Seattle Bankruptcy News - Page 2 of 21 - Symmes Law Group

How Do I Get Approved For a Loan Modification?

How to get approved for a loan modificationIf you have become delinquent on your home mortgage you are probably searching for options for how you can avoid foreclosure, get approved for a loan modification and make your mortgage payments more affordable to keep your home.  If you have been delinquent in your mortgage payments for at least the last 90 days, your bank servicer may have mailed you a notice of pre-foreclosure options or even a notice of default or notice of trustee sale. These are the first steps in the foreclosure process in Washington state, but as the notice of pre-foreclosure options and notice of default tell you, you may have options to retain your home and one of those options is to get approved for a loan modification.

A loan modification can help you reduce your interest rate on your mortgage payment, allow arrears to be placed on the back end of a loan, or even lowers your overall mortgage payment.  So why would a bank agree to a modification? The answer is because it is cheaper for the bank to give you a modification rather than foreclose on your home.  With that said, a loan modification is not guaranteed just because you apply and the bank has several guidelines that they will use to evaluate whether it is in their best interest to approve you for a loan modification.

After the housing crash of 2008, the government created a program called Home Affordable Modification Program (HAMP) which allowed for banks to adjust mortgage payments to 31% of a borrower’s income.  This program was phased out at the end of 2016 and replaced by a program called the Flex Modification program which applies the same measures, but it allows lenders to also consider how many days delinquent borrowers are and the value of their home.  The flex loan modification program aims to reduce monthly mortgage payment by 20% for eligible borrowers.

What are the requirements to get approved for a loan modification?

(1)   You mortgage must be owned or guaranteed by Fannie or Freddie Mac.  Loans from FHA, VA or USDA do not qualify.

(2)   Your mortgage must be at least a year old.

(3)   The mortgage you are trying to modify must be in first position on your home.

(4)   You must be at least 60 days delinquent on your mortgage payment.

(5)   The mortgage loan must not have been modified 3 or more times.

(6)   You must submit a borrower response package provided by your loan services as well as a completed 4506T form requesting a copy of your taxes, last filed tax return, a letter of hardship as well as proof of your last 60 days of income and bank statements.

With this information your bank will evaluate whether to approve you for a loan modification and if you are more than 90 days delinquent on your mortgage loan you may be eligible for a streamline version of flex modification in which a full forms and income verification package may not be required.  The streamline modification goal is also to reduce mortgage payments by 20%.

Once the bank receives all of the required documents, they will do their own analysis to determine whether you qualify for a modification.  The most important factors that will impact whether you receive a modification or not are going to be how much in arrears you are, the value of your home and whether you can afford a modified payment moving forward.  The bank needs to make a business decision on whether it is more beneficial for them to give you a modification or foreclose on your home.  For a complete look into how the bank will analyze your application you can click HERE

If you live in Washington state and would like to apply for a loan modification and get the protection and peace of mind of not being foreclosed upon while in the modification process you should consider applying for a modification through the states foreclosure fairness program in which a mediator as well as local attorneys for the bank and yourself will be present to hopefully make sure things go smoothly.

If you are denied a modification or have not applied in time in which to stop a foreclosure sale on your home, you may qualify to file a chapter 13 bankruptcy in order to stop a sale and make up your arrears over 60 months.  You can also apply for a loan modification while in a chapter 13 bankruptcy.

If you live in Washington State and are looking for assistance with applying for a loan modification give Symmes Law Group a call at 206-682-7975 to speak to a loan modification attorney and learn about your options.

What Happens After Filing For Bankruptcy?

filing for bankruptcyIf you are considering filing for bankruptcy, you likely want to know what exactly happens once you do so. However if you want to know if filing for bankruptcy is a good idea and whether chapter 7 or chapter 13 bankruptcy makes the most sense, you should consult with a bankruptcy lawyer prior to filing your case.

So what happens after you have filed for bankruptcy?

After you have reviewed and signed your bankruptcy petition and supporting schedules your bankruptcy attorney will file your documents with the local bankruptcy court in the jurisdiction in which you reside. In Washington State, all bankruptcy attorneys must file cases online using the courts Electronic Case Filing System. Once the case is filed, the clerk of court will review the documents that were filed in your case and make sure you have filed all of your required documents. If something required is missing, the clerk will issue a notice of deficient filing and you will need to make sure you comply with the court notice by the deadline listed if you don’t want your case to be dismissed.

