Sports Gambling Comes to Virginia

Posted by Robert Weed / in Weekly Posts /

Sports Gambling Comes to Virginia

Like most people, I’ve noticed that ads for sports gambling have taken over the TV (at least on basketball and college football, which is about all the TV I watch.) Sports gambling was legalized in Virginia April last year and began in January 2021.

Now in October and November, I’ve met two people who each lost more than $40,000 betting on sports in the last six months.  (Neither had a gambling problem before.)

Maybe a couple times a year I talk with people who are considering bankruptcy because of casino gambling at National Harbor.  From where I set, sports gambling is fast becoming a far bigger problem.  

I’m wondering if it takes about a year for sports gambling to suck people in.  A few bets here and there, a little more, and suddenly it’s a destructive, life-wrecking addiction.

That’s good news for bankruptcy lawyers.  But very bad for American families.

 

 

 

Getting Your Mortgage Statements After Bankruptcy

Posted by Robert Weed / in Weekly Posts /

Are you getting your mortgage statements after filing bankruptcy?

Some mortgage companies use bankruptcy as an excuse to stop sending mortgage statements. (Or they send them to your lawyer, not to you.) The law is completely clear. The law says to keep sending them to you. 

That law is Regulation Z. The Consumer Finance Protection Bureau issues and enforces regulations under the Truth In Lending Act. Here’s what that regulation says.

First, the mortgage servicer has to send you a monthly statement.  That’s 12 CFR 1026.41(a)(2).  (Sometimes consumers accidentally give up a right in small print without knowing it. So the official interpretation says the consumer can’t do that. You cannot give up your right to receive monthly statements.)

Second, bankruptcy does not change that. That’s in 12 CFR 1026.41(f). While they need to keep sending the monthly statement, they also need to say that they know about the bankruptcy and that the statement is for information purposes.  §1026.41(f)(2)

Third, you or I can tell them to stop.  We can tell them directly, or through papers we file with the bankruptcy court. If you are not planning to pay and keep  the house, we can tell them to stop sending those bills.  §1026.41(a)(2)(B).  (Some mortgage companies want your lawyer to request that you KEEP getting your statements.  That stands the law on its head.  The Official Interpretation says your lawyer has the authority to tell them to STOP sending payments.  Your lawyer does NOT have the authority to tell them to keep sending payments. Why? Because Regulation Z says to send the statements without being asked.)

What If You Don’t Get Your Mortgage Statements After Bankruptcy

OK.  They are supposed to keep sending your mortgage statements. What if they just don’t?

Send them an email and link this page. (Copy me on the email.) We’ll see how that works.  

The Consumer Finance Protection Bureau has enforcement authority.  Complain to the CFPB here.  Especially since the 2020 election, the CFPB is good about following up. Hope that works.

But if that fails, can you and I to to court to make them follow Regulation Z? That’s at best a gray area. It looks like we don’t have your own private right to go to court if this right is violated.  

Can the bankruptcy court help?

The bankruptcy court has general power to carry out the provisions of the bankruptcy law.  11 USC 105.  So, can the bankruptcy court require the mortgage company to do what they are supposed to do, so that you can do what you are supposed to do?

Maybe. Several of us talked about this problem at the 2021 annual meeting of the National Association of Consumer Bankruptcy Attorneys.  I’m hoping they do a class on it next year.

 

PS Here’s the notice:

Here’s the notice to send to the mortgage servicer, if they are NOT sending you the monthly statement.

************************************************************************************************************

NOTICE TO MORTGAGE SERVICER

Mortgage servicer!  We are sending this reminder of the law to you.

Regulation Z orders you to send monthly statements to your customers, including the ones that have filed bankruptcy.  But you are NOT doing that. That’s why I’m sending you this this notice.

Please do what you are required to do. Send your customer the mortgage statements every month, like you are required to do.  You do NOT need my permission as your customer’s lawyer to send them.

You can take this as permission if you insist. But you do NOT need my permission to follow the law.  Just do it! — Robert Weed, Lawyer.

