Hello Paul -

Sometime ago, I was in a program to settle a debt. Later, I was contacted by Arrow Financial (a collection company). Yes, my account was sold. Arrow Financial requested that I pay more than what the other company had me pay monthly.

I couldn’t meet the payments they were requesting nor could I commit to any type of payment considering the current recession and cut back on my hours at work.

So yesterday, I received a call (at work) from some guy stating that he had a claim from Arrow Financial for $4K+. They are requesting to know if I will pay it or if they will need to file a “CIVIL SUIT” against me.

I was stunned and requested the phone number to call this guy back when I was off work. This sounds like some type of SCARE TACTIC. I may have written down a wrong phone #. When I called it, it was a some other type of service.

My question…can they do this? File a CIVIL SUIT against me?

At this point, I’m not sure what to do. Please help!

Char (more…)

With regards to short sales, what are the stats on the delinquency amounts being sought after. Are banks filing against the sellers? Is the government going after unpaid amounts?

Any help would be greatly appreciated.

Justin (more…)

Hello Paul,

Several months ago, my Arizona home, which is also my primary residence, was foreclosed upon.  As it happens, the property was sold back to the lender via a Sheriff Sale.  From what I can see Chase Bank basically used the foreclosure as a means to take the property from their left hand and put it in their right hand.   

I had two loans on my house, a first mortgage with Chase and a second mortgage (HELOC) also with Chase.  I did not ask for the second mortgage, but when I refinanced my first mortgage several years ago, Chase insisted on including a HELOC. 

As has been true with many other homeowners, bad things happened to me, both on a personal and professional level.  So I ended up owing about $450K on my first mortgage and about $150K on my HELOC.   When my home value crashed, I had no means to extricate myself from the situation, even via a short sale and so ended up losing the house in foreclosure. 

All of this was bad enough.  But yesterday it just got worse.  I received notice from Chase that they are now attempting to collect on the second/HELOC. 

I’ve been on several websites trying to figure out exactly what my exposure is in this situation.  There are lots of opinions that run the gamut from “no risk whatsoever”, to “you’re screwed”.   It would be nice to have some clarity about what Chase can do — as well as what Chase is likely to try to do in this situation. 

Any insight you may offer would be sincerely appreciated!

yours truly,

Bill (more…)

Paul,

I don’t know if this area is in your realm of expertise, but perhaps you could advise where to go for free advice.

My daughter and son-in-law closed on a short sale in Nevada in early April, 2009.  The short sale lasted more than a year, with a potential buyer after the house was on the market for one month in 2008.  My daughter and son-in-law asked at the closing if there was anything else they needed to do or sign to make sure this was final and that no lender would come after them after they signed the short sale papers. The realtor and lenders said “No, and that all debt was forgiven.”  At the time of signing, my son-in-law was without a job.  My daughter is a teacher.  They have two children.  It is now mid July, 2009, and my son-in-law (with an MBA) is still unemployed due to company buy out.

They just received a collection agents notice for full payment due on their second mortgage equaling $69,000 from Chase Mortgage.  They were shocked.  My daughter has cried nonstop.  They are VERY HONEST people.

Besides being unemployed, my son-in-law has a serious blood disorder (not AIDS), but haven’t had substantial medical debts for some years.  My daughter sold her prep at school to work straight through the day to use the money to pay for college classes to earn 32 college credits in one year (on top of teaching full time 200 students)in order to get a pay raise….to get themselves out of debt.  My son-in-law has been unemployed twice in the past 2 1/2 years.  ALL of their savings has been depleted.  They have some credit card debt…but most of their debt is student loans.  They are both in their late 30s.

Bottom line, they need free legal advice.  We don’t know if there is such a free agency to help them.  They cannot afford a lawyer, unless he thought they have a suit against their realtor for misinformation…and the lawyer could wait for payment after the suit.  They don’t think they have a case for a suit; they just need free advice how to get out of this. 

If you know the name of such an agency in Nevada, please advise.  

Thank you.

Sincerely,

Chris (more…)

Many consumer practitioners and debt buyers may not realize that federal law specifies a two-year statute of limitations for actions to recover on cell phone and interstate and foreign landline communication charges.  This short limitations period has significant practical import because a large portion of collection lawsuits based upon telecommunications charges are brought beyond this two-year limitations period.  In addition, while the federal limitation does not apply to state-regulated local phone charges, today telephone bills often combine on the same bill charges for local, long distance and cell phone service.  After two years have elapsed, the collector will have to specify which telephone charges it seeks to collect on are just for local service.  This may impose an impossible burden on a debt buyer with limited access to the original monthly billing statements.

47 USC. § 415(a) states that “All actions at law by carriers for recovery of their lawful charges… shall be begun, within two years from the time the cause of action accrues, and not after.”  Note that this applies to all actions, and not just to actions under the federal telecommunications statutes or pursuant to federally regulated tariffs.