Upon the filing of your case, you will also be issued a bankruptcy case number, a bankruptcy trustee will be assigned to your case, and mail will go out to all of your creditors that you listed in your bankruptcy petition from the bankruptcy noticing center.  This all happens immediately and from the time your bankruptcy case is filed, the bankruptcy automatic stay will go into effect, stopping most creditors from attempting to collect on a debt. This is what stops wage garnishments and foreclosure actions on your home.

Next, your attorney sometime before your required 341 meeting of creditors will send the trustee assigned to your case your last filed tax return, last 60 days of paystubs, last 30 days of bank history and a declaration form as well as a chapter 13 info sheet if filing for chapter 13.  The meeting of creditors is held in about 30-45 days after your case is filed and in the jurisdiction where you live.

At the meeting of creditors, the trustee will ask you basic questions about your bankruptcy petition and financial circumstances.  Creditors can show up at the meeting to ask you questions under oath, but that is a rare occurrence.  Creditors are more likely to show up if you know you have the possibility of a hostile creditor such as an ex spouse or business partner who is trying to prove that a debt may not be dischargeable or if there is the possibility of making a case for fraud. Usually general creditors such as somebody representing a credit card or medical bill won’t show up.  In many cases, if you don’t own many personal assets, your meeting will be less than 5 minutes, however usually about 1o other people are assigned to meet with the bankruptcy trustee at the same time so you should expect to be at court for about an hour.

If you haven’t already completed your required financial management class, you should do so after the meeting of creditors in order to ensure that you will receive your discharge in about 90 days after your case is filed in chapter 7 or at the end of your plan in chapter 13 bankruptcy.

Creditors or the US Trustee have the right to object to your bankruptcy filing or discharge and are given about 90 days in which to do so. In most cases, no objections are filed and the discharge will be issued in 90 days after your case was filed.  This is what you are looking for as a bankruptcy judge signs an order stating that your debt has been forgiven if the debt is of a type that is dischargeable.  In a chapter 13 case you would be on a 3-5 year repayment plan so the discharge would happen once the plan is completed.

Filing For Bankruptcy and Case Closure

One you receive you bankruptcy discharge, your case can close. However if a chapter 7 trustee is investigating assets or trying to sell assets such as real estate for the benefit of your creditors, your case can remain open, even after your bankruptcy discharge has been issued. Once your discharge is issued however, your credit reports should be updated to reflect that your debts have zero balances and are closed out.  You will want to review your credit reports about 30 days after your discharge has been entered to make sure items are being reported correctly.  If they are not reporting correctly you can dispute these items with the credit bureaus.

If you happen to get a collection letter or call from a debt collector regarding a debt that was discharged and incurred prior to your case being filed, it is likely because the creditor did not receive notice or it may be a scam, so be mindful of that.  Usually scam callers have to do with pay day loans and these calls should be reported to the Federal Trade Commission, FBI or your states Attorney General.  If your case was a no asset case, which means the bankruptcy trustee did not take or sell any assets of yours, that debt should be discharged whether it was listed or not.

This is a general guide of what happens in a typical bankruptcy case, however other things you may have to deal with or consider are reaffirmation agreements for secured debts, trustee objections and motions to dismiss proposed plans or filing or defending the rare adversary case if there is a creditor who is behaving badly and not adhering to the rules of the bankruptcy code or if you failed to abide by the rules of the bankruptcy code by acting in good faith. Filing for bankruptcy can be complicated and have consequences but if done properly with the proper counsel you could be debt free and get the fresh start that you deserve. Most debtors are able to purchase a home after about 2 years of a bankruptcy filing and shockingly you will be offered offers for new creditor cards and vehicles almost immediately after filing, so there is hope that you will be able to rebuild your credit scores in short order.

If you live in Washington State and are looking for assistance with filing for bankruptcy, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

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How Do Mortgage Payments Work?

HowdomortgagepaymentsworkFiguring out what you owe on your mortgage can be very difficult, especially when you likely have to go in circles with your loan servicer to get a competent person to answer the phone with regard to how your mortgage payments work. I discussed this topic on 1150AM KKNW recently and you can listen to the entire conversation here:

For most people, their mortgage is their biggest debt that they will ever have and their home is their most important and expensive asset that they will ever own. Surprisingly, the people accounting for your payments are increasingly incapable of the very basics of their job.  These days, it is very common for home loans to get sold to another owner the moment the deal closes. It is even more common for your note to get sold into a trust with many other loans without you having a say in the matter. The right to collect the loan payments is bought and sold separately from the right to the payment amount which is usually handled by a separate loan services.