 

 

After Bankruptcy: Please Don’t Go Out and Co-Sign for a Car

Posted by Robert Weed / in After Bankruptcy, Weekly Posts /

After Bankruptcy: Please Don’t Go Right Out and Don’t Co-Sign for a Car

Got an email last week that made me sad.  Cherry filed Chapter 7 bankruptcy back in 2017.  She recently went to buy a car and ended up getting financed by Santander at 21%. After she did that, she asked why is her credit score so low, four years after bankruptcy?

When I looked at her credit report, here’s what I saw. Two months after her bankruptcy was discharged, she got a car loan with Regional Acceptance.  Regional Acceptance finances cars at terrible rates for people with terrible credit.  

I asked her, didn’t I warn you not to try to finance a car until at least two years–three is better–after the bankruptcy?  She said she didn’t “finance” a car: she just “co-signed for a friend.”

(The friend, of course, only paid for a year; and then the car got repossessed. Obviously the friend had really bad credit; so bad that Cherry right out of bankruptcy was needed as a co-signer.)

Instead of having the best credit of her life, four years after bankruptcy, Cherry’s score is stuck in the mid 500’s.  And Regional, if they bother, has two more years where they can sue and garnish her.

Two lessons.  First, if you have any way at all to get to work, do not finance a car until two years after your bankruptcy is discharged. Second, don’t co-sign for anybody whose credit is worse than yours. Ever.   

Please Don’t Co-Sign for a Car and Mess Up Your New Start in Life

Improving your credit score is one of five ways that bankruptcy gives you a fresh start.  Three years after bankruptcy you can have as good a credit score as anyone you know.  Don’t mess that up.  Don’t co-sign for a car for a friend.

 

 

 

 

A Million Dollar Mistake: Personal Injury and Bankruptcy

Posted by Robert Weed / in Virginia Bankruptcy, Weekly Posts /

A Million Dollar Mistake: Personal Injury and Bankruptcy

Under Virginia law, the bankruptcy court cannot take away a personal injury claim.  Injured in a car accident? Hurt in the hospital? Anyone in Virginia can file bankruptcy and still keep those claims.

Steven Ramsdell, one of the top bankruptcy lawyers here, is desperately trying to save a possible million dollar injury claim involving a Mr. Barnes, who “forgot” to tell the bankruptcy court about his personal injury.

Barnes filed bankruptcy in June 2020 and it was discharged in October 2020.  Two months later, Barnes sued a Loudoun County doctor for a million dollars, claiming a wrong prescription caused permanent damage to his liver.  In May 2021, the Loudoun County Circuit Court court threw Barnes put of court.

That’s How To Lose Your Personal Injury Claims In Bankruptcy

Here’s what happens when someone forgets to tell the bankruptcy court about your car accident or any other personal injury.

Those rights are forfeit. Two ways.

First, because forgetting to tell the bankruptcy court about the claim means forgetting to protect that claim. So the injury claim now belongs to the bankruptcy trustee. Sometimes in law, “you snooze, you lose.”

Now, Barnes will ask the bankruptcy court to cut him some slack.  If the bankruptcy judge finds Barnes “forgot” because of “excusable neglect,” he may get a second chance to claim and protect his rights. 

Supposed a mortgage company overcharged someone and they didn’t know they were owed a refund. Forgetting to tell the bankruptcy court about that would easily be excusable neglect.

Barnes, on the other hand, sued his doctor less than three months after his bankruptcy was over.  Does that look like “excusable neglect.”  Or does it look like lying? 

Second, even if the bankruptcy judge helps him out, the state court judge can still toss out the suit for judicial estopple.  If Banes told the bankruptcy court that nobody owed him any money, how can he come into the state court and claim the doctor’s insurance owes him a million dollars?

Imagine this in the state court.  “You are telling this court, Mr. Barnes, that you are in constant pain? But you didn’t mention that pain when you met with your bankruptcy lawyer? Why should any jury believe you?”

Today, we don’t know how the Barnes case will turn out. Last week, the bankruptcy judge agreed he’d at least give Barnes a chance to explain his side.

