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Sep 2010

Paying for help with loan mods

Posted by / in Weekly Posts / 3 comments

Generally I don’t recommend paying for help with loan mods.  Two reasons.  I think people can do pretty well on their own.  And the professional loan mod business is filled with scams.  (Here’s an article about how Florida is trying to shut down scams.)

(When I say do pretty well on your own, that does not mean you will be approved the first time you apply, or the process goes without a hitch.   I probably know two hundred people who got loan mods, finally.  I don’t think any of them didn’t have all their paperwork lost at least once.)

Still some people ask me for a recommendation.   Here are two people you can talk to.

I believe these are honest people.  What does that mean?  I’m aware that both of these people, have told at least some people, “we can’t help you” and turned money away.  That’s different from the scammers who claim “100% success rate” and say “we guarantee you’ll get approved.”

So, I’m not in a position to say these people are always get results.  But I do believe they are honest.

The first is Compliance Counsel, headed by Dena Roudybush.   Ms. Roudybush is a lawyer.  In fact she was a lawyer for a large local mortgage broker–a company that I noticed was an unusually honest mortgage broker.

She did interview on News Channel 8 talking about who hard it is to try to compete with the scams.

Her number is (703) 261-7097.

The second is Fred Lear.  He operates as Vantage Negotiation Services.  Lear is a former loan officer.   His phone number is 703-447-8571.   He told me that he gets only a down payment of his fee upfront, and collects the rest when the loan mod is approved.

Again, I’m not in a position to judge how well these people do.  But I think they are both honest and do their best.

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Aug 2010

Before Bankruptcy: Do You Need to Change Banks?

Posted by / in Before Bankruptcy / No comments yet

As a Virginia Bankruptcy lawyer, I often tell my clients to “change banks.” Why?

If you have been hit with and ignored a warrant in debt,  and the return date is past, you may be about to be garnished.  What checking account did you use when you last paid that debt?  Since they know where it is, that’s the one you can expect will be first garnished.  Unless we can file your bankruptcy right away, it’s time to change.

(Changing your account number is not enough.   A garnishment will hit all the accounts you have at that bank.)

You also need to change if have a loan where you bank .   If you are falling behind on your second mortgage–for example–with Bank of America and you save or check with Bank of America, they can dip into your account to pay themselves.   Credit Unions can also pay themselves for credit cards.  Banks can’t.

What do I recommend? I like to say that the universe is full of banks.  You want to go to a bank you never used before.  And one you don’t owe money to.

Some people’s before bankruptcy credit is so bad they cannot open an account at most banks.   I recommend TD Bank, which has a number of locations in Northern Virginia.   I send TD four or five people a months, with no complaints.  Many people  have told me TD is their all-time favorite.

(TD is also right across the street from the bankruptcy court.  They are always very nice when I need change for parking.)

Woodforest Bank, found in some Northern Virginia Walmarts, will also open an account for most people with really bad credit.

Even if they haven’t done it before, your bank, if you owe them money, can freeze your account and help themselves to what you had there the day the bankruptcy was filed.

After bankruptcy, your account is safe.  Being able to keep your money safe from offsets and garnishments is one important reason people file bankruptcy in Virginia.

Here are the steps.  Stop the direct deposit.  Spend down the money you have in your existing account:  pay bills, buy groceries, whatever.  Open a new bank account.  Start the direct deposit going to the new bank.

There’s a very remote danger your bankruptcy could be challenged if you transfer money from the old bank to the new one.  So spend that money on real needs as quick as you can.  Switch the direct deposit to the new bank.

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Aug 2010

Do I need to file bankruptcy after foreclosure?

Posted by / in Weekly Posts / 143 comments

Do I need to file bankruptcy after foreclosure?

As a Virginia bankruptcy lawyer, I talk to about a dozen people a month who have already lost their home to foreclosure.  When we look at the credit reports together, the first mortgage usually shows foreclosed, with a balance of $0.   And talk about the question, after the foreclosure, do I still need to file bankruptcy?