Increasingly, the servicers are making mistakes as they cut corners for the almighty dollar at your expense and it not uncommon for your services to change several times over the lifetime of the loan.

So what do you need to know to assess whether your loan servicer has got the numbers right?

1. Principal balance isn’t always what you owe

For most people if you ask somebody what they owe on their mortgage they will recite the principal balance. The principal balance is the remaining part of the amount originally borrowed that is still unpaid. With that said, it’s possible you owe other fee’s that you may not be aware of such as delinquent payments that are mostly interest, late fees, escrow advances, or junk fees that most delinquent loans consist of in the form of penalties.

Finding the principal balance gets even trickier if the loan has been modified to include a non-interest bearing amount or some other out of the ordinary adjustment. So the amount necessary to pay off the loan upon sale, or refinance, may very well include charges from past delinquencies plus fees for calculating what you need to pay to satisfy the debt in full.

2. Payments are credited to oldest month unpaid

If you fall behind on a mortgage, then resume making payments, your payment will likely be credited to the oldest month still unpaid.
So the payment you make in March 2017 may be credited to July 2016 if you missed a payment back in July 2016.  The servicer will then report that you remain due for July 2016, even though you sent a check in March 2017.  It’s all in the rules about how payments are credited under the terms of the note that you signed when you closed on your home and financing documents that you probably did not read closely at that time.

3. Payments may not be credited

Loan servicers usually have a separate super secret account labeled “Suspense” into which they sometimes dump your payment.  Of course they don’t tell you this when you sign your loan documents. The bank usually has your money, they just haven’t credited it to the amount you owe when the funds are in a suspense account.

Usually the only reason for putting funds in a suspense account is when the payment submitted is too little to make a full payment on the monthly loan amount. Servicers are not required to credit partial payments to your account. Therefore, they put the money in suspense until they receive enough money to make the usual payment.  Suspense accounts can often contain errors of unapplied funds in the tens or even a hundred thousand dollars so this is the first place I would check if it looks like you are being reported delinquent on a mortgage payment.  Therefore, a mortgage statement that doesn’t address any funds held in suspense would not tell the whole story.

4. Escrow accounts contain something extra

If your local property taxes and hazard insurance are paid by the lender, you have an escrow account. Under federal law, the lender is allowed to collect more than the sum of the year’s taxes and insurance as protection against the borrower’s non payment. The extra money, the “cushion”, can be no more than 1/6th of the annual expenditures. It remains your money, it’s just held by the servicer should the servicer have to make the payment on your behalf should you not be able to pay.

You should also get an annual escrow analysis that shows income and expenses in the past year’s escrow account and a projection of the coming year’s expenses. That projection will determine what you pay in escrow payments going forward.

5. Statement doesn’t come from owner of note

Now that it is common for loans to be bundled up and sold on Wall Street to investment trusts, the work of collecting your payments has been handed off to loan “servicers”.  The owner of the note (likely a trust) pays a company to deposit your payments, keep track of fees and expenses, and take action if you don’t pay. The servicer rarely owns the note, they just have the right to collect the money.

Servicers change and they change quite often.  When there’s a loan handoff from one servicer to a new servicer, details about anything unusual in the loan account sometimes gets lost. You should review your monthly statement. The problem of finding out what the servicer thinks you owe became such a problem that regulations written pursuant to the Dodd-Frank act gave borrowers some protection. Now, a borrower with a home loan can make a Request For Information about their loan and expect answers within a shorter period than under the old law.

If the servicing of the loan has changed to a new company, the borrower has a window in which to request information from the old servicer, to compare with what the new servicer thinks.

If you live in Washington State and are looking for assistance with a loan modification or foreclosure defense, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

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Can a Business File Bankruptcy?

Can a business file bankruptcy?Yes a business can file for bankruptcy, but a business owner will need to determine whether it will make sense to file a business bankruptcy, or deal with the debts on a personal level through a personal bankruptcy or debt settlement.  A business is eligible to file Chapter 7 or Chapter 11 bankruptcy.  Chapter 7 bankruptcy is a complete liquidation of the businesses assets and debts, but the catch is that a business does not get a discharge of debts.  This differs from a personal chapter 7 case in which the individuals are usually given a discharge of debts that are eligible for a discharge.  A Chapter 11 bankruptcy is a type of bankruptcy that allows a business to reorganize its debt in a payment plan. This type of bankruptcy is usually filed by high net work individuals or businesses who want to remain in open and figure out a way in which to pay their debts over time.  Chapter 11 bankruptcy cases have many requirements and can be very expensive due to the complexity of the cases and requirements.

