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Jun 2013

Statute of Limitation in Virginia for Credit Cards

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Virginia Statute of Limitations for Credit Card Debt

Some people, whose credit is really, really bad, don’t need to file bankruptcy, because their debts are barred by the Virginia statute of limitations.

If you can run from your debts long enough–and they never “serve” you with court papers–then they are SOL.  SOL stands for Statute of Limitations.


Some people whose credit is bad enough don’t need to file bankruptcy, because their debts are barred by the statute of limitations

This statute helps people whose credit report is really, really bad.  Bad enough that debt collectors look at it and say, there’s no point in bothering to chase this guy.  Then, at some point, if they change their minds and try to sue you, they are too late.

So, how long do they have to leave you alone?

Five years if they can produce your signature on a written contract; otherwise three years.  That’s in Code of Virginia 8.01-246(2) and (4).

So what’s a written contract?  First, they have to come up with your signature.  Now you’d think they have hundreds of copies of your signature–on your original card application, and then every time you sign a charge slip.  So you’d be surprised this is not easy.  I’ve seen credit unions be very good at always keeping your card applications.  But credit card banks usually can’t.

If your debt has been sold to a debt collector, they hardly ever have your signature.

Even if they do have your signature on something, maybe that’s not quite enough.    To be a “written” contract for this purpose, something in writing has to show the complete agreement–interest rate, payment terms, due date. maybe more.  So your signature on one of those charge slips, or the original card application, is not enough.  They have to somehow tie in all the fine print.   It’s got to be “complete.”

If it’s not complete–can’t find your signature, or can’t tie your signature to ALL the terms of the contract–then the Virginia Attorney General says the “unwritten” contract three year rule applies.   

(This doesn’t entirely make sense.  A written contract where they can’t find your signature is not exactly “unwritten.”  Legal Services of Northern Virginia says maybe the two year rule for “other” should apply. )

I’m pretty sure most judges follow the attorney general three years–not legal services on two.

The protection of the statute of limitations is not automatic.  It’s an “affirmative defense.”  If somebody sues you on a debt that’s barred by the SOL, they will still win–UNLESS you answer and claim the protection of the statute.    You can’t just sit on your rights.

So if you ar relying on the statute of limitations to protect you, do NOT ignore any court papers that come your way.


PS  While we’re here, I should add that a promissory note has a six year statute of limitations.    A second mortgage would probably be covered under this six year rule.

PPS.  Also here’s the link to the Code of Virginia on restarting the statute of limitations.  8.01-229G.  A partial payment, without an express promise, is probably not enough to restart the statute in Virginia.

Can they keep calling and billing you on debts too old?

The Fourth Circuit says , yes, they can.  At least as long as they don’t threaten to sue.  Here’s the decision,Mavilla 4th Cir FDCPA.  Even if a credit card debt is barred by the Virginia statute of limitations, phone calls and bills, without some kind of threat, are not illegal, harassing or misleading.



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Jun 2013

Do I need to file bankruptcy after foreclosure–update!

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As a Virginia bankruptcy lawyer, people ask me almost every day, do I need to file bankruptcy after foreclosure?

When I try to answer that question, we look at the credit reports.  Usually, the first mortgage shows “foreclosed” with a zero balance.  Does that mean you are safe?  Does that mean you don’t owe the money any more?  Most people think it does.

Lawyer Robert Weed  Bankruptcy after foreclosure?

People ask me almost every day, do I need to file bankruptcy after foreclosure?

Yesterday’s Washington Post has alarming news.  Lots of people, in Maryland, are now getting sued.  Getting sued on these first mortgage deficiencies.

I first wrote about this three years ago.  Back then, I said I had almost never seen it.  But I was worried that Fannie Mae, the bailed out mortgage giant, put out a press release in June 2010, saying they were about to start.

That was three years ago.  I still haven’t seen much sign of it–until this Washington Post story.

Now I’m worried.  In about half the country,  the mortgage lender cannot come after you for a deficiency.  When they take your house, that’s all they can get.

But they can in Virginia.  And Maryland.  And in Maryland, at least, they are starting to.

The Washington Post points out this long delay, suing years after the foreclosure, may be the mortgage company’s strategy.

If they sue you right after the foreclosure, they are pretty sure you are broke.  So filing bankruptcy after foreclosure could be easy.  (As easy as bankruptcy ever is–it’s never any fun.)

After a few years, you might be back on your feet.  Good credit and a good job, again.  Then they sue.  And then they figure maybe you can’t file bankruptcy after foreclosure.   Maybe, just maybe, you’ll have to pay.