PS  I should add that Steven Ramsdell was NOT the lawyer who first handled Barnes bankruptcy case. Barnes, of course, may be tempted to blame the problem on the first lawyer who handled his bankruptcy.  That first lawyer knew Barnes hadn’t worked for five months. Was that because of this injury? Should the bankruptcy lawyer have asked?

A lot of people will be sweating when the bankruptcy judge decides on “excusable neglect.”

The Wells Fargo Home Projects Card and Chapter 13

Posted by Robert Weed / in Chapter 13, Weekly Posts /

The Wells Fargo Home Projects Card and Chapter 13 Bankruptcy

The Wells Fargo Home Projects Card is issued differently than most credit cards. As far as I can tell, they don’t market it directly to consumers. Instead, they get home improvement businesses to sign people up. That way Wells Fargo finances the home improvement and the business gets paid.  Makes sense to me.

What doesn’t make sense to me is this:  Wells Fargo uses that card to butt in line ahead of other credit card creditors in Chapter 13 bankruptcy.  That’s because Wells Fargo claims to be a secured creditor.  Secured creditors have to be paid ahead of regular credit cards in a Chapter 13 bankruptcy payment plan. 

What’s a Secured Creditor?

What’s a secured creditor?  A secured creditor is a creditor with a “security interest.” UCC § 9-102(a)(73).  The Wells Fargo Home Projects card agreement claims they have a security interest:  “You grant us a purchase-money security interest under the Uniform Commercial Code in the goods purchased on your Account.”

What’s a security interest?  Your car finance company has a security interest in your car.  The car finance company has a lien attached to the title of your car.  If you don’t pay; they can come get it.  (Bankruptcy clears your personal liability–you don’t have to pay. But the car still has to pay.)

Consumer goods–something like a washing machine–don’t have a title.  But the people who finance them are still have a security interest.  They are secured automatically.  UCC § 9-309(1). Automatically, as long as you sign a paper with a description of the washing machine, so it can be reasonably identified.

Years ago Sears was very aggressive asserting their right to payment after bankruptcy on things like washing machines.  So aggressive that they ended up getting hit with multi-million dollar sanctions by the bankruptcy court in Massachusetts.  Conley v Sears 222 BR 181. D Mass 1998.  A few years later, Sears got out of the business of issuing their own credit cards.

Wells Fargo though isn’t claiming a security interest in a car, or in a washing machine.  In the cases I’ve seen, they claim a security interest in “trim,” in “replacement,” in “remodeling,” and most often in “items purchased.”

I call BS on the Wells Fargo Home Projects Card

I call BS on Wells Fargo.  These come nowhere near the legal requirement that the consumer sign an agreement that provides a description of the collateral. UCC § 9-203(b)(3)(A).  “Items purchased” could be anything. That’s not a description. By law, it’s not a description unless it “reasonably identifies what is described.” UCC § 9-108(a).

Second, a security interest does not exist in “ordinary building materials” once they become part of the building.  Trim obviously becomes part of the building. UCC § 9-334(a).

On their website, Wells Fargo tells home improvement businesses what kinds of things they finance. Here’s the list.

Flooring       Siding     Windows/Doors   

Remodeling   Roofing    HVAC

Doors and HVAC are a gray area.  Are they part of the building, or not?  Could go either way.  But Wells Fargo can never be secured in flooring (once it’s installed, of course.) Or siding. Or windows, or remodeling, or roofing.   

It looked to me like Wells Fargo always claims a legal right that they hardly ever actually have.

Wells Fargo Caved In

In the case of Merida Mejicanos, 21-10600-KHK, Wells Fargo Home Projects claimed a security interest in “trim” and “door replacement.”  I objected, and privately dared them to come in and fight.  They caved.  Without admitting they were wrong, they dropped their claim. They said they wanted to avoid “the risk of further litigation.”

The big risk of course is that the judge would write that they were wrong–and other lawyers and judges would read it.

 

 

 

 

 

 

 

Supreme Court Says Being Listed as a Terrorist is ‘No harm.’

Posted by Robert Weed / in Blog, Weekly Posts /

Supreme Court Says Being Listed as a Terrorist is ‘No harm.’

