My question is 2 1/2 yrs ago my jeep Cherokee was reposessed because I was in jail for a few months. My original loan was through wells Fargo and has been sold to arrow acceptance. I am wanting to by a house now and my fico median is around 680. 

The loan has been turned over to a law firm who says nothing will be reported on my credit until it is paid in full. They threatned to sue me but I am a merchant mariner and it is impossible to place a garnishment or attatchment against my wages according to u.s.c. 46 part 11109. I told them this about a year ago and they have not responded back.

My real question is should I use a dept settlement company to pay them off or should I just say screw them. My credit has already taken the hit for the repo but I don’t know if a settlement would further hurt my score.

The owed balance is $10500 they said they would settle with me for $8500. I think this is hi being that they in no way can garnish my wages what amount should I be looking g to settle at? 

Thanks for any help or advice.

Taylor the towboater

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Hello Taylor,

Wage garnishment is only one means by which collection on a judgment can be pursued.  A judgment – if it gets to that stage – can also lead to garnishment of bank funds or attachment to any other asset owned.

I’d guess that balance could be settled for half of what was offered, but bear in mind that from a credit reporting standpoint – if the law office is collecting and nothing is on the credit save the original tradeline which shows a $10,500 balance, then settling this 2.5 year old account without a pay for delete will probably reduce the credit score.

Read: Dana’s Story

Thanks for the questions and hope this helps.

Paul

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

I have a loan on a 2007 motor home for $134,000 that I can not afford to keep making the $1002 a month payments on.

The problem is that the RV industry and the economy have made the value on this motor home maybe $75,000 now.

If I do a volutary repossession or if it is repo’ed in Oregon which is a anti-deficiency judgement state will my other assests like my car or my Certificates of deposits be liened on.

What can I expect to happen?

James

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Hello James,

Unfortunately, the anti-deficiency statute does not apply to motor homes.  However, if the creditor commits a breach of peace in repossessing the motor home or the sale is not conducted in a ‘commercially reasonable’ manner then they may be barred from collecting the deficiency. 

Read: Oregon Deficiency Judgments, I’m In Deepo With A Repo and Dana’s Story

Thanks for the questions and hope this helps.

Paul

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

(singing)

East bound and down, loaded up and truckin’,
we’re gonna do what they say can’t be done.
We’ve got a long way to go and a short time to get there.
I’m east bound, just watch ol’ “Bandit” run.

Reginald

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Hello Reginald,

A voluntary repo will cause damage to the credit to the point that qualifying for a mortgage refinance in the next year will be difficult to impossible.  Additionally, the car will be sold at auction and the creditor may seek a deficiency judgment to pursue garnishment of wages or bank funds.

A voluntary repo isn’t much of a solution unless you were able to obtain a written agreement with the creditor to settle the loan balance in full and redact the tradeline – now, while that would not be impossible; nevertheless, it would be rare/unusual.

Interestingly, there are rules of repo and if the creditor breaks them, then a deficiency can be fought and prevented defensively.  I’d suggest keeping the car if at all possible.  A voluntary repo is probably not the solution you’re looking for.

Read: Did You Receive Your ‘UCC Compliant’ Repo Notice?, I’m In Deepo With A Repo & Buy Here Pay Here Car Lot – Judgment

Thanks for the questions and hope this helps.

Paul

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

We will have the money to pay off most if not all his old debts very soon. My question is where to focus our efforts for a 10 point increase.

He has about 4 misc accounts (all charge offs) that amount to about $1200 total and an auto repo that is for $16,000 (the amount owed when it was repo’d about 2 years ago).

We never recived any paper work on the repo telling us when it was sold or for how much. We live in California so the statue of limitaions in 7 years (I believe).

We do plan on settling up what is owed eventually. I am pretty sure we can get the small debts to pay for delete.

Is it possible to get a pay for delete on the auto repo? If not what is our best action.

Thank you for your help!

~Kelly

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Hi Kelly,

I believe California statute of limitations for the auto loan is four years.  Keep in mind, there is a difference between statute of limitations and credit reporting limits.

Pay for delete is what you want, because paying the collection in the absence of a pay for delete may likely reduce your credit score.

