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Apr 2012After Bankruptcy: Suing Navy Federal
Posted by Robert Weed / in After Bankruptcy / 26 comments
We sue debt collectors and creditors a dozen times a month for doing illegal things to our clients–before bankruptcy or after bankruptcy.
We don’t make a lot of money doing that. But I think big companies can act like small children–they do what they can get away with. I don’t let them get away with much when it comes to my bankruptcy clients. That’s part of my job as a lawyer.
Bankruptcy Lawyer Mark Sullivan beat Navy Federal in court, when Navy Fed claimed their collection calls were “merely administrative.”
Most times, once we sue them, they apologize, and send us a check; and we agree not to bad mouth them. (I can’t write about those.)
Last year, March 2011, Navy Federal decided to fight us. (Navy Federal is my least favorite financial institution; and I may be their least favorite bankruptcy lawyer.)
They had continued to call my client–Jennifer–after she filed bankruptcy the end of February, 2011.
Jennifer never actually talked to them. They just left messages on her phone. A total of 16 voice mails over the space of a couple weeks.
Making collection calls after the bankruptcy is filed, violates “the automatic stay.” The stay tells the whole world to stop “any act…to collect” a debt from the person who just filed the bankruptcy.
I asked Mark Sullivan, the top lawyer in my Sterling office, to go after them. And he did.
Navy Fed argued that they were not trying to “collect” a debt. That the “purpose of the calls was merely administrative.” (The person who claimed the calls were not collection calls was a collection manager at Navy Federal. I thought that was pretty funny.)
Mark made short work of them at trial last fall. Bankruptcy Judge Robert Mayer awarded $500 in damages to Jennifer. (Different judges in different parts of the country would have gone higher.)
After a second fight, the Judge also awarded us $2585 in attorneys fees and costs. That spilled over into January.
Just last month, Navy Fed wrote us a check. The check cleared the bank.
The whole fight took 13 months. It was worth it.
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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.
Amber
Navy Fed is a chronic offender in the Hampton Roads area as well. They like to claim that they did not get notice of bankruptcy whenever we have to call them, even though they voluntarily signed up with our court to receive email notifications, and we can look at PACER and see the court’s own certification that Navy Federal was emailed at their address of choice.
Those could be human error… a suspicious lot of oversights… but I’m still angry at them about an incident in which one of our more impressionable clients was manipulated by a Navy Fed representative who certainly did know he was in bankruptcy into voluntarily repaying a debt he did not have to (and could not afford to), because she convinced him it would be a good idea.
So yes, your story made my day.
G
Thank you for this story. I had been with Navy Federal for over 30 years. The day my bankruptcy hit the filing, they shut down electronic access to my account. I was told that electronic access was a privilege and that I would have to come in personally for any banking. A member organization? Not in my book!
ST
I am currently in Chap 13 through Illinois. I have lost two vehicles to insurance claims. What the trustee says I owe to what Navy Federal states I owe is significantly different. Right now I am waiting a 3k difference since Oct 2011 in my favor.
I challenged the same issue in a previous insurance pay-off and was told they were right.
What happens is Navy Federal likes to claim interest as if the loan was not paid off. If you do not challenge them they will keep the money. They are dragging their feet and if my lawyer doesn’t do something soon, I will be suing him as well.
Just want to put out there to be very suspicious of Navy Federal Credit Union. I was a member for 9+ years as well.
r/ ST
Robert Weed
ST
Thanks for your comments. I often see Navy Federal push to the very edge of what the lay allows.
Linda
We have been stuck with NFCU for 25 yrs. All these stories ring true. We still receive calls now for arrears that were to be paid by my bankruptcy in 2008. Once again they have place a bldg. Into foreclosure for a debt paid in that old bankruptcy because they are missing money?? They have placed money into a suspense account, unapplied to our mortgage specifically to force this situation. They are intentionally malicious and deliberately violate privacy laws. This is where a real class action lies!
Robert Weed
Linda:
Thanks for sharing. I hate them, too.