Last Friday, in a case called TransUnion v Ramirez, the Supreme Court said the Fair Credit Reporting Act cannot give you the right to sue TransUnion for putting your name on their OFAC terrorist warning list. Led by Justice Brent Kavanaugh, a 5 to 4 majority held that people have no right to sue unless they can prove TransUnion actually showed someone the list with your name. TransUnion just putting you on the list isn’t enough.

Justice Clarence Thomas, considered the court’s most conservative Justice, strongly disagreed.  He said that the law as written clearly covered TransUnion’s OFAC warning list.  Justice Thomas often says it’s the job of the courts to read and apply the law–not re-write it.  He said the court was re-writing a law they didn’t like.

Here’s the Rest of the OFAC Story

Besides the credit report you know about, TransUnion keeps and sells an “OFAC warning list.” OFAC stands for Office of Foreign Asset Control. It’s the Treasury Department list of terrorists, international drug kingpins, illegal arms smugglers, and other threats to national security.  People can’t have have money in an American bank or own any property in America if they are on that list.

TransUnion claims they matched that Treasury Department list with their list of Americans who have credit reports. That’s the TransUnion OFAC warning list.

 A guy named Sergio Ramirez found out he was on the TransUnion OFAC warning list when he went to a buy a new Nissan in 2011.  The finance manager told him that he couldn’t buy a car. He couldn’t buy a car because “he was a terrorist.”  (The dealership then turned around and sold the car to Ramirez’s wife.) 

Ramirez knew wasn’t a terrorist or arms dealer. So, he sued.

The Ramirez trial lasted six days. Turned out that TransUnion had misidentified 8,165 people, falsely labeling ordinary consumers as “threats to national security.”

The jury agreed TransUnion was in the wrong. They awarded $7337.30 to each person on the list. $60 million total. (Do you think the $7337.30 was too high? The jury found TransUnion had been sued for this exact same thing way back in 2005, and did almost nothing to fix the problem.) 

No Harm, no Foul

The Supreme Court said only 1853 people out of the 8165 had the right to sue. Those 1853 people could prove that TransUnion had sent out their OFAC warning when those people applied for credit. (The trial only looked at a seven month period.)  The others didn’t apply for credit during those seven months.  So they had no right to sue.  “No…harm,” said Justice Brent Kavanagh, no foul.

Justice Thomas hit the ceiling. 

“TransUnion generated credit reports that erroneously

flagged many law-abiding people as potential terrorists and

drug traffickers… Yet despite Congress’ judgment

that such misdeeds deserve redress, the majority decides

that TransUnion’s actions are so insignificant that

the Constitution prohibits consumers from vindicating

their rights in federal court.”

 

A Business Built on Lies

The three liberal justices went on to point out one other angle. TransUnion was sending out false information because they made money. TransUnion couldn’t prove that anybody among the 8165 people in their OFAC warning list was really on the State Department’s official OFAC list!  (Would any actual terrorist or wanted drug kingpin come to America to open a credit card or buy a car? Would they do it in their own name?) 

TransUnion was making money selling a list that was totally inaccurate!  Here’s what the 9th Circuit said: “TransUnion’s misconduct was repeated and willful. TransUnion used name-only OFAC searches for more than a decade, resulting in thousands of false positives and not a single known actual match identified.” 951 F.3d 1008, 1036. Not s single known actual match.

According to the liberal judges, the TransUnion OFAC warning list was business built on lies.

Two Ways This Affects You After Bankruptcy

The rule that Justice Kavanaugh laid down here goes beyond TransUnion and OFAC. Justice Kavanaugh said, and the Supreme Court majority agreed, that just because Congress says you have a consumer right does not mean you can sue to enforce it. You can’t sue somebody who might violate your rights; they have to actually do it first.

That obviously applies when you, like Mr. Ramirez, need to correct credit report mistakes.

Improving your credit score is one of the important five ways bankruptcy gives you a fresh start.  That’s why I tell everybody to check your credit report after the bankruptcy discharge. Making it harder to sue the credit bureaus doesn’t help you make the most of your new start.

