What is a time-barred debt?
It’s a debt that’s too old for a debt collector to sue you to make you pay. Debt collectors have a limited number of years – called the statute of limitations – to sue you to collect on money you owe. Statutes of limitations vary by state, and by type of debt.
What can I do if a debt collector calls about an old debt?
Debt collectors can contact you about time-barred debts at any time. If you get a call from a debt collector, they might come right out and say they can’t take you to court to make you pay a time-barred debt. If a debt collector doesn’t tell you this, which is most often the case, ask him for the date when you made your most recent payment. Ask him to send you a validation notice – a legally required letter detailing the amount owed, and the name of the creditor. Once you receive the notice, send a letter back within 30 days explaining that you are ‘disputing’ the debt and that you want to ‘verify’ it. Debt collectors must stop trying to collect until they give you verification.
What if I am sued for an old debt?
Do not ignore it. Defend yourself. Consider talking to an attorney in order to prove that the debt is time-barred, and have the lawsuit dismissed. Sometimes for a relatively small amount an attorney can call or write the collector and get him to dismiss the case before you need to file an answer in response to the complaint. To do this, you may be asked to provide a copy of the verification from the collector, or any information you have that shows the date of your last payment. Many times, even if the debt is not time-barred, you can get the complaint dismissed. Because there have been so many bank mergers, many times the collector cannot provide the original document you signed to obtain the credit. This is especially true of credit cards. If you get the case dismissed you can ask for attorney fees, or if you are representing yourself, you can get your costs.
Do I have to pay a time-barred debt?
It’s up to you. Here’s what can happen:
- Pay nothing. Not paying a debt may lower your credit rating. So check your free credit report by going to annualcreditreport.com first to see if a time-barred debt has been reported. If the debt appears on your credit report, this could make it harder and more expensive for you to get credit. Debts stay on your credit report for seven years after you stop paying. Although debt collectors can no longer sue you for a time-barred debt, it won’t make it go away. Debt collectors can keep contacting you to pay because you still owe the money. If you want them to stop, send a cease communications letter.
- Partially pay. If you make, or promise to make, a debt payment, the statutes of limitations clock may reset and your debt will no longer be considered time-barred. A debt collector can then sue you for the full debt amount, plus interest and fees.
- Pay it off. Before making a full payment, get a signed letter from the debt collector saying that your entire debt is being settled to release you from further obligations.
|Debt collection issues on your mind? Please call Attorney Linda Fessler at 213-446-6766 for a free consultation.|
If you are thinking about filing a bankruptcy you probably wonder if you will ever be able to buy another house or car or have a credit card.
There are options available to begin re-building your credit rating after a bankruptcy, such as secured credit cards.
A bankruptcy will remain on your credit reports for 10 years and, during that time, it will have some degree of a negative impact on your credit score.
This doesn’t mean that you will have terrible credit scores for a decade after filing bankruptcy. It will have less and less effect as time goes by. Some lenders will consider you for a mortgage 2 to 4 years after the bankruptcy is discharged.
It is sometimes possible for you to qualify for a subprime auto loan within just a few months of his bankruptcy discharge.
You may find yourself paying interest rates on an auto loan in excess of 20%, which will make your financing options extremely expensive almost to the point where it is not worth it.
In addition, just because you can qualify for an auto loan shortly after bankruptcy does not mean that you should purchase a new vehicle. If a consumer truly needs a new vehicle and can afford the monthly payment then adding a new auto loan to his budget might not be a bad idea.
There are plenty of options, if you want to pay outrageous fees and interest rates north of 30%. Having a $30,000 credit limits at 12.9% is a long way from happening after a bankruptcy.
If you have numerous debts and see no way of paying them, you probably should file for bankruptcy. Your credit will recover faster after the bankruptcy, then if you have those numerous debts still appearing on your credit rating for 7 years.
If you have any questions about filing a bankruptcy, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.Read More
If credit card bills are dragging down your budget each month, paying them off as quickly as possible can create some much-needed breathing room. When you’re trying to get out of debt, sheer willpower alone won’t cut it; you also need to have a plan for how you’ll pay it down.
Consolidating your credit cards allows you to streamline your payments so you can cross the debt-free finish line that much faster. While consolidation may not be right for everyone, there are some excellent reasons to consider it if you’re tired of handing over you cash to creditors each month.
Reason #1: You want to save money
By and large, the biggest advantage of consolidating your credit cards is the fact that it can potentially save you a tremendous amount of money. If you’ve got four or five cards that you’re paying 10, 15 or even 20 percent interest on, you’re going to have a hard time digging your way out of debt, especially if you’re not able to pay much more than the minimums each month.