(PS.  This is about first mortgage deficiencies.  Did you have a second mortgage on a house that went to foreclosure?  If you did, you will get sued.  You can count on it.)


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May 2013

Virginia Bankruptcy Lawyer Robert Weed gets Martindale Satisfaction Award

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Got an email this week from Martindale-Hubbell, publishers of the famous Martindale Hubbell lawyer directory and also Lawyers.com.

They told me my clients rated me in the top one percent in client satisfaction.   “Less than 1% of the 900,000+ attorneys listed on martindale.com and lawyers.com have been accorded this Martindale-Hubbell honor of distinction.”

They also wanted to sell me “this commemorative wall plaque.”  

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Feb 2013

How to Tell Your Bank to Stop Payday Loan Automatic Withdrawals

Posted by / in Before Bankruptcy, Weekly Posts / 154 comments

How to Tell Your Bank to Stop Loan Automatic Withdrawals

Stop those automatic withdrawals! I usually tell people that when we first talk. Even before we file the bankruptcy.

Internet payday loans usually set up automatic withdrawals when you get the loans. Traditional finance companies, like Mariner and One Main, often do, too.

When you try to stop them, people tell me it’s hard to get their banks to help.  (Today’s  New York Times said the same thing.  The Times says the banks don’t cooperate because the banks love those overdraft fees.)

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Dec 2012

Internet Payday Loans are Illegal in Virginia

Posted by / in Virginia Bankruptcy, Weekly Posts / 173 comments

Internet payday loans are illegal in Virginia.  They are a felony.  (In order to make payday loans in Virginia, they have to have a licensed office in Virginia.  The internet payday loans do not have offices Virginia–they are on the internet.)

Since the people behind the internet payday loans could be sent to jail in Virginia, the internet payday loan companies are careful to

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Jun 2011

Bankruptcy, the automatic stay and debt collector NCO.

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Tuesday, I saw a press release from NCO, one of the largest of the debt collection companies.   While many businesses are slow to add jobs in a recession, NCO is hiring 400 more people for its Rockford IL “Customer Management Contact Center.”  Apparently debt collection is now a growth industry in America.

That same day I got an email from one of my clients, Victor (not his real name).  Victor got called Tuesday by Mr. Balakrishnan of NCO, who wanted to “update his information.”  Victor told Mr. Balakrishnan, “I’ve filed bankruptcy, I don’t want to talk to you.”  Mr. Balakrishnan replied, “I have a very good offer for the settlement of this debt.”

Victor told the debt collector, “you are violating the bankruptcy court order.”  The debt collector replied, “this call is being recorded” and hung up.

I’m glad to know the call was being recorded, because we will ask NCO to produce it when we go in front of the bankruptcy judge for this violation of the “automatic stay.”

The automatic stay is a court order that takes effect automatically when you file bankruptcy.  The stay tells your creditors they have to leave you alone while your case is going on.  (That usually about three months and two weeks.)  Creditors who know about the bankruptcy and still try to collect a debt can be punished by the judge.  The judge can award “punitive damages” to you.  In other words, fine them and give you the fine.

Written notice is not required.  Even if NCO lost the first notice from the bankruptcy court–which was mailed to them on May 19–they violated the stay as soon as Victor told them he filed bankruptcy and they didn’t apologize and hang up.

This call from NCO to “update their records” says to me that they didn’t lose the notice–they knew about the bankruptcy when they called.  They wanted to ask for a payment without exactly asking.  That won’t stand up in court.

We’re seeing this a lot.  A debt collector will call about a debt and is told about the bankruptcy.  Instead of saying, sorry, the collector makes some excuse.

Maybe the collectors records aren’t right; anybody can make a mistake.  But “oops, sorry, my mistake” is what they should say when they are told.  If the collector says “your lawyer filed the wrong bankruptcy” or “you can’t file bankruptcy on us” or “we have a good offer”–we sue.

One of the purposes of bankruptcy is to get relief from the pressure of those phone calls.  We don’t let debt collectors try to dodge around the law.

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Oct 2010

Loan mod papers lost for the third time? Don't take it personally.

Posted by / in Weekly Posts / 1 comment

As a Virginia bankruptcy lawyer, I’ve talked to three hundred people who’ve gotten loan modifications.    (Most before they filed bankruptcy, but more and more after.)

Only one of them had his loan mod approved the first time he sent it in.  I met that person yesterday!

Why?  There’s a clue in this article I saw in Wednesday’s New York Times.  It says the people in Chase loan servicing department are known by the rest of the bank as the “Burger King kids.”  The joke is that everybody doing loan mods now was working a year ago at Burger King.