For some people, the answer is obvious.  If there was a second mortgage on the foreclosed house–those almost always sue.  Usually within a year.   If the credit cards got out of control while trying to save the house, then people need to file bankruptcy to clean up the credit cards.

But what if the foreclosed first mortgage is the only problem?

Up to this point, I’ve told people I almost never see any effort by anyone to collect on those foreclosed first mortgages.  (A couple months ago I saw a couple being sued on a first mortgage forelcosure.  That mortgage had been a rural development loan backed by the Department of Agriculture. Don’t see much of that around here.  That house had been in Culpeper County.  That may be the only time I’ve seen someone sued on a first mortgage.)

That may be about to change.  Bill and Janie (not their real names) came to talk to me about filing bankruptcy last week.

Bill and Janie had a collection letter for $137,000 from a company called Strategic Recovery Group.   This was the mortgage deficiency on a first mortgage that had been held by GMAC.  Their credit report showed “foreclosed” and $0 balance for GMAC; but now a debt collector was after them.

(The debt collector did not say they were collecting for GMAC.   They said they were collecting for Fannie Mae.  Most mortgage loans in the country are made by one of the big banks, but then sold to Fannie Mae, who bundles them up and sells them to big investors.)

Other than that, they had no credit problems,  Each had one small credit card that was current.   What to do?

Back in June, Fannie Mae put our a press release saying they were going to start taking legal action to collect on those foreclosed loans.  Looked like this might be the first sign that they were doing it.

We spent a long time talking about what was the best way to go.  The debt collector had not his their credit report, at least so far.  And there was still no sign that Fannie Mae really was suing on these.  So waiting to see what happened next was definitely an option.  That was my recommendation.  (Also, personally, I was curious.)

Why go ahead now?   This family wanted to buy a house in a few more years.   If they went ahead and file bankruptcy now, they knew they’d be back to good credit in a couple years, when they wanted to buy.

Does that surprise you?  Take a look at this chart.  It was prepared by the National Association of Realtors.  It shows the current policies of Fannie Mae, Freddie Mac and FHA.  Basically, you can have good enough credit to buy a house two years after a bankruptcy.  Three years after a foreclosure.

Bill and Janie lost their house to foreclosure about a year ago.  So if the go ahead and file bankruptcy now, the two years after bankruptcy and three years after foreclosure will end at about the same time.    If they wait to see if Fannie or Strategic sues them for the $137,000–maybe a year and a half from now–then the two year waiting period after bankruptcy would start then.  and that would put off their chance to buy a house again.

(Actually, they wouldn’t even have to sue.  If Strategic or Fannie waited a year and then hit their credit report–bam–then they’d have to file bankruptcy or never get back to good credit.)

So rather than wait and see what happens next–and take a chance on ruining their credit just as it was getting good again–they decide to go ahead and file bankruptcy now.

It was a close call, but it makes sense to me.   (So I still don’t know if Fannie Mae actually does follow up on its threat to start suing.)

(This is specific to Virginia law.  In about half the states, they cannot sue on a foreclosed first mortgage.   But in Virginia, they can.)

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Aug 2010

Year after bankruptcy, Beth Ann still in house

Posted by / in After Bankruptcy / 1 comment

Beth Ann (not her real name) asked me to be her Virginia bankruptcy lawyer in December, 2008.   She was self employed, a single mom, with not much income.  She was in one of those two year teaser rate loans, and when the real rate hit, there was no way she could afford the house payment.

In February, 2009, she came back and asked if bankruptcy could help her keep the house.  Her brother had lost his house to foreclosure, and his family was now living there, too.

Still not enough income to afford that house payment, but I had hope.  Barrack Obama had just been inaugurated two weeks before, and changes in bankruptcy law had been part of his platform.  Obama had promised to change the law so the bankruptcy judge could adjust the balance on a home mortgage to what the house was now worth.  (Bankruptcy judges can do that on an apartment, an office building, or one of Donald Trump’s casinos.   But homeowners can’t use bankruptcy the way businesses can.)

