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18

Feb 2017

Navy Fed does the Right Thing; Wells Fargo Makes More Excuses

Posted by / in After Bankruptcy, Weekly Posts /

After Bankruptcy Mistakes: Navy Fed does the Right Thing; Wells Fargo Makes More Excuses.

Everybody makes mistakes. Banks do, too. When you file bankruptcy, the banks you owe money to don’t always do what they are supposed to do. This is a true story of Navy Fed admitting their mistake and fixing it. Wells Fargo making excuses and more excuses

After Bankruptcy, Navy Federal Hit Rob’s Credit So He couldn’t Buy a House.

Rob, not his real name, and his wife Daisy, filed Chapter 13 bankruptcy with me in summer of 2011. One of the debts that was partially paid and mostly discharged—wiped clean—was a third mortgage to Navy Federal for $39,157. The chapter 13 was paid off in July 2014. 

By the fall of 2016, Rob and Daisy are back to good credit. They sold their house to buy a new one. In fact they signed a contract to have a house built.

That’s when they find out Navy Fed is still hitting Rob’s credit. Rob’s Experian credit report shows that years three years past due on now $39,000 to Navy Fed. Rob called and complained to the credit reporting department. He was told the credit report was right. Rob called Jeremy in the Navy Fed bankrutpcy department. Jeremy said he agreed with Rob (!) but he couldn’t change credit reporting. Rob went to the branch. That did nothing.

Finally, someone at Navy Fed whispered to Rob that he should talk to his bankruptcy lawyer.

We Ask Navy Fed to Tell It to the Judge

January 6, 2017 I filed papers with the bankruptcy court. We asked the Navy Fed to come to court on February 2, and explain to the judge why they were still trying to collect a discharged debt. 

It didn’t get that far. I heard first from Jeremy, in the bankruptcy department, and then from Emily, their lawyer. Most importantly, they sent a correction over the Experian, and the other credit bureaus, too.

(Rob wondered why this problem showed up only with Experian. Each credit bureau’s computer programs are slightly different, so a small mistake might show up with one, but not the others. But, I don’t think that’s the problem here. Under the Terri White class action settlement, the credit bureaus are supposed to show your debts are discharged in bankruptcy—even if the creditor keeps reporting them as late. My best guess is that Navy made the mistake with all three credit bureaus, but only Experian let is slip past.)

February 1, 2017, we were able to confirm with each of the three credit bureaus that the Navy Fed loan was now showing “discharged in bankruptcy.” That fixed his Experian credit score, his loan was approved, and Rob and Daisey will be moving into their new house in a few weeks.

As a tangible apology, Navy Fed also agreed to make a small payment—we agreed to keep the amount secret—for Rob and Daisy’s sleepless nights and for my legal work. Although they had given Rob the run around, Navy Fed was all over it when they heard from me. So we did not squeeze them to make a big settlement.

WellsFargo_logo_standard_62

Wells Fargo takes 9 months to fix their mistake, while Veronique drives on expired tags.

Wells Fargo Won’t Let Veronique Renew the Tags on Her Car

Veronique, not her real name, filed Chapter 13 with me in April 2016. We needed to prevent the repossession sale of her car. (Veronique traveled to two or three different job locations every day. She had to have a car.)

Wells Fargo stopped the repo sale, and gave Veronique her car back, exactly like they were supposed to. But, when she went to renew her tags in June 2016, Veronique was in for a shock. Wells Fargo had taken her name of her title, so she couldn’t renew her tags.

This was no ordinary screw up

I thought this screw up could be easily fixed. After all, Wells Fargo has four million car finance customers. They know how to fix a car title. Wrong.

She updated me on June 20. Still not fixed. July my office started calling. No luck. August, Wells Fargo insisted that the title was right. Not true. September they asked for a power of attorney for us. Then they told us it had expired. How could this be? they just needed to correct her car title.

Finally, September 30 we drew up paper to take this problem in front of the bankruptcy judge. Called them again on October 3. “Can’t you get this fixed; we’re suing you because you can’t fix this lady’s car title.” Transferred all over the place. Four hours! on the phone. No results.

Wells Fargo Tell the Judge They Fixed it: Two months Before They Really Do

October 17 2016, Wells Fargo files a copy of what they claim is Veronique’s title with the bankruptcy court. I tell Veronique to take it to the DMV and see if that works. It doesn’t. “Wells Fargo invalidated this title back in April,” we’re told.

On November 8 Wells Fargo’s lawyer went in front of the Judge and told the court that Wells Fargo had done everything possible to fix Veronique’s title. The Judge believed them. (I didn’t.) 

Finally, January 18 2017, Veronique’s title as fixed. She was able to renew her tags.

It took Wells Fargo, the world’s second largest bank, with four million car loan customers, nine months to correct their mistake on Veronique’s car title. 

Wells Fargo Promises a $10,000 Settlement Payment—So Far, No Check

Wells Fargo also offered in January, to pay Veronique $10,000 for her trouble—hours on the phone, multiple pointless trips to the DMV, and driving eight months on expired tags!

We agreed to accept the $10,000. They said they’d send it as soon as we submitted her W-9. That’s been three weeks ago. Still no check. 

 

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26

Jan 2017

Holly Gets Hired after Bankruptcy and Gets a New Credit Card

Posted by / in After Bankruptcy, Weekly Posts /

Holly Gets Hired After Bankruptcy and Gets a New Company Credit Card

Holly was at the end of her rope. She’d been out of work for two years; she kept getting interviews but no offers; and she was feeding partial payments to her creditors, to try to keep them off her back. She believed she was losing job offers because of the late payments on her credit. She was doing everything possible, borrowing from family and friends, to stay close to current.