Consolidating multiple cards, either through a balance transfer, personal loan, or home equity line of credit, gives you a shot at scoring a lower rate. That means more of what you pay each month goes to the principal, which speeds up your progress and cuts down on what you’re spending for interest.
Reason #2: You’re trying to boost your credit score
Your credit score is based on a number of factors, including how long your accounts have been open, the types of credit you have and how good you are at paying your bills on time. Late payments and the total amount you owe have the biggest impact so if raising your score is the goal, consolidating your credit cards may work in your favor.
Your credit utilization ratio is the amount of debt you owe versus your total credit line. For instance, if you have five cards that have a $5,000 limit and you’re using $1,000 of your available credit on each one, your credit utilization ratio is approximately 20 percent.
If you were to open up a new credit card with a $5,000 limit and transfer your balances to it, that would increase your total credit line to $30,000 and your credit utilization would drop to 17 percent. As long as you keep your other accounts open and don’t create any additional debt, you should see an improvement in your score.
Reason #3: You own a home
If you’ve built up some equity in your home, shifting your credit card balances onto a home equity loan or line of credit can yield some significant benefits at tax time. The IRS allows taxpayers to deduct the interest they pay towards their primary mortgage but this rule can also be extended to second mortgages.
As of 2015, you can deduct the interest on a second mortgage loan up to $100,000 or up to $50,000 each if you’re married and file separate returns. The catch is that you do have to itemize to claim the deduction so if you normally go the standard route, you may be better off exploring other ways to consolidate your debt.
If you need more info, please call Attorney Linda Fessler at 213-446-6766.Read More
Last year’s $2.9 million verdict in Parr v. Aruba Petroleum, the so-called “first fracking trial,” garnered attention throughout the country. It was significant in that not only did the plaintiffs succeed on their private nuisance claim, but also because the verdict provided a publicly available measure of damages for litigation alleging health issues related to the fracking. Unfortunately, when cases are settled, the settlement is often conditioned on the plaintiffs not disclosing the amount of money that they receive.
The Parr verdict remains on appeal and may be modified or overturned, but it is far from the only case in which landowners have made health-related personal injury claims due to alleged exposure to hazardous gases and industrial chemicals from neighboring oil and gas activities.
At least 26 such cases have been brought in federal and/or state courts in Arkansas, Colorado, New York, Ohio, Oklahoma, Pennsylvania, Texas and West Virginia. Two have been dismissed on the merits, four have been dismissed for failure to join a necessary party or lack of subject matter jurisdiction, eleven have been settled, and nine remain pending. Based on a review of these cases, the following trends have emerged:
- The majority of the litigation has been in Arkansas, Pennsylvania and Texas.
- The most frequently asserted causes of action are negligence, nuisance, trespass, strict liability, medical monitoring and violations of the Pennsylvania Hazardous Sites Cleanup Act.
- The factual allegations are strikingly similar, generally alleging that defendants caused releases, spills and discharges of combustible gases, hazardous chemicals and wastes from its oil and gas facilities causing health injuries, damage to property, loss of use and enjoyment of property, emotional distress, loss of quality of life, and other damages.
- The most common reason for a case to be dismissed is settlement.
- In addition to drilling facilities, plaintiffs have alleged identical injuries from operations at natural gas compression and transmission stations and disposal wells.
Since most of the additional cases have been settled, it remains to be seen if any additional cases will reach a jury verdict.
If you think you have such a case, please call attorney Linda Fessler at 213-446-6766.Read More
If you are ready to become a home owner but you cannot qualify for a traditional mortgage, you may still be able to buy a home. There are a few ways to finance a home purchase that do not involve going to a bank.
- Buy on contract
When you’re financially able to afford a home but your credit is a barrier to getting a loan, buying on contract may be the answer. When you buy a house on contract, you make monthly payments to the seller. The seller holds on to the title until you’ve paid the agreed-upon purchase price in full.
In a contract for deed scenario, the seller is essentially financing the home to you so the bank never gets involved. That’s a definite plus if your credit is not good. You may also have a bit more leeway with the down payment, since some sellers may be willing to accept less than the standard 20 percent down. However, you may end up paying a higher interest rate.
- Take out a margin loan
If you have invested and earned some decent returns, you could leverage those investments into a new home. Brokerages will allow you to take out what’s known as a margin loan, which basically means you will be borrowing against the value of your portfolio. Typically, a person can borrow up to half of what your investments are worth and they serve as your collateral for the loan, instead of the property.
There are pros and cons. On the one hand, you will not pay any closing costs, you will not be required to have your new home appraised and you will not get a prepayment penalty if you pay the loan off early. There is no set repayment schedule, although you should at least pay the interest each month.