The documents that you’ve listed regarding the repo would be a means of challenging the repo should the creditor attempt to obtain a deficiency judgment through the Court.  Incidentally, the UCC 9-210 allows the consumer to request an accounting on a car loan; failure of a creditor to comply with its provisions results in an additional $500 to the consumer. 

And along those lines, I’d look into the FDCPA, FCRA, and California’s statutes for the long haul.  In the short run, one pay for delete should get you ten points right away. 

Thanks for the questions and hope this helps.

Paul

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

So, this morning I check my bank account and my paycheck of 650.00 had been deposited as usual.  A couple of hours passed and I went to pay my electric bill and all of my money was gone from my checking account. 

These collectors from an attorney’s office told me that they had every right due to a judgement against me. They did not garnish my wages, they took it directly from my account. 

I made payment arrangements, and they asssured me this would not happen again, as long as my monthly payments were payed on time. 

I guess my question is, can they do this??  Can they take everything I have from my checking account, and leave me without any money for anything at all???

I don’t even know how I am getting to work for the next two weeks.  Please help!!!

Bethany – Hopeless in Kentucky

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Hi Bethany,

It sounds like a default judgment was entered against you.  It appears Kentucky CR 60.02 permits a default judgment to be challenged for a period of one-year after entry of judgment by debtor filing a motion for reasons including (among others) “mistake, inadvertence, surprise or excusable neglect”.

If the motion is granted then the case would be reheard.  There are rules of repo that a creditor must follow and if your case is reheard then it may be possible to challenge on that basis.  For example, for a deficiency judgment to be entered, the sale must have been completed in a ‘commercially reasonable’ manner.  If the consumer challenges on that basis then the burden of proof is on the debt collector to prove.  This would involve producing required notices to the consumer, evidence the sale was publically advertised, timing of the sale and the actual method of disposition.

In the meantime, you may want to look into prepaid debit cards.

Thanks for the questions and hope this helps.

Paul

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

First, the testimonial. My credit score was doomed until I stumbled upon this site about 10 months ago. I used the abundant advice on this site and have repaired my credit so much so that I’m well within reach of approval for a mortgage to purchase my first home!! The pay for deletes, references to consumer rights using exact verbiage, and the ever helpful green cards, have been a credit-saver. I CANNOT THANK YOU ENOUGH!

Now, for the question. I had a vehicle on my report for about $12,000 that went into default back in February of 2002. It was repossessed, but wasn’t reported as such. Additionally, GMAC reported the debt twice on my report, with 2 different account numbers, for different amounts, AND they were not reporting the payments I was making on the account. It simply read that the account was seriously delinquent. It goes without saying it wasn’t difficult to get it removed from my credit file since even I didn’t know what account was valid, and GMAC couldn’t verify (sounded like a failure on their part records wise). Also, the statute of limitations shown on my credit report showed the debt would be removed in October of 2008 anyway. So, it is gone.

This past week I received a letter from a collection agency for the full amount of this account attempting to settle for less than the amount owed. Up until now I’d never received a letter from any collection agency regarding this account. I’ve scoured BrokenCredit.com for answers on what to do in this case, but I can’t find anything. I’d like to send the collection agency a letter citing what my rights are and their wrongful collection practices (if they’re wrong at all).

Even more on this issue is the IRS. I received a letter from them back in September stating I would have to pay taxes on the full amount of the debt because GMAC has reported it as income to me. So, I am also paying the IRS. I stopped making payments to GMAC once I received this letter. I sent a letter to dispute this with the IRS along with copies of my payments to GMAC (how can I owe taxes for income on a debt that I’m still paying on?), but the IRS still says I owe taxes on the amount. I don’t want to mess with the IRS!

Can the collection agency really collect on this debt? And am I really up against the wall with the IRS on this?

Oh…if I may add…today, while sending off my final letters and proof to the credit reporting agencies, my local post office informed me of a new way of receiving proof of receipt without the need for the green card. The clerk said to send via Certified mail. On the receipt is the tracking number. Within 3 days of mailing check the tracking number on the USPS website and simply print out the signature. I tried this with one of the past letters I mailed and sure enough! There was the address, date and time of delivery, and the printed name and signature of the recipient. She assured me it was just as good as the green card. Saved me about 20 bucks today! This should be enough…right???

