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We have all heard, and perhaps felt, there is a foreclosure crisis. We hear the stories about banks misusing their power to misdirect homeowners into default or fail to assist them even if required by the federal government. What we don’t hear about are the abandoned pets left to fend for themselves after their owners have lost their homes. That thought makes me angry, sad and wanting to bring back corporal punishment. Alright, I realize this might be slightly over reacting, but that comes from my heart.
Of course there are other reasons why pets are abandoned, such as death of the owner. Take heart – there is a group looking out for these abandoned waifs. It is called Lost Our Home. Their vision:
Our mission is to ensure that all pets have loving homes when families face major life challenges. We provide compassionate options when Realtors and the community find an abandoned pet.
Our vision is a world in which all pets have loving homes
and are treated with dignity and respect.
Check out their web site and see how you can help.
The post Pets Abandoned When Owners Lose Their Homes – Help Available appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
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.
- 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.
- 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.
Do you have an order of discharge following the completion of your Chapter 7 or Chapter 13 case? If not, you may want to fix this problem now before it bites you later.Every Chapter 7 or Chapter 13 debtor must attend two credit counseling classes. The first, called the pre-bankruptcy credit counseling course, is required before you can file. Your certificate of completion is your ticket in to the bankruptcy process.Once you have an active case, however, you must attend a second course called a financial management course, obtain a certificate of completion and have your lawyer file that certificate with the clerk of bankruptcy court.This financial management course offers tips about how to set up a household budget and how to avoid financial mistakes that resulted in your need to file for bankruptcy in the first place.If your lawyer does not file this financial management course certificate of completion you will not be eligible for a bankruptcy discharge. Instead, your case will be closed without discharge.Why is a discharge order so important? It represents a formal order from the bankruptcy judge that all debts which can be eliminated or adjusted have been so modified. This order is binding on all state and federal courts and if a creditor attempts to collect on a discharged debt, you can sue that creditor for damages in a contempt proceeding.Equally important, the discharge order serves as a formal notice to the world that your bankruptcy case is officially over and that a future creditor will not be surprised by a reopening of your bankruptcy file.Mortgage lenders, in particular, do not count a “case closed without discharge” as the end of your bankruptcy case. As far as most mortgage lenders are concerned, a non-discharged bankruptcy case is still an open bankruptcy case.Last week, I spoke to a gentleman who is dealing with this very problem.This gentleman had filed a Chapter 7 back in 2010 with another lawyer. As instructed he attended a financial management course and obtained a certificate of completion which he forward to his lawyer.Unfortunately his lawyer was in the midst of some major business problems. This particular lawyer had borrowed money to grow his practice but overextended himself and had to lay off most of his staff. The lawyer ended up filing his own bankruptcy and has since moved out of town.The lawyer received but never filed his client’s financial management certificate. The case was closed without discharge.Fast forward five years and the gentlemen has rebuilt his credit to the point where he is able to purchase a house. But there is a problem – no conventional mortgage lender will underwrite the loan until two years has passed since the issuance of the bankruptcy discharge (note that there are other mortgage problems that did not apply here which have a 1 year post-discharge requirement).The gentleman hired me to reopen his case, file the certificate and get a discharge issued, which I did. The problem remains, however that the date on the discharge order is 2015. In this case, my new client is going to have to wait until 2017 before he qualifies for mortgage underwriting.Needless to say, my client is not very happy with his prior lawyer but there is nothing he can do but wait.The takeaway from all this is clear: if you file bankruptcy, do not wait to find and complete a financial management course, and ask your lawyer for confirmation in the form of a filing receipt that the course certificate was filed.Note as well that there may be other pre-discharge filings you have to make – for example in Chapter 13 case you will need to file a certificate that all child support payments which have come due in your Chapter 13 case were made.Within two to three weeks after your case closes, you should receive an discharge order from the judge. You should keep this discharge order as part of your permanent files because you may need to show it to creditors or other agencies in the future. If you misplace your order your lawyer can download and reprint a copy from the online PACER system.The post Case Closed without Discharge Creates Big Problem for Chapter 7 Debtor appeared first on theBKBlog.