On the other hand, you will not receive the mortgage interest deduction. You can, however, deduct the interest you pay on the margin loan. The interest rates are usually higher than what you’d get with a traditional mortgage and if your portfolio loses too much value, you may have to deposit cash into your brokerage account to make up for the difference. You need to weigh the pros and cons.
- Ask friends and family
Taking out a loan from your parents or a friend allows you to avoid the bank and not worry about your credit rating. It is essential that you agree on the loan terms before any money is given or accepted. Drawing up a formal contract or at the very least, signing a promissory note gives the person who is lending the money a tangible guarantee that you are planning to make pay back the loan. A contract should include, at the very least how much you are paying and what the interest rate is in writing.
As long as the money is a loan and not a gift, the lender should not be taxed. You, on the other hand, will lose the mortgage interest deduction.
If you need help in reviewing or preparing a contract, call Attorney Linda Fessler at 213-446-6766.Read More
More Regional Banks to Face Probes of Shoddy FHA Loans
by Kate Berry
AUG 7, 2015 3:52pm ET
Banks are still haunted by bad underwriting of mortgage loans from the last housing boom, and the nightmare could endure for months to come.
M&T Bank’s disclosure Thursday that it is in settlement talks with the Justice Department for not complying with underwriting guidelines on Federal Housing Administration loans has renewed fears that more lenders will be the targets of probes and possible litigation.
The $97 billion-asset bank M&T, in Buffalo, N.Y., joins a growing list of large and regional banks currently in litigation or settlement discussions with the government for allegations of shoddy underwriting.
What is unique about M&T’s case is that it is not a top-20 mortgage lender. Most of the top banks including Bank of America, JPMorgan Chase, Citigroup and U.S. Bancorp have already reached settlements so there is a sense that the government is moving further down the list of lenders.
“We could see some others that haven’t faced this issue yet,” said Frank Schiraldi, a managing director at Sandler O’Neill. “I think if you do see more regional banks announce disclosures [of probes], you’re going to most likely see more settlements as opposed to the banks fighting the government on this.” …
Lenders have been particularly galled by the Justice Department’s use of the False Claims Act, a Civil War-era law that allows the government to collect triple damages for fraud. Lenders have argued that underwriting is subjective. Moreover, FHA has encouraged lenders to make affordable loans to low- and moderate-income borrowers, many with low credit scores who by their very nature have higher defaults.
Most of the investigations into FHA lending began in 2012 or 2013, though the FHA loans in question could have been originated as far back as 2001 and up to 2010.
Theoretically lenders are required to indemnify FHA for loans that have mistakes or are defective, essentially self-insuring the loan so taxpayers are not on the hook for potential losses. In many of the cases, the Department of Housing and Urban Development paid insurance claims on defaulted loans that it later found had significant material violations of its underwriting guidelines. …
Both Wells Fargo and Quicken Loans are fighting the government’s allegations. Wells is currently in the discovery phase of litigation after settlement talks broke down last year. The $1.7 billion-asset San Francisco bank, the largest U.S. mortgage lender, raised its “reasonably possible” loss disclosure for litigation to $1.4 billion in the second quarter, up from $1.2 billion in the first, said Brian Foran, an analyst at Autonomous Research. …
JPMorgan Chase settled a probe for $614 million in February 2014. …
If you need more info, call Attorney Linda Fessler at 213-446-6766.Read More
Citibank ordered to pay $770 million over credit card practices
RICHA NAIDU Jul 21st 2015 1:55PM
Citigroup Inc’s (C.N) consumer bank has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, the U.S. Consumer Financial Protection Bureau said.
The bank will also pay civil penalties of $35 million each to the consumer finance watchdog and the Office of the Comptroller of the Currency.
The $770 million total payout is about 1 percent of Citi’s estimated revenue for 2015, according to Thomson Reuters StarMine.
“Citi is fully reserved to pay costs associated with the agreements,” the bank said in a statement on Tuesday.
The CFPB said that about 7 million customer accounts were affected by Citibank’s “deceptive marketing” practices, which included misrepresenting costs and fees and charging customers for services they did not receive.
The CFPB, set up under the 2010 Dodd-Frank Act aimed at reforming Wall Street practices, said a Citibank unit also “deceptively” charged nearly 1.8 million consumer accounts often unnecessary same-day payment fees while collecting payments.
Citibank misrepresented the charge of $14.95 per account as a “processing” fee and did not explain that the fee was merely to make a faster payment, the CFPB said.
Citi said it had been issuing refunds and had stopped selling products that were part of its agreements with the regulators, including credit monitoring and debt protection products.
The bank said it no longer charged a fee to make same-day payments over the phone.