(After-bankruptcy credit reports are now usually right–they didn’t used to be.  Because they are usually right, you have to dispute wrong info at least twice, before you can sue to have it corrected. Now, you probably also need to wait until you’ve applied for credit and been turned down. And even then, how can you prove you were turned down because of the error on your report, instead of the bad history from before you filed bankruptcy. You can see the problem.)

Stopping creditor harassment

Stopping creditor harassment is another way bankruptcy give you a new start. But it doesn’t always work as it should.

Just this past week, Zarah got a hate letter from a debt collector, threatening to file court papers on a debt that was cleared by her bankruptcy. That’s an obvious violation of the bankruptcy law. But are we allowed to do anything about it? Did Justice Kavanaugh just say we can’t complain about the threat? Do we have to wait until they actually do send her court papers?

Some judges do not want to be bothered by “insignificant” consumer complaints. Most businesses don’t want to be sued.

So, when you and I try to defend your rights, the credit bureaus or debt collectors can just say, there’s “no harm.”  They can use Justice Kavanaugh to tell you the door to the courthouse is locked.                         

                                                                                                                                                                                                                       

 

Does Reaffirming Your Car Loan Help Your Credit Score?

Posted by Robert Weed / in After Bankruptcy, Weekly Posts /

“Does Reaffirming My Car Loan Help My Credit Score?”

Ray and Theresa, who filed bankruptcy with me last fall, asked me that last week.

Lots of people ask that same question after they look at their after-bankruptcy credit report and see that their car payments don’t show.  Then, they are told by their car finance company, “Your lawyer should have had you reaffirm your car. That way your payments would show and your credit score would be better.” 

What’s the truth? 

Does Reaffirming Your Car Loan Help Your Credit Score? A Top Bankruptcy Judge Wanted to Know

Last fall, Judge Margaret M. Mann asked that same question. She had a a stream of people in her courtroom reaffirming car loans and she wanted to know why. They told her it was to help their credit scores. So she asked–actually ordered–Wells Fargo to send their credit score expert and explain.  What Judge Mann heard was this: Reaffirming the debt cannot be said to affirmatively help debtors rebuild their credit since the benefit is minimal at best.

In other words, reaffirming your car loan is hardly any help to your credit score–and that’s if you make the payments on time. (It you miss a payment–if the car needs a repair you can’t afford or gets totaled, or any of the things that can happen–then you drag your score way down with after-bankruptcy bad credit.)

The Judges in Alexandria Already Hated Reaffirming

 As far as I can tell, Judge Mann is the only bankruptcy judge who has put in writing her opinion on reaffirming car loans. But she is the Chief Bankruptcy Judge in the Southern District of California, the busiest bankruptcy court in America. So you can bet bankruptcy judges around the country read what she said on this.

Even before that, the judges here in Alexandria VA made it clear they didn’t like reaffirmations. Now they like them even less. So–unless it’s Ford Motor Credit or your credit union–I will not agree to reaffirming your car loan.  And even I did, the Judges here mostly won’t approve it.

Your After Bankruptcy Credit Report is Very Important

For most people with damaged credit, filing bankruptcy is the fastest way to fix it. 

That’s one reason why its very important for everybody to check your credit score two or three months after bankruptcy. 

When you do, you’ll see your  after-bankruptcy car payments don’t show on your credit report.  (The payments don’t show because after bankruptcy because you don’t have to make the car payment. The car still has to pay, but you don’t.) But even if those payments showed on your credit, the car payments would help your credit score hardly at all.  

I have some tips on how to rebuild your credit here and here.  As long as you need a car–and need that car–you should keep up the car payment. But filing bankruptcy means you don’t have to keep the car once you can get a better deal when your credit is better.  

That’s why we don’t reaffirm car loans. Reaffirming your car loan doesn’t really help your credit if you. And if you get behind, it’s a disaster.  

PS

Stephen Dunne, a bankruptcy lawyer in Philadelphia, also has a helpful article on Judge Mann’s opinion.  

After Bankruptcy, are you getting your mortgage statements?

