May 31, 2008


Filed under: Credit Cards,Mortgage,TILA

Hello Paul,

Wonderful service you provide. The information on your site has saved my house and my sanity!

I have been researching bits of the TILA act and it seems that it applies to many loans–not just ones that are secured with property.

My question: I believe that people can also rescind credit card loans–again within the three year period. From what I’ve found, TILA also covers loans under $25,000 that don’t have to be attached to ‘property’. It also covers leases, I believe.

Do you know of anyone who has rescinded a credit card loan? Do you know of how the process would go? I believe that those with high rates would benefit from having their loans lowered and they could probably even do this in bankruptcy.

Leela (more…)

Florida – Truth in Lending Act – Open Letter

Filed under: Bankruptcy,Short Sale,TILA

Dear Florida Consumer Lawyers,

I run a free consumer website dealing with credit issues on the internet; it’s my volunteer work.  The site has become extremely popular and is the #1 credit blog by Google’s standards.  As a result of my work, I interact with thousands of homeowners in the State of Florida and I’m writing this letter to you because of your expertise with the Truth in Lending Act.

Attached to this letter, please find a Broken Credit Blog article that was written from a non-attorney’s perspective on April 19, 2008.  The implications of the article seem to be that the failure to include the difference between the title insurance re-issue rate and the HUD-1 actual cost for title insurance results in an under-disclosed PFC.  For borrowers going through foreclosure that amount would easily exceed the $35 tolerance.  I believe tender could be made through a pre-arranged short sale (inclusive of attorney’s fees) or bankruptcy.

I’d like to refer clients to Florida attorneys knowledgeable with the Truth in Lending Act and I am not looking for anything in return.  Please advise whether this is something that you might be interested in discussing or if I am otherwise off base in some way (which is entirely possible).  In any regard, thank you for all that you do.

Credit Score Post Short Sale

Filed under: Credit Scores,Short Sale

My husband and I are having to do a short sale on our home after he was laid off from his job last December, couldn’t keep with the payments, and owe more than it’s worth. We have a buyer, the bank has approved the sale, and we are supposed to be closing on June 16th.

My question is, we both had 750 credit before this all happened. We’ve managed to pay off all of our consumer debt except our car, so that’s the only thing left with a balance. What can we do now to boost our credit score after the short sale is complete?

Rachel (more…)

May 30, 2008

National City Bank v. Hill

Filed under: Bankruptcy,Mortgage

Ok, here’s the deal.  Banks made tons of loans while ‘looking the other way’ and not verifying income with a little bit of security in knowing that if the loan goes bad, the loan can’t be discharged in bankruptcy because the bank can claim the borrower committed fraud.  And now we find this recent ruling in re Hill that has the banksters shaking in their boots:

“While the Court finds and concludes that the debtors made a material false representation concerning their financial condition to the Bank in October 2006, with knowledge of its falsity and the intent to deceive the Bank, the Court finds and concludes that the Bank’s nondischargeability claim under § 523(a)(2)(B) must fail.  The Bank failed to prove that it reasonably relied on the Debtors’ false representation concerning their income, as set forth in the October Loan Application.  As a result, the Bank’s claim has been discharged.  Judgment will be ordered accordingly.”

In re Hill (National City Bank v. Hill), United States Bankruptcy Court, Northern District of California, Case No. A.P. 07-4106 (Filed May 23, 2008)

One Dispute Letter?

Filed under: Credit Repair

Paul I have a question that I would like to ask you. 

Is it better to dispute one item at a time or should I dispute all items at once?

Thank you for your seminar, I learned some valuable info on the process of debt validation and re aging.

Lashawn (more…)

May 29, 2008 is a Free Site

Filed under: Credit Repair Seminar

How can I correct my credit report/ score for FREE?


Stopping Foreclosures

Filed under: Foreclosure

An article authored by Patrick Pulatie

Chapter 13 Bankruptcy

Much has been written about the foreclosure problems facing many homeowners today.  But how effective are the programs and which one should a person choose? I offer this as the topic today because there is much confusion about these programs and what is entailed. I will discuss the characteristics in basic and random order.

Chapter 13 Bankruptcy is still the most common attempt made to stave off foreclosure. With the filing, all foreclosure proceedings are put on hold. It is a legal action in which all debt is organized into what is hoped to be an affordable monthly payment for the homeowner. All consumer debt and taxes are lumped together to create one monthly payment for sixty months . Included in this amount will also be the mortgage amount that is in arrears. it is hoped that this new monthly payment will reduce monthly outgo and solve the person’s financial problems.

The problem with going this route is that one still must make the current mortgage payment, plus the bankruptcy payment. It does not address the mortgage rate or terms. So if a person has an adjustable rate mortgage, then that rate can continue to adjust up or down. So a homeowner still can face changing payments.

Also, lenders include many “junk” fees in the foreclosure process. Unless you have a sharp attorney who understands this and also how RESPA and TILA violations can be used in the bk process, you can be at a big disadvantage.

A large number of people using this method will end up losing their homes anyway.

Loan Forbearance

Forbearance is a popular method promoted by lenders. It is a process where the lender will “workout” a new payment plan for you to catch up. It involves a higher payment for many months to a couple of years. Occasionally the lender will add payments to the end of the loan term. 