The bank set a foreclosure sale on February 28, 2010, so we filed a bankruptcy for Beth Ann the day before.  We hoped to save her house with the change in the bankruptcy law that President Obama promised but hadn’t been voted on yet.

On March 5, that change in the bankruptcy law passed the House of Representatives.  It looked like Beth Ann and Obama were on a roll.   We filed our bankruptcy reorganization plan two weeks after her bankruptcy was started.  And the change in the law we needed was half way there.

That’s as far as it got.  On April 30, the bill failed in the U.S. Senate.  Commentators blamed Obama for going silent when he needed to speak up.

On July 13, 2009, her mortgage company got permission from the bankruptcy judge to foreclose her house.  (Called “relief from the automatic stay.”)

On September 30, my office got a copy of the notice sent to her of the upcoming foreclosure sale.  Beth Ann’s luck had run out.

Or had it.  Beth Ann came to see me last week about a problem in her credit report.  (I’m one of a handful of bankruptcy lawyers in the country who sues the credit bureaus to fix people’s after-bankruptcy credit reports.)

She mentioned that she is still in the house.  A year after the mortgage company got permission from the bankruptcy judge–seventeen months after the first sale date was blocked by her bankruptcy–there was no foreclosure.

As a bankruptcy lawyer, I file a lot of bankruptcies for people on the eve of foreclosure.  I tell them it gets you at least three more months to live in the house, sometimes more.

Beth Ann’s experience is on the long end of the sometimes more.

Here’s the lesson.  If you want to keep your house and they’ve set a foreclosure sale, file bankruptcy.  (That’s if you have eligibility–you certainly want to talk to an experienced bankruptcy lawyer, first.) At the least, you’ll get several more months to live for free.

And landing your file on a different person’s desk might work in your favor.  That new person might offer you a deal you didn’t get offered before.  Or, they might not know what to do with you, and you just sit there.  That seems to be what happened to Beth Ann.

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Aug 2010

Lawyer Klinette Kindred named bankruptcy trustee

Posted by / in Weekly Posts / 3 comments

The Bankruptcy Law Office of Robert Weed is proud to announce that Klinette Kindred has been named a bankruptcy trustee.  Kindred joins the panel of six chapter 7 bankruptcy trustees in Alexandria, Virginia.  New appointments to the panel are very rare.  Five of the six chapter 7 bankruptcy trustees have served for more than twenty years.

Kindred is an honors graduate of Virginia State University.  She earned her law degree at the University of Virginia.   She has been a bankruptcy attorney with the Law Office of Robert Weed for more than ten years.

Kindred has been the Chapter 13 attorney for the Bankruptcy Law Office of Robert Weed.  She also handles most of the law firm’s hearings and court appearances.

As a bankruptcy trustee, Kindred will be assigned cases beginning  in September 2010.   Her duties include, conducting the meeting of creditors,  investigating the financial affairs of the debtor, collecting non-exempt assets of the debtor, for prompt distribution to creditors,  and opposing the discharge of the debtor, when advisable.

Trustee service is a part-time.   Attorney Kindred will continue her work with the Bankruptcy Law Office of Robert Weed.    She is based in the firm’s Alexandria, VA, office.

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Jul 2010

Before bankruptcy: beating a warrant in debt

Posted by / in Before Bankruptcy, warrant in debt / 64 comments

Bill, not his real name, is filing bankruptcy with me in October.  (He needs a couple more months to finish everything to get his bankruptcy approved.)

Virginia Bankruptcy Lawyer Robert Weed

Virginia Bankruptcy Lawyer Robert Weed

In the meantime, he received a warrant in debt.  Midland Credit Management, a big debt buyer, was suing him on a old Chase card.  He didn’t want to get a judgment and a garnishment while we were waiting for the right time to file the bankruptcy.

Bill knew, from my warrant in debt website, that he had to go to court on his return date, and tell the judge he wanted a trial.  He had an easy basis for saying he wanted a trial.  “I never heard of Midland Credit Management.  I don’t know who they are or what this is about.”