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.
According to a publication of National Association of Student Loan Administrators “NASFAA” the options for students and guarantors of student loans to discharge those loans are slowing expanding. Only time will tell how this will play out for students and guarantors.
GEN-15-13: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings Publication Date: July 7, 2015
DCL ID:
GEN-15-13
Subject: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings
Summary: This letter provides guidance to guarantors and educational institutions participating in the Federal Family Education Loan Program (FFELP) and Federal Perkins Loan Program (Perkins), hereinafter “holder[s],” as they continue to implement U.S. Department of Education (Department or Education) regulations (at 34 C.F.R. § 682.402(i)(1)(ii) & (iii)) (FFELP) and 34 C.F.R. § 674.49(c)(Perkins)), which govern their actions in defending bankruptcy adversary proceedings seeking discharge of student loans authorized by Title IV of the Higher Education Act of 1965, as amended (hereinafter Title IV), on the basis that excepting the loans from discharge would impose undue hardship upon the borrowers.
For more information, please see the attached PDF file for Dear Colleague Letter GEN-15-13.
Attachments/Enclosures:
GEN-15-13: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings in PDF Format, 2MB, 23 Pages
The post New Criteria for Discharging Student Loans in Bankruptcy 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.
The Consumer Financial Protection Bureau (CFPB) took action against Residential Credit Solutions, Inc. for blocking consumers’ attempts to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren’t, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan. Residential Credit Solutions has agreed to pay $1.5 million in restitution to victims and a $100,000 civil money penalty for its illegal actions.“By failing to honor loan modifications already in place, Residential Credit Solutions put consumers through more headaches but in some cases cost consumers their homes,” said CFPB Director Richard Cordray. “Residential Credit Solutions must now compensate its victims $1.5 million as a result of our action.”
- Failed to honor in-process modifications
- Provided incorrect information
- Misrepresented to consumers that they had extra money in escrow and were due a refund
- Forced consumers to waive certain rights to get a payment plan
The post CFPB Takes Action Against Residential Credit Solutions, Inc. For Bad Acts Against Homeowners appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
In this excerpt from the Legal Action television show, Attorney David Siegel talks about the types of debts that can be eliminated in a Chapter 7 case. He also covers the fact that student loans are not typically eliminated in bankruptcy. What type of debts can be eliminated through a Chapter 7 Bankruptcy? A: David+ Read More
The post David Siegel Talks On Legal Action Television Show appeared first on David M. Siegel.
Can I keep my home if I file bankruptcy? Do I have to list the mortgage company? What if I’m behind on the payment? Can I still pay the mortgage payment online? Will they send me monthly statements? How do I know that the past due amounts were paid current? I want to file bankruptcy but I don’t want to lose my home. I don’t want to list that debt.
Homeowners have a lot of anxiety about filing bankruptcy, and for good reason. They worry that by filing bankruptcy they will lose the home. To be sure, there are risks to filing bankruptcy, but the whole idea of filing a case is to protect property and there is no reason a home should be lost or compromised if you observe the following:
- Nebraska exemption laws protect the first $60,000 of equity in your homestead. If your home could not be sold for $60,000 more than what you owe on the mortgage the home is safe when filing Chapter 7. If the home has more than $60,000 of equity do not file Chapter 7. Rather, consider filing the alternative type of bankruptcy–Chapter 13–where the trustee does not have the power to liquidate assets.
- All debts must be listed in bankruptcy. You cannot exclude any debt, including mortgage or vehicle loans.
- Reaffirmation Agreements. In Chapter 7 cases the homeowner can sign an agreement to reaffirm the mortgage debt. Such agreements basically pull the mortgage loan out of bankruptcy. The only real benefit to these agreements is that the mortgage company will continue to report to the major credit bureaus whether the loan is being paid on time, and continued credit reporting is critical if you will refinance the mortgage loan in the future. Reaffirmation Agreements are not used in Chapter 13 cases.