Dan
I was a proud member of NFCU for over 25 years; until the day I needed them to work with me – I entered into Chapt 7, and they kicked me to the curb faster than a Seaman Recruit headed for liberty! It’s been almost three years since my Chapt 7 was finalized, I called them today to try and re-establish some kind of relationship. They said I was ineligible to be a member (but yet I still have a savings account there – go figure) since NFCU took a loss during my BK. I agree with “G”, they are NOT a member organization; they could care less about their members – they are just as greedy as the rest of the banks.
Robert Weed
Dan:
Sorry you had that experience, but YEAH, that’s Navy Federal.
Taisha
I am considering Chap 7 at this time. I have a credit card and a personal loan with Navy Federal both totaling 5200 I would like to add. I also have my home finance through Navy Federal. After reading reviews on Navy Federal and bankruptcy I am very nervous about this. Can they take my home if I file Chapter 7 on the credit card and personal loan?
Robert Weed
Taisha:
No–being Navy Federal they would if they could but that’s illegal. They can’t tie in your other loans to your mortgage.
Taisha
Hi Mr. Reed
I talked to an attorney yesterday about filing Chapter 7. He said that Navy Federal has some kind of cross collateral clause, and because my home is financed through them that they may try to add the credit card and signature loan that I have with them to my mortgage pay off, is this true???? Can they do that???
Robert Weed
Taisha:
Wrong. Navy Fed is allowed to tie your credit card and signature loan to a CAR loan, or something like that. But they can’t tie it to your mortgage.
Danielle
I also run into the cross collateral situation. I got divorced in 2008 and my ex-husband and I had to keep some loans in both of our names. With Navy Federal Credit Union…I have a car loan, credit card joint with my boyfriend and home equity loan and my ex-husband and I are on the car loan and home equity together, but he also has a separate credit card as well. He stopped paying on everything on his end even the home equity in which I am not paying for because I signed the home over to him and he was suppose to re-finance the home equity in his name solely, but I also run the risk of his other loans not being paid. Well the vehicle was given to me in the divorce, but now I need to file bankruptcy because of my ex-husband not paying the house loans again so I don’t want to be responsible for it since taking him to court would cost more than if I were to file a chapter 7 and start over. I want to keep the vehicle since the title is solely in my name only, but I run the risk of paying off the vehicle and not getting my title. Can they keep the title of the vehicle if I pay it off in my situation?
I will be paying the credit card even after the bankruptcy because that is in my boyfriend’s name so it has to be paid anyway. Can I keep the vehicle and pay it off without worries of my ex-husbands side of the loans? I can with hold paying all my debt except the home equity because I am not paying for a house or loan for the home equity when I don’t live there and it was court ordered my ex-husband pay these things.
Robert Weed
Danielle:
Obviously you are tangled with Navy Fed in a lot of ways, and I’m not sure I’ve got them all. But I think the key is this. Navy Fed cannot tie a mortgage loan to your car. They can tie a credit card to the car but not the mortgage loan.
If that answers your question than I think you are ok to do what you are trying to do. If I missed something–we’ll you really need to spread it all out in front of your lawyer.
Danielle
What if my name is the only one on the title of the vehicle, but the vehicle loan is in both my ex-husband and my name me as the co-signer he is the main one on the loan, but title is only my name. If my ex-husband is delinquent on his debts even a credit card can they still keep the title of the vehicle even though my name is the only one on the title as ownership?
Danielle
Or also what if I refinance the vehicle elsewhere or sell it to a private party, does NFCU have to release the title to the new owner?
Amanda
My husband and I only have one payment left on our chapter 13 plan. We had a credit card and personal loans with NFCU that were unsecured and therefore not included in the repayment plan. We did, however, have a used car loan for a car that is now 18 years old. With only one payment left on the plan, we now find out that NFCU never filed a claim against the vehicle. They have also never repossessed it. According to our atty we have two options: 1) File a claim on behalf of NFCU that will extend the payments on our plan, pay the debt for the car, and force NFCU to send the title to us after our case is discharged or 2. Finish out the plan as is, receive our discharge, and then attempt to negotiate a settlement with NFCU on our own to get the title to the vehicle. Any thoughts?