You can check out the audio conversation I had regarding whether a business can file bankruptcy that was live on 1150AM radio here:  
(1)   Does chapter 7 bankruptcy make sense to file for the business if no discharge is given?

In most cases the answer is no because a business cannot receive a discharge of debts, which means the business will still have debt at the end of the bankruptcy filing.  With that said, there is a situation in which it would make sense for a Washington state business to file for chapter 7 bankruptcy.  In Washington state, individual owners of a corporation or LLC are generally personally liable for all of the taxes incurred by the corporate entity, however Washington state law provides that the individual owners of a corporation or LLC will not be liable for premiums owed to the Washington State Department of Labor and Industries [See RCW 51.48.055(4)] and the Washington State Department of Employment Security [See RCW 50.24.230(3)] if the business associated with the debts files and completes a Chapter 7 bankruptcy.

Therefore, the only reasons in most cases it makes sense for a business to file chapter 7 bankruptcy is to either get some help liquidating assets or avoid personal liability on L&I taxes by completing a Ch. 7 case which is solely based on Washington state law, not Federal bankruptcy law.

(2) Can Individuals file for bankruptcy to get out from business debts?

In many cases the answer is yes if the business owners have personally guaranteed the unsecured business debts.  Debtors best options will likely be to need to negotiate settlement for less than the full balance on the debts or file a personal chapter 7 or chapter 13 bankruptcy to escape liability if they qualify and it makes sense. With that said, filing a personal bankruptcy may not relieve a person of Washington state L&I premiums, which is why a corporate chapter 7 bankruptcy filing may be necessary as well to get out from that type of debt.

(3) What happens if a business files chapter 7 bankruptcy?

The first step after filing a bankruptcy case, is that a bankruptcy trustee will be appointed to the case.  Their job is primarily to liquidate assets and pay creditors from their proceeds.  If your business does not have many assets, your case may close in about 90 days.  Otherwise the case can stay open until all assets of value are liquidated and creditors paid.  The case will close without a discharge of debts, which is different than from a personal bankruptcy, where an individual can receive relief from their debts.

(4) What if I don’t owe L&I Taxes related to my business?

If you don’t have any Washington state L&I taxes to worry about, then it makes sense to simply dissolve the business and assets on your own and then if there are other unsecured debts you are personally liable for from the business, file personal bankruptcy if it makes sense or settle your debts outside of bankruptcy.

(5) Can my business be sued after it is closed?

The short answer is yes, but if the business has no value or assets, then any judgments against the business will be moot.  If you have dissolved the business, then you should be more worried about being sued personally if you have personally guaranteed the debts.

(6) How much money can I make personally to qualify for chapter 7 Bankruptcy?

The amount you can make varies based on your family size and your household gross income.  However there is an important exception in the bankruptcy code where if 51% or more of your debt is business related, you don’t have to pass something called the means test and the income limits don’t apply to you.  With that said, you will still need to show on bankruptcy schedules I & J of the bankruptcy petition, which shows your current income and expenses, that you don’t have disposable income in which to pay creditors.

At the end of the day, if business dream does not play out the way you expected, at least you know you have options in which to start rebuilding your personal credit and financial situation.  If you live in Washington State and are looking for assistance in managing your business related debts, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

Who is National Collegiate Student Loan Trust?

National Collegiate Student Loan TrustIt’s not surprising that you have never heard of National Collegiate Student Loan Trust, in fact you are probably reading this article because you have no idea who they are or why they have filed a lawsuit against you.  National Collegiate Student Loan Trust in most cases has to do with a private student loan that you took out or personally guaranteed.  The interesting thing is this entity isn’t a lender, servicer or guarantor of your loan. Instead, it’s a series of trusts that contain numerous private student loans packaged and sold as investment vehicles to investors.  While private student loans are not dischargeable in bankruptcy, this entity may agree to a settlement of your loan for 50% or less of what you owe them if you have a lump sum available to offer due to the investors seeking to recover as much of their investment as possible.  Furthermore you could also choose to fight the lawsuit and force National Collegiate Student Loan Trust to provide proof that you owe the debt by providing a promissory note signed by you or proof that the trust has standing to sue you for the debt.