Citi is not the only big U.S. bank whose credit card practices are under scrutiny.
U.S. authorities, including the CFPB, said earlier this month that JPMorgan Chase & Co (JPM.N) would pay $136 million and reform its credit card debt collection practices.
JPMorgan was accused of relying on robo-signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers. …
$280 Million Uncollected by Consumers
Wells Fargo, JPMorgan and Others under the Microscope for Mortgage Servicing
In 2011, the Office of the Comptroller of the Currency (OCC) and Federal Reserve ordered 16 mortgage services to hire independent consultants to review files for homes in any stage of foreclosure, an enforcement known as the Independent Foreclosure Review. The goal was simple: put an end to the forged or sloppy paperwork being used to hastily foreclose on homes, an act better known as robo-signing.
While many of the mandated changes have been undoubtedly met, it would seem that some lenders still haven’t fully complied, as the OCC has recently slapped Wells Fargo, JPMorgan Chase and four other banks with restrictions on each bank’s mortgage servicing operations.
- Acquisition of residential mortgage servicing or residential mortgage servicing rights (does not apply to servicing associated with new originations or refinancings by the banks or contracts for new originations by the banks);
- New contracts for the bank to perform residential mortgage servicing for other parties;
- Outsourcing or sub-servicing of new residential mortgage servicing activities to other parties;
- Off-shoring new residential mortgage servicing activities; and
- New appointments of senior officers responsible for residential mortgage servicing or residential mortgage servicing risk management and compliance.
Wells Fargo and HSBC were dealt the hardest blow and are prohibited from the following:
- Acquiring of mortgage servicing rights until the consent order is terminated
- New contracts to perform mortgage servicing prohibited until the consent order is terminated
- New offshoring of mortgage servicing activity until the consent order is terminated
EverBank, JPMorgan Chase, Santander Bank NA, U.S. Bank National Association will only need prior approval from the OCC on mortgage servicing activity.
Each of the affected banks said that they are working with the OCC on the related matters.
Some lenders are in the clear though – the OCC also announced that Bank of America (BAC) Citigroup (C) and PNC Financial Services Group (PNC) are in compliance with the IFR and will no longer have restrictions on their mortgage-servicing activity.
So far, the IFR Payment Agreement resulted in the distribution of more than $2.7 billion to more than 3.2 million eligible borrowers, representing more than 90% of the total amount available for distribution.
But despite that high cash rate compared to many other payment distributions, the OCC anticipates that approximately $280 million from OCC-supervised institutions will remain unclaimed at the end of the year after considerable efforts to locate eligible borrowers have been exhausted.
If you think you may be owed money or if you have any other questions, please call Attorney Linda Fessler at 213-446-6766.Read More
FTC stops robocall scam
June 29, 2015
Attorney, Division of Consumer and Business Education, FTC
… The FTC just shut down Payless Solutions, a scam using illegal robocalls to lie about lowering your credit card interest rate.
Here’s the scam: A robocall – often from “Card Services” – says that you qualify for a special program to lower your credit card interest rate, save thousands of dollars, and pay off debts sooner. If you press a number, a representative might tell you they work for your bank or credit card company. They don’t.
It gets worse. Next, they ask for your credit card information and Social Security number. Then, they charge $300 to $3499 for their interest rate reduction services – often without your permission. Most of the time, you don’t get a lower interest rate. And you lose your money.
The FTC and the Florida Attorney General filed a lawsuit to shut down this scam. Why? Payless lied about lowering interest rates, lied about working for consumers’ banks, and unfairly charged consumers’ credit cards without authorization. And those annoying robocalls? They violated the Do Not Call rules.
How can you guard against phone scams like this one? Here are some suggestions:
- If you get a robocall, hang up the phone. Don’t press 1 to speak to an operator or any other key to take your number off the list. If you respond by pressing any number, it will probably just lead to more robocalls.
- Keep your credit card, checking account, or Social Security numbers to yourself. Don’t tell them to callers you don’t know – even if they ask you to “confirm” this information. That’s a trick.
- Sign up for the Do Not Call Registry. If you’re on the registry and get a sales call, it’s a scam.
- You can also sign up for a service to block robocalls, like nomorobo.com, which won the FTC’s 2013 Robocall Challenge.
- Report your experience to the FTC online or by calling 1-888-382-1222.
Looking for ways to lower your interest rate and pay debts? Consumer.gov has tips on managing debt and using credit. For example: when comparing credit cards, don’t just look at interest rates. Also ask about the annual fee, other fees, and the grace period for late payments. Want more help? Check out the FTC’s advice about choosing a credit counseling service.
If you need further information, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.Read More