47 USC. § 153(10) defines common carrier or carrier as “any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy…”  Thus “carrier” includes cell phone, interstate, and foreign communications.  47 USC 332(c)(1) (A) exempts call phone service from federal regulation under subchapter II, but the provision relating to the limitations period is in subchapter IV.

Debt buyers may argue that cell phone service and long distance service are not subject to federal tariffs.  But this does not change their status as carriers subject to federal law, including the federal statute of limitations.  Tariffing and federal regulation are two different things.

Moreover, there should be no doubt that a shorter federal statute of limitations preempts a longer state limitations period.  This shorter limitations period applies not only to carriers collection on charges, but also to assignees of those carriers, such as debt buyers:

Congress could not have been clearer.  To suggest a carrier could otherwise assign its contract to a third-party debt collector to bypass the requirements of section 415 and bring a state action pursuant to a four-year limitations period, would undermine the express language and purpose of the statute.  Therefore, the clear lanuage of section 415 states a two-year statute of limitations applies.

NCLC Reports, “Debt Collection and Repossessions Edition”, Volume 27, May/June 2009

I have been in Escrow for the past six months. We were approved by a private lender and the BOA through the builder.  We have not been able to lock in a rate and we have not chosen our loan agent yet. We are waiting for a new home to be built.

I recently checked my credit score on creditreport.com and was shocked that my credit score was 587!  I contacted my realtor and she said I am may not be able to get a loan.  I am wondering if it is because of the credit inquiries and because I paid off a an old collection acct. a couple of months ago. 

I have been current will all my credit cards.  My lender mentioned rapid rescoring.  How many additional points will I be able to get with rapid rescoring?  Can I obtain enough so I would be able to qualify for the FHA loan? 

Any information would be super helpful.

Michelle (more…)

Anyone who closes short sales knows that these second mortgages can be tough to deal with.  When the first forecloses, the second can still go after the borrower for the full balance by suing on the promissory note, so they tend to want to hold out for as much as they feel they can claw back on the short sale and their behavior can potentially kill the transaction. 

Readers of the Broken Credit Blog know that I purchase short sales in Florida and throughout the U.S.A.  Call me crazy but I like the challenge of orchestrating a perfect short sale strategy all the way down the finish line.  And along those lines, here’s an example of how to successfully deal with a second mortgage on a short sale.

Bear in mind that the second can offer a full release of liability, a lien release only, or a partial release with signature loan.  The shorting second wants the seller to commit to paying back the deficiency while the seller wants a full release.  Solving this negotiation puzzle takes time and a calculated strategy.  Contrast this with the fact that the normal short sale submission involves a buyer who is extremely anxious and desiring/demanding to close within 30 days of contract.  This is why the short sale and the type of release need to be negotiated in advance of any end buyer.  Here’s a follow up to Estoppel The Insanity:

HSBC Second Mortgage Crummy Short Payoff

Seller Counters By Crossing Off Crummy Terms

HSBC Gives In

I love a happy ending.

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Palisades tries to use an article in Wikipedia as evidence that it is entitled to collect a debt against this consumer.  Funny!

Palisades Collection, L.L.C. v. Graubard, No. L-3394-06, 2009 WL 1025176 (N.J. Super. A.D. April 17, 2009)

I have experienced a company that sells bad debt or (old accounts to consumers) By buying this account and assuming the debt and paying a small amount to settle, this institution reports it clean of lates, you own the account and it’s 7 year history is reported onto your credit. Fast way to rebuild hitting the 35% of your FICO portion of your score.

Passed this through an attorney and he stated it was legal as collection companies buy and sell debt all the time.

I guess Collection companies are tired of chasing debtors and just sell the bad debt to people who need the history. ” Assumable Accounts” is what they are called. Of course removing the lates and reporting it clean is in the settlement contract.

What is your take on this concept? I have tested it and have seen it jump scores 40-75 points. By the way the company is a financial institution.

BAJ

My husband and I are in debt. He joined the military to boost our income and make it possible to repair our credit. We wanted to do the right thing and avoid Bankruptcy.

Before we could negotiate settlements we’ve started getting letters from the IRS that debts have been charged off and we owe income tax on them.

I’ve checked, these same debts were apparently sold after the charge off and are attempting to be collected in full by a third party agency.

My husband leaves for Iraq in a week, I feel like we’ve done all of this for the right reasons but will amount to nothing if we have to pay IRS plus the origional debt. Also, if I do make a settlement with this 3rd party for less than the full amount, will I pay taxes on the difference again this year?

Where does any of this end and why bother avoiding bankruptcy at all if this is legal?

It seems like a self defeating system.

Tracey (more…)