I am guessing that if you are being sued by National Collegiate Student Loan Trust, at some point in your life you borrowed or co-signed a private student loan from JPMorgan Chase Bank, N.A., Charter One Bank, N.A., Wells Fargo Bank N.A., Bank of America, N.A., RBS Citizens, N.A. or Union Federal Savings Bank among others.  These lenders are called loan originators since they created the loans.  What you probably were not told when you signed up for the loan is that shortly after the bank lent you the money, the loan was transferred to an entity called The National Collegiate Funding LLC.  This company has no function aside from hanging on to the loan until it’s ultimately transferred into the trust.  This entity is called a depositor while a servicer is the company that collected the money on your private student loans and sent you a bill every month.

Did You Know That There is More Than One National Collegiate Student Loan Trust?

Yes it’s true that there are numerous National Collegiate Student Loan Trusts made up of hundreds if not thousands of private student loans packaged and sold off from the originator to the depositor and then sold to investors.  Each trust is identified by a numeric code, such as National Collegiate Student Loan Trust 2007-3.  Here is a sample prospectus from National Collegiate Student Loan Trust 2007-3 just to get an idea of how complex this system is.

Once the loans are transferred into a National Collegiate Student Loan Trust, bonds are sold to investors. Each bond entitles the investor to receive distributions from the trust based on the amount of money that comes in from private student loan borrowers.

The greater the percent of loans in the trust that are paid on time, the better the return on the investor’s investment. But if too many of those loans go into default, the investors don’t make very much money which opens up the door for you to settle your debt for less than the full balance of the student loan you owe or possibly challenge the validity of the loan.

What Happens Once I Default on A National Collegiate Student Loan Trust Debt?

Once you have gone delinquent on your National Collegiate Student Loan Trust debt, the operators of the trust may hire a third party debt collection company or law firm to send out collection letters or call consumers.  The primary debt collection law firm hired for these loans is Patenaude & Felix. Unfortunately for National Collegiate Student Loan Trusts and many other third party debt buyers, the information that they have from major banks, the originators of the loans, only includes a spreadsheet of information with consumers information. It is very possible that National Collegiate Student Loan Trust nor Patenaude & Felix cannot produce original contracts or promissory notes signed or any proof that you actually owe on a debt or that National Collegiate Student Loan Trust has standing to collect on the debt.  Further, if National Collegiate Student Loan Trust shows up on your credit report it is likely that they will not be able to validate that you owe a debt in accordance with the Fair Credit Reporting Act and therefore any negative reporting must be removed from your credit upon a request for validation of the debt.

How Should I Handle A Debt Being Collected By National Collegiate Student Loan Trust?

Now that you know who National Collegiate Student Loan Trust is, the next step is to figure out  how you can deal with them.  Your first contact with this company will likely be through a letter that you receive in the mail from a third party debt collector or debt collection law firm such as Patenaude & Felix indicating that they represent National Collegiate Student Loan Trust who has purchased your Student Loan and that you should contact them to make a payment on a debt that they are collecting for.   If you don’t take any action then at some point it is likely you will receive or be served with a Summons and Complaint, also known as a lawsuit.  These are legal documents that indicate that a lawsuit has been filed against you and you will have 20 days to respond from the date of service to avoid having a default judgment being entered against you. It is likely that your case will have been filed in the county in which you live in either the superior or district court.  Also be on the look out for any case filed against you without a case number.  If your case does not have a case number, you still must respond to the complaint to avoid a default judgment being entered against you.  However if there is no case number you have a better chance of the law firm not pursuing the collection in the near future since they have to incur more fee’s in which to actually file your case at the court house.  If anything at least filing an answer will buy you some time.

If you get a default judgment entered against you, that allows National Collegiate Student Loan Trust to garnish your wages, bank accounts or place a lien on your home. You will want to avoid this from happening at all costs.  Having a judgment against you will impact your ability to settle the debt for less than the full balance and can also affect your credit scores and impact your ability to gain favorable credit in the future

How you decide to handle debt being collected by National Collegiate Student Loan Trust will be determined by your particular situation.  For instance if the debt in question is for a small amount and you know you are responsible for the debt you may just want to settle your account with the company attempting to collect on the debt.  Often times these debts can be settled for less than the original balance owed.  Obtaining a settlement of 50% or less of the total balance on settlements is not uncommon.  If a settlement isn’t an option then often times a payment plan can be obtained although the total settlement amount will probably be higher.  The option to pay to have a negative item deleted on your credit may also be available but always make sure you get any settlements in writing.