Robert Weed
Amanda:
Your lawyer certainly knows more about your local procedures than you or I do. And you know better than I do how important the 18 year old car is or isn’t to you. So you are seeing your choices real clearly. I can’t add much, except to say, good luck.
Leliu
I am also tied to this horrifying institution if you want to call it that. The car part of the loan which is on a different accounting string on my credit report shows my car will be paid off in July 2015. I want the title to my car and they said I could not have until the credit card was paid off. These sub humans are ridiculous and a dead end to any help. I want to restructure the loan to pay off the credit card after the car part is paid for. The loan payment is $460 a month for the CC and car. I do not want to pay them $460, just the $125 as it was before cross collateralization. This should be illegal to hold the title after the vehicle is paid for. How do I get out of this mess? The are by far the WORST CU to deal with ever and not recommended by anyone. Cross Collateral Loans should be Illegal~
Robert Weed
Leliu:
Credit Unions get away with a lot, because they are supposedly “owned” by their members and so they supposedly would never do the low down things they do.
Thanks for posting.
Shelly
After my petition was filed my husband got a letter in the mail stating they were aware of the bankruptcy being filed , well they then decided they’d charge it off on my report, I’m an authorized user on his account. So now it sits on my account saying I owe over $7,000 on something that was included in bk.
Is this illegal? I thought once the petition is filed they cannot sell, or charge off accounts?
I’d like to stick it to them, they’ve been a terrible bank!
Robert Weed
Shelly:
Yes, we hate Navy Federal. The problem of credit reporting for authorized users is a real headache. I tell my clients to cancel those authorized users, to avoid that problem.
I think what you have to do is dispute it with each credit bureau, saying this is not my account, I never used it this is not my account. That usually works.
Your rights on credit reporting run to the credit bureaus, not to the creditor, so its pointless to argue with Navy Fed.
Erin
We are unsure if we will need to file bankruptcy because of Navy Federal. We purchased a home in 2005 through another lender, but Navy Federal used it’s inflated “online appraiser” to give us a 2nd and a HELOC which we used to improve the home. Following the market crash in northern VA (and nationwide), 10 years later the home is STILL not worth what we owe. NFCU had previously modified our payments to a reasonable rate which we paid faithfully for years. Suddenly, they DOUBLED the payments, which could not possibly be managed. So we asked them to put the loans back to the manageable payments by way of another modification request. They responded with a demand that we short sell the home. This is not an option for us. They have since CLOSED the two accounts, which are both showing a balance due. As they are in the second lien-holder position, can they foreclose on us and force us to leave the home? Or will the debt become a lien that must be repaid when we do sell the home? Or are we just waiting for the other shoe to drop and we should quickly file for bankruptcy protection? With so many stories about NFCU, we just don’t know what is the right thing to do.
Robert Weed
Erin:
I’d need to know the details in order to know what to do, too.
Besides the exact legal details, I’d want to talk about your family. How long do you plan to stay in this area, in that house? How old are the kids?
But besides being worried about whether they can, or would, actually foreclose you on the second mortgage, you have another problem. If you do nothing, they will sue you and garnish you for the total amount of the second. You really need to talk to a local bankruptcy lawyer.
Lela
I filed Chapter 7 in Nov 2015, 2 months after I got a personal loan with collateral (my vehicle) with Navy Federal, I currently owe them $4700 on the loan and while I signed a reaffirmation agreement with them (which was denied by a judge) but I have been current on my loan payments which I intend to keep up because it’s my car.
Can NF now close out the loan and take my vehicle even though I am current? My actual car value is about $9000 and my Chapter 7 was discharged last month.
Robert Weed
Lela:
the 2005 bankrutpcy law said that lenders can pick up cars even when you are current, UNLESS you sing a reaffirmation. MANY judges around the country have said that your are PROTECTED if you sign the reaffirmation–even if the judge then turns it down. I don’t know what your judge has said about that. (And what Navy Fed thinks your judge has said about that.)
Maybe the judge was doing you a favor by turning down the reaffirmation. A lawyer where you are would know better–or at least have an informed guess.