frequently means that if you push them hard enough, they may lose in court.
When the debt collector loses, you win.
Use The Magic Sparingly
You may be tempted to fall behind on your debts and wait for the collection lawsuits to come, if only to beat them at their own game.
It’s understandable, but remember that the result of any debt collection lawsuit is firmly in the hands of the judge. Though their proof may be weak, a judge may see things their way.
And if you’re going to fight the collection lawsuit, you’d be wise to hire a lawyer rather than roll the dice on your own.
Finally, you don’t want to defend the case if you acknowledge that you owe the debt. After all, doing so would be lying.
But for the right situation and the right time, these two magic words are some of the handiest you can find.
Many
students don't realize the scope and extent of the lifelong financial burden
they saddle themselves with when taking out student loans. It is only after
getting into the "real world" that they realize that living expenses
are higher, and after tax income is lower, than they anticipated, making
student loan debt repayment difficult if not impossible.
Some
look to bankruptcy for relief and a fresh start. But all debt is not treated
equally in bankruptcy. Student loan debt is not the same as, for instance,
credit card debt. It is not dischargeable pursuant to Bankruptcy Code section
523(a)(8) except in one narrow circumstance. Specifically, to discharge student
loan debt, a debtor must show undue hardship - a very high bar. Read More ›
Tags: Chapter 7, Western District of Michigan
If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers,... Read more »
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on AllmandLaw.
If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers,... Read more »
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on Allmand Law Firm PLLC.
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