Dana

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Hi Dana,

Don’t confuse ‘statute of limitations’ with ‘reporting limits’. Credit reporting limits are generally seven-years (or 7.5 years from the date of first delinquency) and this is federal law.  The statute of limitations on the other hand, has to do with the length of time with which the debtor is at a heightened risk of a lawsuit and that length of time is governed by state law.  The good news is that it is gone from your credit report.  The bad news is that your payments may have restarted the statute of limitations.

Since it’s impossible for me to be an expert on every state’s statute of limitations, I am going to leave that to you to determine.  If the statute of limitations had expired, then a debt collector cease communication would effectively end the new found (creepy) relationship between you and this debt collector; however, for the remainder of this answer I will assume that the statute of limitations has not run.

Well what have we here?  They are a debt collector and as such are subject to the good ole’ FDCPA.  If this was their first communication with you then within five days of that initial communication, they are obligated to send you your validation rights.  The validation rights should inform you that you have thirty-days to request validation.  I would definitely request validation and, of course, send it CMRRR (call me old fashioned, I like the green cards!). 

You have bad records, they have bad records.  Has this thing been paid off?  Questions, questions…  I don’t know the answers.

The debt collector is barred per the FCRA from reporting it to the CRA because debt collectors are required to use the same date of first delinquency as the original creditor.  If they do report it then that means they’ve re-aged it which is actionable, so I wouldn’t worry about that too much.

The bigger concern would be that they might attempt to obtain a deficiency judgment.  This is why it is important to question whether or not the sale of the car was completed in a ‘commercially reasonable’ manner.  If it was not, then the junk debt buyer is barred from obtaining a deficiency judgment.  Further, if the consumer denies that the sale was ‘commercially reasonable’ then the burden of proof is on the debt collector to prove that it was.  This would involve producing required notices to the consumer, evidence the sale was publically advertised, timing of the sale and the actual method of disposition. 

If it were me, I would demand evidence that the sale was ‘commercially reasonable’ in my debt validation request as well as a complete accounting of the payment history and the original promissory note.  Now a debt collector does not have to provide all of that for proper validation, but I’d be building a case file if they should pursue legal action.

As for the second issue of the IRS and taxes – the easiest solution would be if the insolvency exclusion to debt forgiveness applied.  This would involve filing form 982 with the IRS and if you have $12,000 more debts than assets then there would be no taxes owed on the 1099-C.  If you find that you won’t meet the insolvency exclusion then, in addition to fighting it based on what you’ve listed, also add to that the fact that a 1099-C should only include principal forgiveness (and not interest forgiveness).  It sounds like GMAC is having some accounting issues.  Maybe now that they’ve received $14 billion in TARP money they are a little more cheery.  Nah!  Doubt it!

Read: Debt Collection after a 1099-C, Creditor Document Retention & Did You Receive Your ‘UCC’ Compliant Repo Notice?

Thanks for the questions and congratulations on your progress!

Paul

This author is not an attorney or tax advisor.  This information should not be considered legal or tax advice.  Please consult an attorney for legal advice and please consult a qualified tax advisor for tax advice.

We told them that we would be able to make July’s and August’s payment all at once, by the end of August, from the economic stimulus payment we would recieve.  Our payments were $365. So we would owe them $730. Well right before the end of August two men came to repossess our car. 

We called them and they said it hadn’t been paid in three months.  We called Truepay, which removes money from our bank account and places it with the car loan bank account.  They had went out of business!  We had no idea where our payments went.  They sent our account to Speedpay, another middle man.  But they had no idea about the payments either. We told our bank that we would not make payments until it was settled. 

They then told us that our car was repossessed because my husband had told them we weren’t going to make July and August’s payment, when we said we were going to pay in full.  They even said we were late every month because we made our payments on the 5th and 20th and they didn’t accept half payments and even though they said payments were do by the 27th, they told us that the date varied every month!

The guys took our car and it was sold about a month and a half later.  It was sold for half of what we had left on the loan!  Now we can’t get ahold of the bank to make payment arrangements.  Though we can’t afford them since we had to get another vehicle and pay a high interest.  Its not even as good as vehicle as what we had.  We went from 2006 Hundyaii Sonata to a 2003 Chevy Cavalier.