Posted by Robert Weed / in Weekly Posts /

After Bankruptcy, are you getting your mortgage statements?

After you file bankruptcy, you are still supposed to keep getting your mortgage statements.  But, are you?

This question came up at the 29th Annual Meeting of the National Association of Consumer Bankruptcy Attorneys.  (I’m at that meeting this week, which was supposed to be in Orlando, but it’s actually on the internet.)

The Dodd-Frank law says that your mortgage company is supposed to send you your monthly statement.  And the Consumer Finance Protection Bureau says that still applies even after you file bankruptcy.  (Unless you say you don’t want them.) See 12 CFR § 1026.41(a)(2) and §1026.41(e)(5). 

Lots of us bankruptcy lawyers, meeting afterward on Zoom, think our clients are NOT getting their statements.

I’m Gathering Info

If you have experience NOT getting your mortgage statements after bankruptcy, let me know. I’m gathering info for the leadership of the Consumer Bankruptcy Attorneys. We want to see if there’s a big problem; and figure out what to do.

[email protected] is keeping track of this for me.  Also, you can contact me directly. [email protected]  Thanks.

Are your getting your after bankruptcy mortgage state? Our first reply.

While I was writing this, I did a test.  Along with scanning the Selene Finance mortgage payment to one of my clients, I asked was she also getting a copy, or am I the only one. (I routinely scan and send these statements out. But I didn’t ask that question before.) 

She replied instantly, “I never received any statement from them. Can I sue them?”

So, I told her, that’s a great question. It’s what we are trying to figure out.

 

 

 

For most people bankruptcy works. For most people, debt settlement doesn’t.

Posted by Robert Weed / in Weekly Posts /

The three toughest questions at your bankruptcy hearing

Posted by Robert Weed / in Blog, Weekly Posts /

The three toughest questions at your bankruptcy hearing.

The three toughest bankruptcy hearing questions are NOT what most people expect.  The bankruptcy trustee does NOT ask you to explain how you got into this mess. They are not asking about your plans for the future.  And the creditors are NOT there demanding their money.

Have You Sent the Bank Statements?

So what are the hard questions? For most people the toughest bankruptcy hearing question is: Have you sent us all your bank statements, showing the balance on the day you filed your case? Especially if you have old accounts you don’t think about because you never use them–getting those bank statements in can be a tough challenge.

Can You Find The Mute Button?

The next bankruptcy trustee question is, can you find the mute button on your phone?  People who do conference calls at work figured out the mute button long ago.  For other people it’s a challenge.  (Progressive Insurance uses a mute button as a joke on one of their TV ads.)  

The bankruptcy court in Alabama has mute button instructions on their webpage. 

Why is the mute button important?

When you call into your bankruptcy trustee, there will be almost thirty people on the line.   About twenty people filing bankruptcy, maybe eight lawyers, plus the trustee and helper.  

Everybody needs to be on mute when it’s not their turn. Otherwise the background noise–fans, computer noise, barking dogs, children–the background noise makes it impossible to hear.  So, be sure you can find and use the mute button.

Can I Whisper to My Lawyer?

The third toughest bankruptcy hearing question is your question, not a bankruptcy trustee question. Your question is, how do I talk to my lawyer?

When you dial in to the trustee phone number, you don’t know that whether I’m there.  (And I don’t know if you’re there, either.) That’s the biggest disadvantage to doing these on the phone. 

You for sure want to know I’m on the call and you might have a last minute question, too. You can’t ask me a question out in the hall because there is no hall.

We can’t whisper–because we are broadcasting to the whole room. That why we need to email each other ten minutes before the hearing starts.

I’ll shoot you and email letting you now I’m on. Please reply. And email any last minute questions. Use [email protected]. That goes straight to me.

(We’ve been doing these bankruptcy trustee hearings by phone for ten months now. And I overhear a lawyer whispering with their client almost every hour. And of course the whole room hears it.  So far I haven’t overheard anything really bad–like, I’m sure glad they didn’t ask about that farm in Kentucky. Anyway, you and I won’t do that. We know to whisper by email.)