A “wrinkle” on this plan is one I have seen from Wells Fargo. They will adjust the payment for a short period of time, in this case four months. At the end of four months, the borrower must come in with a large lump sum payment, again in this case $40,000. If they cannot pay this amount, or they miss one payment, the forbearance ends and the foreclosure picks up where it left off.

As you can see, forbearance does not address the issue of increasing interest rates, etc. This is a plan where the homeowner is likely to fail.

Loan Modification

This is a popular program. With it, the lender will negotiate new terms on the mortgage, reducing the interest rate and payment. However, there are major problems with this program.

Lenders tend to not work with people who are not in default or late on payments. In fact, they often tell the homeowner that they must be behind on the mortgage before they can be processed for the modification. So the borrower allows himself to get behind on the mortgage and then the mortgage company starts to process the modification. But there is no guarantee that it will be approved, which is often the case. Now the borrower is behind, no modification, and they have trashed their credit. Unfortunately, I see this time and again.

Law Suits

I refer to this as the “Nuclear Option”. In this program, the homeowner goes to an attorney who will check over the loan for violations of RESPA, TILA, fraud, deception, and other issues. (This is usually done by outside people familiar with the loan process.) Based upon the findings, the lawyer will determine if a case exists for filing lawsuits.)
At that point, a retainer agreement is executed and the lawsuit is filed. It will usually include a Restraining Order stopping the foreclosure on the home until settlement is reached.

The issues with this method is that it is very costly. The retainer can involve payment of the initial fee upfront, or monthly payments. This can be quite overwhelming for many homeowners.

Also, while the case is ongoing, though the homeowner is not making his mortgage payment, he must have a bank account where he is depositing the monthly payments and not using them. This is interpreted by the courts as a sign that the lawsuit is being done in Good Faith.

The lawsuit must have an End Game to it. There must be a plan on how to end. Most will involve settlement whereby the loan will be rescinded or modified. Very few actually go to trial due to the high cost of litigation and lender willingness to settle out of court rather than risk trial in this current environment of the housing crisis. If there is no realistic End Game, their is no lawsuit.

The other issue is that the homeowner must understand that he is “going to war” against the lender. Lawsuits are not an easy chore. They are time consuming, stressful, and expensive. Many homeowners start a suit, only to back out midway into it because of the cost and the stress.

These are the most popular methods of stopping foreclosures. They all do have their drawbacks and risk. Nothing is ever guaranteed in these negotiations. The most important part for deciding which method to use to stop a foreclosure is to take time and carefully evaluate your options. And, when you decide which method to use, to commit to going through with it, thick and thin. It will be frustrating and time consuming, but it can be effective.

(Patrick Pulatie is currently a Loan Officer, Loan Examiner, and Court Expert Witness. Please feel free to contact him with any questions you might have about your options. He will be more than happy to answer your questions.  He can be reached by email at or by phone at 925-522-0371.  BTW, He is not an attorney and does not give legal advice.)

Visit Patrick’s website at

Don’t Fall Asleep on the Junk Debt Buyers!

Filed under: Judgment,Wage Garnishment

I have been sued for a debt that I disputed on my credit report.  The debt could not be verified and was removed from my credit report.  They have now started to garnish my wages. 

Can they sue and garnish my wages even though the debt could not be verified?

Lawrence (more…)

May 28, 2008

Michigan Deficiency Judgment

I have an 80/20 loan through 2 different lenders. 

I am 2 months behind and have lost one rental property through foreclosure. 

My questions are:  For a short sale do I need to keep making the payment until the house sells? 

2)What is the statute of limitations as far as deficiency in the state of Michigan? 

Finally, will a deed-in-lieu keep me from deficiency problems and can I get that with an 80/20 loan? 

Thank you SO much!

Doris (more…)

May 27, 2008

Violation of the Discharge Injunction – Boo-Yah!!

Filed under: Bankruptcy,Credit Reports

When a creditor falsely reports unpaid balances which are stayed or discharged by a bankruptcy, it impermissibly attempts to collect that debt in violation of the automatic stay of 11 U.S.C. § 362 and the discharge injunction of 11 U.S.C. § 524. See Russell v. Chase Bank USA, N.A. (in re Russell), 378 B.R. 735, 743 (Bankr. E.D.N.Y. 2007), Torres v. Chase Bank USA, N.A. (In re Torres) 367 B.R. 478, 486 (Bankr. S.D.N.Y.), Lohmeyer v. Alvin’s Jewelers (In re Lohmeyer), 365 B.R. 746, 750 (Bankr. N.D. Ohio 2005); Carriere v. Fed. Credit Union, Case No. 03-1894, 2004 U.S. Dist. LEXIS 14095, at 20-23 (W.D. La. July 12, 2004); In re Burgess, Case No. 05-12813, 2007 Bankr. LEXIS 142, at 4-6 (Bankr. E.D. Va. Jan. 12, 2007); Norman v. Applied Card Sys., Inc. (In re Norman), Case No. 04-11682, Adv. No. 06-1133, 2006 Bankr. LEXIS 2576, at 3-5 (Bankr. M.D. Ala. Sept. 29, 2006); Smith v. Am. General Fin. Inc. (In re Smith), Case No. 00-02375, Adv. No. 05-9085, 2005 Bankr. LEXIS 2481, at 6-7 (Bankr. N.D. Iowa Dec. 12, 2005).

In re Fox 3:05-bk-12267-JAF (Bankr. M.D.FL, May 8, 2008)

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