Even though we agreed that payments would stop until the car was sold, the bank still made the new middle man take out the next two payments.  They said we verbally agreed on them taking them out.  We did get those two payments returned and had a stop placed on the bank and on Speedpay.

Can we do anything about the middle man taking out money?  And what about those half payments that were never posted to their bank?  Was the bank with the loan in the wrong? 

I have two children and one on the way.  My husband is getting deployed soon and we need the money. I am afriad that they will garnish his wages.  Or even take our tax return which i need to pay my student loan that has to be paid.  It feels like we were trapped!

Kimberly

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Hi Kimberly,

There’s a lot going on in your post.  You’d have to talk to your bankruptcy attorney.  Did you sign a reaffirmation agreement?  Did the lender follow bankruptcy procedures with a motion to lift stay and repossess the car?  Also, check your local rules of repo.  You also need to talk to an attorney about a breach of contract for the “middle man taking out (your) money”. 

As far as your husband’s deployment, check into the Servicemembers Civil Relief Act.  You may be able to have the interest rate reduced on the 2003 Chevy Cavalier down to 6% (as well as other debts where he was an obligor or cosigner) and additionally there are protections against execution of judgments against servicmembers.

Thanks for the questions and talk to your bankruptcy attorney.

Paul

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

The notice provided by the lender failed to include a number of requirements found in section 679.614(1)(a) and section 679.613(1), such as whether the sale was public or private, or where or when the sale would be held. The lender argues that if the notice was not in compliance with the UCC, plaintiff had received actual notice of the sale through conversations between her and the director of collections for the lender. The case relied on by the lender to support its argument that the oral notice would remedy any deficiencies in the written notice, Bondurant v. Beard Equipment Co., 345 So. 2d 806 (Fla. 1977), was decided before the legislature enacted the current statutes requiring written notice, and is no longer good law. The court accordingly erred in entering a summary judgment in favor of the lender.

Nor do we agree with the lender’s argument that its unaccepted settlement offer for the full amount of plaintiff’s claim, a practice which is known as “picking off” a class representative, made this case moot. Neither Florida nor the federal courts sanction that practice. Allstate Indem. Co. v. De La Rosa, 800 So. 2d 245 (Fla. 3d DCA 2001); Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004). Reversed.

Jackson v. Southern Auto Finance Company [4D07-3284, Fla 4th DCA, August 20,2008]

Diane

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Hi Diane,

The sale would have to be conducted in a ‘commercially reasonable manner’ for the court to award a deficiency.  According to NCLC’s “Collection Actions” (1st ed., p 76):

“The original secured party will have some difficulty proving that all aspects of a repossession sale were commercially reasonable, including the notice provided to the consumer, the advertising made to the public, the sale’s timing, and the method of disposition.”

Also, if the collection letter was sent by a different company (or even the same company with a different name) than the original creditor, then you may have an FDCPA violation for the threat.

Read: Collection Scare Tactics

Thanks for the questions and hope this helps.

Paul

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

So, now because of our past mistakes we can not get a loan, but we can also not get a credit card.  I have heard of the credit cards where you put the money in and then basically use your money to pay back your money, and I think you get charged pretty big fees for this.  I think it’s called a secured credit card?  Well, I do not have a problem doing this if it will help, my concern is if it will really help, and approx. how long it takes using one of these things before you can get an actual credit card, and then from there how long it can take to raise a credit score.  I read that new credit only acounts for 10% of your FICO score, so could it be years and years before we can ever own our own home. 

Is there any other way to raise my score?  we have always paid our rent, and our utility bills, and our insurance, I feel like we should get some credit for those things.  Well, sorry this was so long, I could keep going, but I am afraid you will just get tired of reading.  Any help would be GREAT appreciated. 
 
Thanks so much, have a blessed day,

Elizabeth

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Hi Elizabeth,

My first suggestion is to listen to our free credit repair seminar.  It will give you the basics on improving your credit score.  As a general rule, you want to take care of the bad credit first before adding new credit.  When I write ‘take care of’, I mean check the accuracy of the credit reporting, were the rules of repo followed, etc. 

There are hundreds of articles that address your situation in the Broken Credit Blog Library.

Thanks for the questions and welcome to the Broken Credit Blog!

Paul