He asked for a bill of particulars, and Midland’s lawyer asked for grounds of defense.

When Midland submitted their bill of particulars, they wrote they had bought the debt from Chase, and Bill owed Chase $4822.

For Bill’s grounds of defense, he wrote to the court and Midland’s lawyer that there were no documents showing that Midland really bought the debt from Chase; and that Midland had no evidence of how much he owed Chase–they would need a witness from Chase to prove that.

Bill was nervous on his warrant in debt trial date, but it was easy.  When they called his name, the lawyer for Midland said, “Your Honor, this is our first dismissal of the day.”  The Judge then turned to Bill and scolded him slightly to be financially responsible.  Then he  said, you won today,  you are free to go.

Bill handled this on his own, but I had given him some tips.  One thing I said, if this is still America, you’ll win.  Nice to know this still is America.

Under Virginia law, Midland would be able to bring the same warrant in debt a second time.  But they won’t be able to move fast enough to beat our October bankruptcy filing.  (And they probably couldn’t prove it then, either.)

When we get to October, his bankruptcy will go fine.

PS  Here’s an update on March 30, 2011.  The Attorney General of Minnesota announced he is going after Midland, and their parent company, Encore.  He says they used robo-signed affidavits to sue people on in Minnesota.  In other words, Midland claimed they reviewed their records and had proof so-and-so owed them money–but nobody actually looked to see whether they really had that proof.  This press release would be something to bring to the attention of the Judge, if you go to court and fight Midland on one of these.

PPS.  Washington Post had a good article on beating Midland in May 2014.

In Northern Virginia, Encore’s Midland unit has filed 16,878 lawsuits from 2003 to March of this year in the district courts of five counties. The company won nearly two-thirds of those cases through judgments against consumers who either failed to appear in court or simply agreed to pay the amount.

Almost 20 percent of those people wound up having their wages garnished, according to a review conducted by The Washington Post. Debts range from as little as $53 to as much as $23,786.

The Post article includes a comment from a guy who calls himself “rogerramjetz.”  He says he used to work as a collection lawyer on exactly those cases.

A guy gets a credit card with an Account Agreement that charges him $137 to open the account the first time he uses the card, and the card has a $250 credit limit. He then buys a $35 iron and a $45 coat at Walmart with the card. He now owes $217 the next month, and when he doesn’t pay the bill, he accrues an interest charge of $5 at 29% interest. When he doesn’t pay the next month, the card accrues a late charge of $35, $5 in interest, and an overdraft fee of $35 a month, totaling $297. The following month, interest is $6, and the late fee is $35 and the overdraft fee is again $35. A year and a half after the initial $80 purchase, the account shows a $1600 balance to Providian Bank. Totally legal.

Providian then sells the debt to Midland for $0.17 on the dollar, or around $200, and gives the last statement the guy received for $1600 as evidence of the debt. Glasser & Glasser in Norfolk is promptly retained to sue the guy for $1600, with interest at 29%, and accrued interest since the default a year before totaling $500, while the Account Agreement is invoked for a “33.3% reasonable attorney’s fee, totaling $533” and court costs of $63.00. An affidavit from Midland and Providian is generated, and a sheriff delivers the Warrant in Debt to the guy.

Total sued for? $2,693, but we will gladly settle for a lump sum of eighty cents on the dollar, or $2,154. For an iron and a coat at Walmart. Or we will take a judgment and garnish 25% of your wages until paid, and in three years the balance will double again at 29% interest.

How do I know this? I worked for Glasser as local counsel.

“Roger’s” example may be extreme but it shows how small debts can lead to fairly big garnishments, with late fees, over limit fees, later over limit fees, legal fees and the rest are added in–the just 29% interest alone doing it’s magic.

What’s the lesson:  Many credit cards in bankruptcy have already been money makers for the credit card companies.   And if you are getting sued by people you never heard of, it’s time to talk to a lawyer.



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