- Banks Do No Automatically Reaffirm Mortgage Loans. The number one frustration homeowners experience after filing Chapter 7 is that the mortgage company stops reporting loan payments to the credit bureaus if a Reaffirmation Agreement is not filed with the bankruptcy court. Banks no longer offer reaffirmation agreements on mortgage loans in most cases unless the homeowner specifically requests one. That means you must call the mortgage company to demand a reaffirmation agreement. You probably will have to call multiple times, perhaps weekly, to get the agreement. Why do you have to pester them? Banks do not view Reaffirmation Agreements as being necessary. Although bankruptcy wipes out the debt, it does not terminate their mortgage lien. So, if a homeowner stops paying the mortgage, the bank still has the right to start a foreclosure whether the loan is reaffirmed or not. For this reason, banks stopped hiring people to process reaffirmation agreements. The bank is fine, but you are not. Without a reaffirmation agreement you will find it nearly impossible to refinance a mortgage loan, even if all payments are made on time. Without the reaffirmation agreement there is no credit bureau reporting, and without that you cannot find a bank that will refinance the loan.
- Keep Track of your Mortgage Payments. It is very common that I handle cases where the mortgage company says they did not get payments due after the case was filed. Most of the time the bank is right, but not always. Sometimes banks apply payments to the wrong account. Sometimes they don’t know where to apply a payment and put the money in a “Suspense Account.” Sometimes homeowners are unaware that the payment has increased and they pay the wrong amount. If the bank says you did not pay you need to have proof of payment, i.e., canceled checks, bank statements, money order receipts, Western Union wire receipts.
- Pay the Mortgage Through Your Bank Account, Not Money Orders. I hate it when clients pay the mortgage with money orders. Why? Because a money order receipt only proves that you bought a money order, it is not proof the bank received the payment. To prove payment you must purchase a “trace report” from the money order company showing the bank actually deposited the money order. Unless you buy a money order trace you have no idea if the bank accepted the payment. Banks lose a lot of checks.
- What if the bank won’t accept my payment over the phone? It is common for banks to cease online mortgage payment access when a bankruptcy is filed until a Reaffirmation Agreement is filed or until a Chapter 13 case is completed. Some banks will not take payments over the phone until the case is over. If they will not accept an online or telephone payment just send them a regular check in the mail.
- What if the bank returns my payment? Banks return payments for three general reasons: (1) They are not aware the bankruptcy was filed; or (2) you are paying the wrong amount; or (3) the amount you are paying does not bring the loan current and they want to make it 100% clear to you that they will not accept partial payment. When payments are returned bring the returned payment and the accompanying letter from the bank to your bankruptcy attorney. We are generally able to get the bank to accept the payment if we route it to the correct department or to the bank’s attorney.
- Keep a chart of your mortgage payments. When banks say that the mortgage payment is behind I have no clue if they are wrong or right until I see a list of every payment made, the date each payment was sent, the date the payment cleared the bank account, the amount of each payment, the check number for each payment, and the bank statement showing each payment made. Keep a chart or a table listing this information while the bankruptcy case is open, especially in those 3 to 5 year Chapter 13 payment plans.
- Homeowners have the burden of proving payment. If the bank says a payment was not made that is assumed by the court to be correct unless the homeowner has evidence to the contrary. For this reason it is very important to keep your bank statements and to highlight each mortgage payment that cleared the bank. Save those bank statements while you are in bankruptcy. Keep a list of all payments made. If you are crazy enough to pay the bank with money orders, keep an organized file of each and every payment made.
Image courtesy of Flickr and Andrey 77 dron.
The Bankruptcy Code is federal law. It affords debtors protections - including the automatic stay and debt discharge injunction - that hold creditors at bay.
The Fair Debt Collection Practices Act (“FDCPA”) is also federal law. It contains limitations on what a debt collector can do when attempting to collect a debt.
Because debts - and more particularly attempts to collect those debts - drive people into bankruptcy, bankruptcy courts are sometimes forced to grapple with questions of how the Bankruptcy Code and FDCPA interact and impact each other. Read More ›
Tags: Chapter 13, Western District of Michigan
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