Finally, she gave up

She came to see me about bankruptcy when she finally got court papers; she assumed she’d never be able to get hired after bankruptcy in the tech field. I told her she would be fine.

After bankruptcy, the opposite of what she expected

We filed Holly’s bankruptcy case September 1; it was discharged—approved and done—December 12. On January 22, she got a job offer. She was offered Chief Technology Officer of the small business. She was excited to get hired after bankruptcy.

But still had a big concern. What would happen when she applied for a corporate Amex Card for business travel. She would be so embarrassed—might even lose her job offer—if Amex turned her down.

Check your credit score, I told her. “It’s 688,” she said, amazed. Of course she got the company card.

Everybody’s case is different.

Everybody’s case is different. Employers look for different things; and your credit score is based on very complicated and secret formulas. But I can say this. For many people, once you’ve started struggling with late payments, bankruptcy can be the quickest (and easiest) way to get your credit score back up.

Many employers are hesitant to hire someone who is struggling financially. They don’t want employees who

Easier to Get Hired After Bankruptcy

When she was dragging around bad credit, Holly got interviews but no offers. She got hired after bankruptcy—in only six weeks.

don’t sleep at night because of bills. They don’t want the sheriff bringing garnishments to the payroll office. (And maybe they don’t want people who are too dumb to take advantage of the laws in their favor.)

That’s why some people find it’s easier to get hired after bankruptcy. 

 

For most people, bankruptcy works.

Every month I see people who have put off bankruptcy for years in order to “protect their credit.” They aren’t protecting anything. Like Holly, they think they are “protecting their credit” but actually just making things worse.  

 

 

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14

May 2016

Keep the Car In Chapter 7 Bankruptcy

Posted by / in After Bankruptcy, Weekly Posts /

Keep the Car In Chapter 7 Bankruptcy: What Are your Choices?

When you file Chapter 7 bankruptcy, you are “in the drivers seat” with some choices on how to keep the car.

One choice is to give it back.

One choice is to give it back.  Especially if you have a terrible interest rate on the car—and if you can put your hands on a junker—give them the car back. You are supposed to give the car back six weeks after you file your bankruptcy case. That gives you time to figure out another way to get around.

(Finding another way to get around is NOT going out and financing a car right after the bankruptcy. You’ll find car dealers eager to put you in a car at 24%—that gets you right back into financial trouble. But if you have a friend or family member who can give or lend you a car for a year or longer, you can then find some good financing deals. You can read about Alice, who got a 4.76% a year after bankruptcy. People who have a friend or family member who knows a lot about cars, also have good luck buying a car for cash, through a site like EBay.)

You can keep up the payments and keep it

Except for the special problems with Ford and Credit Unions, you can keep up the payments and keep your car. For most people, this is the best choice. No paperwork is required, you just need to be sure to make the payments on time. If you get late, they won’t call and yell at you. (That would violate the bankruptcy discharge.) They will just come and get the car.

Since they don’t want to violate the bankruptcy law, most car finance people will stop billing you. You need to pay them on your own. Honda Financial Services has a good set of instructions. And here are sample instructions from USAA. Making the car payment will be like paying the rent—you gotta remember.

You can redeem your car.

If you owe more than your car is worth, but really like your car, you can redeem it. You can keep the car by just paying the book value. (Book value under the 2005 law is what you’d have to pay to buy it.) There are some honest lenders who will finance that straight out of bankruptcy.  One we used is called 722 Redemption. If you know your car is in good shape, this can be the way to go.

But you now have an after bankruptcy car loan. If you pay it, you are building up good credit. If you don’t, you are building up after-bankruptcy bad credit. You really don’t want after-bankruptcy bad credit.    

You can keep up the payments and change your mind later.

Keep the car

Suppose a year later, your car has mechanical problems. You can change your mind and give it back.

The good thing about keeping up the payments is, down the line you can change your mind. Suppose a year later, the car has mechanical trouble. You can give it back without owing anything and without damage to your credit.

Suppose a year from now, your uncle offers you his car. You can give the old one back, without owing anything and without damage to your credit.

Suppose two years from now, your credit union will offer you a car loan at 3.9%. You can give the old one back, without owing anything and without damage to your credit.

People often ask me, how long do I have the option to give the car back? My answer: Until it’s paid for. Once it’s paid for, you can’t give it back.

Is there any paperwork? None. Just call and tell them to come and get it. Or, stop paying and they will come soon enough.

Can I keep the car without making the payments?

The short answer is, No, you can’t keep the car without making the payments.  

At least, you can’t keep the car–unless the car finance company never bothers to come any get it.  Sometimes they never bother. If the car will bring good money at a car auction, they are going to come and pick it up.  But recently, a couple of people have told me nobody ever came and got their cars. Those were cars with about a hundred thousand miles on them–not junkers. But the credit union, in both cases it was a credit union, never picked them up.

So, you might get lucky. 

Can I reaffirm the car loan?

There are reasons why some people need to reaffirm car loans with Ford or with Credit Unions. Except for them, reaffirming a car loan is not a good idea.

The car loan people want you to reaffirm—because it benefits them, not you. When you call, they will tell you your lawyer should have reaffirmed—because it benefits them, not you.

Under the law, the judge will not approve a reaffirmation, unless I sign off that it’s a good idea. 

I don’t think it’s a good idea. So I’m not signing off. So the judge is not approving it. (The judge can, and often does, turn it down even if a lawyer signs off. Which I don’t.) 

I explain more on that, here. 

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES