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Feb 2011

After bankruptcy: Debt collector NCC tries a scam

Posted by / in After Bankruptcy / 19 comments

Cindy (not her real name) filed bankruptcy with me back in 2001.   She called last week, upset.  A debt collector, Nationwide Credit Corporation, of Alexandria, VA, called last week wanting $541.00.

This is the headquarters of Nationwide Credit Corporation, Alexandria VA. A debt collector there called Cindy and told her bankruptcy didn't cover their debt.

Cindy, now retired, didn’t have that much money.  She wondered if I could work something out.

“Work something out!?  We’re suing them!” I said.

This debt collector told her that her bankruptcy did not cover “interest,” and so she still had to pay.  This collector, who gave the name Bill Watson, had Cindy totally confused.  If she had $541, she would have sent it.

Bill violated two separate laws.

The bankruptcy discharge is a court order.  It says that creditors cannot do “any act” to collect a debt that was discharged in the bankruptcy.   Cindy properly listed a debt to Washington Gas.  It was discharged.  Nobody can try to collect it.  Not Washington Gas and not their debt collector either.  The call to Cindy was an act to collect the debt.  It was a violation of the bankruptcy discharge.

Secondly, the call was a violation of the Fair Debt Collection Practices Act  (known as the FDCPA).   The FDCPA says that a debt collector cannot use any unfair means to collect a debt.  One unfair means is making a false representation about the legal status of a debt.   Bill Watson made a false representation about the legal status of the debt.   It was discharged in the bankruptcy;  he said it wasn’t.

Even for violating two different laws, I may not be able to spank NCC as much as they deserve.

For violations of the discharge, the bankruptcy judge can order them to stop.  He can make them pay the consumer’s lawyer (me, thank you) for bringing it up.  But he can’t punish the debt collector.   Not unless they keep doing it.

For violation of the FDCPA, there’s a $1000 penalty.  That was put in the law at $1000 in 1978.  It hasn’t been adjusted for inflation since then.

Bill Watson had his lie all ready.  He said bankruptcy doesn’t cover “interest.”  He could have been telling the same lie to hundreds of people all month.  Paying a $1000 fine and some legal fees.  That doesn’t begin to cover the money he might have collected from people he scammed.

But it’s the best I can do.  I’m sure glad Cindy called me–we’re suing those guys this week.

Bankruptcy law is my business.  Suing debt collectors is my hobby.

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Jan 2011

After bankruptcy discharge: Getting back to good credit

Posted by / in After Bankruptcy / 166 comments

After bankruptcy discharge: Getting back to good credit

About two months and two weeks after your bankruptcy trustee hearing, you should get your bankruptcy discharge.

bankruptcy hearing

You should get your bankruptcy discharge about two months and two weeks after your bankruptcy hearing

When you get the discharge, it’s time to go to work on your after bankruptcy good credit.

To get back to good credit, you need to get a credit card.

Most people get a couple credit card offers in the mail.  You may have to pay $139.00 application fee to get a $300.00 credit card.

A $300.00 credit card can get you something that you really need–good credit after bankruptcy.  Charge gasoline, or something you have to buy anyway, every month.  Pay it in full every month.

After about six months, you’ll start getting pre-approved $1000.00 credit cards.  I recommend you get three or four.   (It helps your credit score to have higher credit limits–as long as you don’t use those high limits.)

Each week, drive around with a different credit card in your pocket and use it to charge that week’s gas.  Each month when the bills come, pay them in full.  (You are NOT trying to get back in debt.)

Three years of doing that and you’ll be back to good credit again.

What if I don’t get any after bankruptcy credit card offers?

Here’s the credit card page at bankrate.com. At the drop down window, search for “cards for bad credit.”  They show about 40 cards.  

After bankruptcy credit help from woodbridge va bankruptcy lawyer and bankrate.com

Bankrate.com credit card page, search for “bad credit,” has cards you can apply for after bankruptcy.

Look for a card that tells you they report to the three credit bureaus.  I see Orchard Bank Mastercard and Visa, the Capital One secured Mastercard, the Public Savings Bank secured Visa, and the Applied Bank Visa Gold card.  Try one or two of those.

Is there anything else to improve my after bankruptcy credit?

Here’s a trick that works wonders if it applies to you. If there’s a credit union where you work, and you didn’t owe them any money in your bankruptcy, they might help you with a loan secured by your share savings account.

Here’s how that works.  You put $200 in a savings account at the credit union. The credit union then lends you $200 until the next payday. You make a direct deposit that pays off the loan out of each paycheck. Then you borrow the money again.

This means you are paying interest on your own money. But it does wonders for your credit score. An example of what I mean is the Apple Federal Credit Union “Share Secured Loan.”

Does paying my car loan help my after bankruptcy credit?

One question people often ask me:  Since I am paying my car loan, doesn’t that help me get back to good credit? The answer to that is, No. Unless you reaffirm your car loan–which I really do NOT recommend–you car is going to show on your credit as “discharged in bankruptcy.” That’s even if you continue to pay.

Here’s the reason for that. Even if you didn’t want to “include” your car in the bankruptcy, you can change your mind at any time. All you have to do is stop paying. They can–and will–repossess your car. But they cannot come after you for the money. They also cannot legally hit you with a repossession on your credit report. The bankruptcy protects you.

That’s why the credit bureaus show “discharged in bankruptcy” on your car loan–even if you are (now) still paying.

How important is my after bankruptcy credit?

Many people right after bankruptcy get offers from a car dealer.  Within a few months, you’ll be able to get approved for a car loan–at about 29%!!  You do not want to do that.

At 29% interest, you pay $18,000 in interest over five years on a $20,000 car.

If you work hard to rebuild your credit over three years, you should be able to get a car loan at less than 8%.    (People in my after bankruptcy happiness survey reported 6.9% and 5.9% can loans. Some people, like Alice, are able to do a lot better.)  At 8% over five years you pay $4000 in interest on a $20,000 car.   That’s a difference of $14,000!

Each month that you do what I say–charge three tanks of gas and pay your cards on time–you knock almost $400 off what that car will cost you in interest!  So please.  Spend the next three years building back to good credit.  And do not buy a car–if you have any way at all to get to work–until you’ve worked for three years rebuilding your after bankruptcy credit.

Getting your after bankruptcy credit report right.

A judge in California gave the credit bureaus have two months from your discharge to get your credit report right.    (So there’s no need for you to pull your credit report before that two months is over.)  The credit bureaus do get your credit report right most of the time. But not all of the time.  

That’s why my office is ready to check your and fight for you if they are not right.  We’ll check your credit report, but you have to get them to us.  (Over the years I’ve tried various strategies to get them for you–but they have eventually outsmarted me on all of them.)

Here’s what to do.  Three months from your discharge, please download your own credit reports and send them to us.

Please go to:  annualcreditreport.com.  (And please AVOID freecreditreport.com.)  You can get one free credit report each year from each of the three bureaus at annualcreditreport.com.

Another way to get the credit reports, is to call the 800 numbers of each of the three credit bureaus.

Equifax        1-800-997-2493

Experian      1-888-397-3742

Trans Union 1-800-888-4213

Please make a copy and mail them to us.  Or print them to pdf and email to:  [email protected]

One more thing–these credit reports are evidence.  (At least if there’s something wrong and we sue, they are evidence.)  For them to be evidence, we have to get them from the credit bureaus at one of the places they have designated.

Not from 3 in 1 resellers.  Not from someone like freecreditreport.com.  Anything that’s in a three column format won’t be good evidence.

Each credit bureau sells all three–and makes money doing it–but those aren’t good evidence.  What Experian sells you as an Equifax report isn’t evidence of what Equifax is really saying.

You may subscribe to a service that alerts you when bad stuff hit’s your credit.  Those services can be a good thing.  But we can’t use those “third party” credit reports for either a dispute, or a legal action.  I explain more,  here.

Also, please don’t write on them.  If you have some comments or questions, please email them or send them on another sheet of paper.  Thanks.

Getting your after bankruptcy credit report right could save you hundreds of dollars, or even thousands, when you are ready to buy a car after bankruptcy.  So please get back in touch with us.


new-banner2PS  Our promise to help you with bankruptcy errors on your credit report is good for five years.  We’re starting to see errors pop up years after bankruptcy.

Jeff had a house got to foreclosure in 2008; and filed bankrutpcy with me in 2009.  Suddenly, without warning, Ocwen started hitting his credit with 180 days late in December 2010.  Jeff did a dispute, and, as back up, we filed papers in front of the bankruptcy court.  By March it was fixed.  (Since the dispute fixed it, we weren’t able to get any money for Jeff.)

Chris filed bankruptcy with us in 2011–and in the summer of 2013–Green Tree started hitting his credit report.  Green Tree started calling, too.  We complained to the bankruptcy judge about that double violation–and Green Tree made it right.

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Nov 2010

Bankruptcy, Mortgage Companies, Your Credit Report Code Q

Posted by / in After Bankruptcy / 70 comments

On your after-bankruptcy credit report, your mortgage is the account most likely to be wrong.  What the mortgage companies do is far worse than HSBC (see my Nov 22, 2010 blog).  HSBC just parks your late status and doesn’t update showing bankruptcy.  The mortgage companies often update every month, saying you are late and getting later.

This leads me to two questions.  Why are they doing this?  And how?

The credit bureaus promised the judge in the Terri White class action they wouldn’t allow this.  They promised to block creditors from updating late accounts  after bankruptcy.  (The exceptions are things the bankruptcy doesn’t clear up–like child support and taxes.)

So how are they getting away with it?

The answer is in the credit reporting instruction manual, published by the three credit bureaus.  The manual, called Metro 2, includes about a dozen codes for bankruptcies.  Chapter 7, chapter 13, discharged, dismissed.

One of those codes, Code Q, means ignore the bankruptcy.  We’re seeing mortgage companies report a code Q–ignore the bankruptcy–to the credit bureaus.  And then they start reporting people late again.  The credit bureaus are using that code Q as their reason (or excuse) to let the mortgage companies keep up late reporting on debts that were cleaned up in the bankruptcy.

But why?  It doesn’t make sense.  I can understand HSBC parking a three thousand dollar credit card on your credit report.  Three or four years after the bankruptcy, especially if you’ve lost contact with your lawyer, you might go on and pay it to clear up your credit.

But nobody can afford to pay a $100,000 mortgage to fix their credit.   Can they?  (Recently I had a client call Bank of America to complain about a mortgage still showing a past due balance after bankruptcy.  And Bank of America told her, “now that the bankruptcy is over you still have to pay.”)

So maybe they think they can hammer people into making payments when they don’t have to, just by continuing to hit their credit.   (Even if only one person out of ten thousand does it,  they’d come out ahead, since it basically doesn’t cost them anything.  Unless they get sued for it)

I’ve sued on three of these cases so far–got the after-bankruptcy credit report fixed and got people a little money.   My clients were happy to settle for that.

I have another one of these cases going now–and my client is really hacked at her mortgage company.  (She works in the finance industry and knows how much this hurts.)   So I hope we can keep the case going a little longer–long enough to make the mortgage companies explain what they think they are doing.

When I find out, I’ll post it here.

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Nov 2010

After bankruptcy success: Rangers in World Series

Posted by / in After Bankruptcy / No comments yet

Hall of Fame pitcher Nolan Ryan

Hall of Fame Pitcher Nolan Ryan buys Rangers in bankruptcy sale

This would have been a better after bankruptcy success story if they had won.   Instead, the Texas Rangers, who filed a Chapter 11 bankruptcy this summer, were American League champions, but lost the World Series four games to one.

Still, for people who worry that bankruptcy is the end of everything, look at the example of the Texas Rangers.   They were the second best team in baseball the same year they filed bankruptcy.

This is a reminder:  The purpose of bankruptcy is to help you.  Help you get a “new opportunity in life and the clear field for future effort.”   (That’s what the Supreme Court said.)

Your World Series ring may still be ahead.

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Sep 2010

After my bankruptcy hearing: Pay the car. Pay the HOA.

Posted by / in After Bankruptcy / 2 comments

After your hearing with the bankruptcy trustee–called the “meeting of creditors”–here are two things you need to know.  Pay the car payment, if you want to keep the car.  Pay the HOA–even if you aren’t keeping the house.

First, make sure you are making the car payment, if you want to keep the car.  They will not bill you.  Because of the bankruptcy, sending you a bill is trying to collect the debt.   And they are not allowed to try to collect the debt.  They will however repossess the car if you don’t pay.  So make sure you are current and stay current.

(If you were set up on an automatic payment, that has probably been turned off.  Check and be sure.)  If they are not receiving the payment, they will not call and yell at you.  They will repossess your car.

After the 2005 change in the law, they can repossess your car even if you are current.   The people who actually do that are Ford Credit, Chrysler Credit, and SunTrust.  (Mazda is part of Ford.)

(Most states have state laws that block them from repossessing if you are current; but this is Virginia.  Virginia has the worst consumer protection laws of any of the fifty states.  Seriously.)

Talk to me about reaffirmation if you have Ford, Chrysler or SunTrust.

Second, make sure you are paying the homeowners or condo association.  Your bankruptcy means they cannot go after you for what you owed before your case was filed.  But your next month’s association fee is an after bankruptcy debt.  So is the one after that and the one after that.   The bankruptcy court is not paying those.  You need to.  (If you have not paid between your filing date and the date of your hearing, you are probably already one payment behind.)

You owe the condo and HOA fees for as long as you own the house.  That’s usually three or four months after the bankruptcy is filed and sometimes it’s six or eight.   Especially when the condo fees are high, and there are already bank-owned condos in your development, the mortgage company is in no hurry to foreclose.   See my blog on “how long after bankruptcy can I keep my house?”

(The mortgage company doesn’t want to be paying the condo fees on an empty place–they’d rather you do it.  If you know there are a lot of empty units in your condo, think about renting yours, if you’ve already moved out.  Rent it on a month-to-month, obviously.)

When are you able to stop paying?  When there’s a foreclosure sale.  You’ll get notice by certified mail.  (They don’t send those to me, once the bankruptcy is over, I’m not involved.  They send them to you.)  Here’s what one looks like.

It would be a good idea to send notice of the sale to your association, so they do not continue to bill you once there is a foreclosure.

The situation with HOA’s and condo associations is so bad, I have one person in my office assigned to it.  It’s Laura Jones, at (703) 962-1043.  I gave her this job in part because she is a Realtor, on the side.

Problems constantly crop up.   Sometimes the associations apply your payments to pre-bankruptcy debts.  They can’t legally do that.   Sometimes they keep billing after the foreclosure finally goes through.  They can’t do that either.

But often, people aren’t making the association payments.   People say, I gave my house to the bankruptcy court.  Why do I still have to pay?  Answer, the bankruptcy court didn’t want it–they gave it back to you.

So, if you had stopped paying the HOA before the bankruptcy, you need to start paying once the bankruptcy is filed.  I know that seems strange, but there it is.  Pay the HOA.

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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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Jun 2010

After bankruptcy, how soon can I get approved for a new mortgage?

Posted by / in After Bankruptcy / 3 comments

Yesterday the mortgage giant Fannie Mae, now owned the the federal taxpayers, announced a new policy on qualifying for a new mortage, after you lose your house in bankruptcy, foreclosure, or short sale.

They say they want to discourage people who “just walk away” from their mortgages, particularly in states, like California, where the mortgage company cannot come after you for the money.  (Under Virginia law, they can.)

So Fannie Mae now won’t back a mortgage for someone who gave up a house in foreclosure until seven years have passed from the foreclosure date.   They call this a “Seven-Year Lockout Policy for Strategic Defaulters”

Now, there is an exception that I’m calling the loan mod/extenuating circumstances exception.  The seven year lockout does not apply to people who can show the foreclosure was caused by “extenuating circumstances.”  That’s not defined, but I think it would certainly include unemployment, divorce, and probably reduced hours or loss of bonus or commission during the recession.  If you are giving up your house, and want to buy again soon, keeping proof of that would be important.

The seven year lock out also does not apply  to people who tried to get a loan mod.   “We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president.

Only a three year waiting period applies to people who tried to get a loan mod and to people who had extenuating circumstances.  (I’m not totally clear whether that means you have to do both, or if either one is enough.)

If you shortsale the house, or do a deed in lieu, the waiting period is only two years.  (This is one of the very few benefits I see in doing a shortsale. September 7, 2012 Washington Post had a good article on the big damage a shortsale does to your credit score.  You can read that here.)

Lots of people think bankruptcy is the worst thing you can do–those people are wrong.  Fannie Mae regulations require only a two year waiting period after the bankruptcy–again if the bankruptcy was caused by extenuating circumstances.   (Again, it’s important to keep a file documenting loss of income or whatever caused the problem.)

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Jun 2010

After bankruptcy mortgage loan modification saves house

Posted by / in After Bankruptcy / 6 comments

Got an email this morning from Bill and Brenda (not their real names) letting me know they had gotten approved for their mortgage loan modification.

They first came to talk to me about filing bankruptcy in Virginia in November 2008. They really wanted to keep their house, but at that point their income was really low.  Bill was paid by commission, and it had gotten really slow during the worst of the panic.

They couldn’t get approved for a loan modification, because the mortgage company thought couldn’t afford any house payment at all.

So, the mortgage company set a foreclosure sale date on May 15.   Bill filed bankruptcy on May 14–to take care of his credit cards and stop the foreclosure.

They applied again for a loan mod, but got no where.

A new foreclosure sale was set for October 2, after the mortgage company got permission to foreclose from his bankruptcy judge. We filed Brenda’s bankruptcy on October 1, just in time to stop them again.  (The bankruptcy also took care of her credit cards at that point, too.)

By the time the mortgage company got permission again to foreclose, Bill’s income had improved.   This time the mortgage company would consider a loan mod.

And yesterday the loan mod was approved. That was twice bankruptcies were filed within two days of scheduled foreclosures, and now they have saved the house.  Bill and Brenda’s hard work staying in touch with the mortgage company was one reason this worked.  Good timing on the bankruptcies made it possible.   Commissions getting back to normal on Bill’s job helped a lot, too.

It doesn’t always work out that well, but when it does, I’m really happy.  Bill and Brenda really are, too.

I’ve seen several clients get mortgage loan modification offers after bankruptcy when they couldn’t get one before.   This is the one I’m happiest about today.

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Mar 2010

After bankruptcy, what's this from Weltman, Weinberg & Reis? Or Bass and Associates

Posted by / in After Bankruptcy / 1 comment

If you buy furniture, appliances or jewelry on store credit, they have a right to get it back after your bankruptcy is over.  (Unless you keep paying, of course.)

In Virginia, and most states, that right is found in the Uniform Commercial Code. http://www.law.cornell.edu/ucc/9/overview.html.  That law–lawyers call it the UCC–also gives the bank the right to repossess your car if you stop making car payments.  http://www.law.cornell.edu/ucc/9/9-503.html.

The fact is, they are more likely to come after your car, if you stop paying, than to come after your big screen TV.  Two reasons for that.

First, the car is parked out on the street, where they can get to it.  Second, the market for used cars is a lot better than the market for used TV’s.

Still, if they want to, after bankruptcy they can file a legal paper, called a detinue in Virginia law, and ask you to turn over the TV, jewelry or whatever.   I’ve done twelve thousand bankruptcies, and I haven’t seen two dozen detinue.  I’ve seen two or three for jewelry worth more than five thousand dollars.  And the rest were filed mainly by USA Discounters, a furniture and appliance outfit located mainly near military bases.

OK, so who are Weltman, Weinberg & Reis?  This is a law firm that after bankruptcy, will write to you about something you bought at Best Buy or Kay Jewelry and a few other places.   They say they want you to call 800-837-6008 to arrange to turn back in their “collateral.”

You’ll notice they don’t even tell you what the “collateral”–the stuff–is.  That tells you the “collateral” isn’t really what they want.  They want you to call and offer them a payment.

Don’t do it.

My rule is this.  If they contact my clients with a list of what you bought and when you bought it, send that to me.  (Assuming I’m your bankruptcy lawyer.)  I’ll contact them and work something out.  That hardly ever happens.

As for their typical letter.  “We want our stuff back”–without telling you what it is.  Just toss those out.

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