So if it seems like the loan mod people don’t know what they are doing, you’ve got that right.

This is the fault of the banks, not the people.

The banks never expected to need to do this many mods.

Before about February 2008, the banks pretty much never modified mortgages at all.  Even when it would make sense for them, they didn’t.  They didn’t want anyone to to think they would ever modify a mortgage.  “Pay us what we want or we take your house.”  That was their rule.

It was February 2008 that I started to see smaller Virginia banks reaching out to people in bankruptcy, offering to work with them to keep their homes.

Newspapers had been reporting the foreclosure flood since the summer of 2007.  But took until mid 2008 for the light to dawn on the bigger banks.  They finally began to realize that they already had too many foreclosed houses and not enough people making payments.  Over the last two years, that problem has only gotten worse.

(Government sponsored programs like HAMP give incentives to banks to make loan mods.  But the real reason they do it is they’d rather reduce your payment a little than take over another house they can’t sell for half what you owe them.)

The banks hired people into loan modification too slowly to handle the flood.  Even when everyone else saw it coming, the banks didn’t.

The other problem is that loan servicing–working on existing loans and collecting payments–is not how banks made money.

The banks spent “billions of dollars in the good times to build vast mortgage machines that made new loans, bundled them into securities and sold those investments worldwide.”  They never gave much thought to how they were going to handle those loans, because they had already made their money.

It’s a lot more work to figure out how to handle a loan that’s gone bad, than it was to make the loan in the first place.  And there’s a lot less money to be made out of it.  So that’s not where the ambitious people in the bank have gone.

My bankruptcy clients report another problem when they try to get loan modifications.   They get conflicting stories from the loan mod and pre-foreclosure departments at the same bank.   The loan mod people say, be patient, we’ll get to you soon.  But the bank is also saying, your house is three weeks from foreclosure.

(There’s rampant confusion in the foreclosure department, too–staffed, according to today’s Washington Post, by “hair stylists, Wal-Mart clerks, assembly-line workers . . . without formal training.”)

So, if you are taking my advice–before or after bankruptcy–of trying to get a loan modification, expect delays, confusion, and lost paperwork.

All my bankruptcy clients tell the same story.  (Except for this one guy I talked to yesterday, who said for him it worked the first try.)

Don’t take it personally and–if you want to keep your house–don’t give up.

PS  That guy, the one who got a loan mod on the first try, is filing bankruptcy anyway.   The second mortgage wouldn’t work with him.  And the small business he started in 2006 is near collapse.    He decided to rent for a few years, and save money, while he builds up a new business.

PPS  In my first paragraph, I quoted the New York Times dumping on Chase.  I don’t think they are worse than other banks.  In fact, they may be better.  Chase has opened up Home Ownership Centers around the country to help people with the loan mod process.  They have two convenient to Northern Virginia.  One in Loudoun County Virginia and one in DC.   No other bank I know of has any.

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Oct 2010

Filing bankruptcy in Virginia gets harder November 1

Posted by / in Weekly Posts / 1 comment

You can thank the bank lobbyists who wrote the 2005 bankruptcy law for this cute trick.   When times get tough, filing bankruptcy gets harder and more expensive.

How’s that?  Eligibility to file bankruptcy is much harder for people who are over the median (average) income in each state.  When times get tough, the average income falls.   That makes eligiblity harder.

Check out these numbers, just released today.  Right now, a family of two in Virginia making less than $64,890 has automatic income eligibility to file Chapter 7 bankruptcy.   November 1, that drops to $62,686.    It’s the same for a family of three.  Right now a three person family making less than $73,887 has income eligibility.  On November 1, that drops to $72,078.

The unfairness to people with big families gets worse.  Right now a family of four is allowed to make $37,443 more than a single person with no kids.  Starting November 1, that drops to $36,102.  The law thinks taking care of kids should get cheaper in a recession.

When I look at that, I get mad all over again at the supposedly pro-family values political party that gave us this law in 2005.

While incomes are falling for average families across Virginia, the banks are doing great.  Earlier this week, JP Morgan Chase announced third quarter profits jumped 23%.

Here’s the complete chart, from the Office of the United States Trustee.  This chart shows how incomes are falling in Virginia for families of two, three, and four people.  Making it harder for people to get their bankruptcies approved.

Family size    Now      Nov 1

1            $48,190  $49,484

2            $64,890  $62,686

3            $73,887  $72,078

4            $85,633  $85,586

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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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