Next if you have other outstanding debts including the National Collegiate Student Loan Trust debt and your debt load is over $10K then you may want to speak to an attorney regarding filing for bankruptcy.  Filing for bankruptcy will stop a debt collector from collecting on a debt immediately.  A Chapter 7 bankruptcy will eliminate all of your unsecured debt in most cases, while a Chapter 13 bankruptcy will give you a payment plan over 36-60 months to pay on your debts in which you may or may not have to pay the full amount back depending on your income and family size.  Since National Collegiate Student Loan Trust is a student loan, this will not be discharged in bankruptcy.

If your goal is simply to buy some time in which to obtain funds to settle the debt or you want to fight the lawsuit and you have already been served with a summons and complaint then it is advisable to file an answer to the summons and complaint.  The answer must be filed in the court where your law suit is and a copy sent to the law firm as well.  The answer outlines all of your defenses and responses to the allegations in the complaint.  Filing an answer will help you avoid a default judgment and allow for you to buy time and force the law firm to produce paperwork from the original creditor showing you owe the debt.  If you do file an answer, it is likely that National Collegiate Student Loan Trust at some point in the next couple of months will file a motion for summary judgment stating that they have evidence that you owe the debt and that they should win their case.  At this point the law firm would be required to actually produce such evidence.  If you don’t have a valid defense to these allegations you will want to settle your case to avoid further attorney fee’s and interest being entered against you.  Otherwise you have the option to continue in litigation and see if the company will produce evidence that you owe on a debt and a court will determine whether National Collegiate Student Loan Trust has  standing to collect on the debt.  Often times third party debt collectors cannot produce such documentation but the only way to find out for sure is to see your case to the end, often ending with a trial.  If for some reason you have let a default judgment get entered against you and you need to stop a wage garnishment a bankruptcy can always be filed after the fact and any wages taken within 90 days of the bankruptcy filing may be returned to you.

If you live in Washington State and have received a letter or a legal summons and complaint from National Collegiate Student Loan Trust and have questions about it, give Symmes Law Group a call at 206-682-7975 to learn about your options.

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How to Manage Old Debt After Recent Supreme Court Ruling

Old DebtIt’s easier for old debt to haunt American consumers seeking refuge in bankruptcy, thanks to a recent ruling by the Supreme Court in Midland Funding, LLC v. Johnson (2017). I have blogged before about Midland Funding and their reputation for collecting on stale debts and debt that they may not even be able to prove that you owe. Unfortunately they are one of the largest debt collectors that are out there and now the Supreme Court seems to have no problem with some of their fraudulent practices.  I discussed how to manage old debt on 1150AM KKNW in Seattle, Washington with Dr. James Gore on the New Urban Unlimited Show and you can listen to our discussion here:

The nation’s highest court said debt collectors can try to collect on expired debt through bankruptcy proceedings without running afoul of the Fair Debt Collection Practices Act (FDCPA), reversing a lower court’s decision. The case started when an Alabama debtor sued Midland Funding, LLC under the FDCPA for filing a proof of claim in Ms. Johnson’s chapter 13 bankruptcy case related a time-barred $1,900 credit card debt that was over 10 years old. In Washington state, creditors have 6 years to collect on a debt from the last account activity which is called the statute of limitations.  The new ruling diminishes much of the liability collectors previously faced when filing bankruptcy claims for debt that passed a state’s statute of limitations. The Eleventh Circuit had ruled in a 2014 case that the strategy violated the FDCPA, dissuading many debt collectors from the practice.

Because of the Supreme Court ruling in this case, bankruptcy attorneys and consumers will no doubt see more stale claims being filed in the bankruptcy court. If consumers don’t know that they have the right to object to the claims, they will be required to pay more into a Chapter 13 payment plan than otherwise needed.
The decision also emphasizes how careful consumers should be when it comes to old debts. Creditors and debt collectors can try to collect expired debt forever by calling or writing letters, but there are laws in place to protect consumers. Here’s what you should know about old debts to use the law to your advantage

Know the statute of limitations when collecting on old debt: While the ruling allows debt collectors to try to recoup expired debt in bankruptcy, they still can’t file a lawsuit against you for the debt. Each state determines how long a creditor or debt collector can sue for an expired debt, which can range from three to 10 years. The length depends on the type of debt and type of contract. The clock starts from your last account transaction. In Washington state the statute of limitations is 6 years.

Get verification of the old debt: If a debt collector calls or sends a letter to collect an old debt, you should respond in writing and ask to be provided verification to make sure the debt is yours with the date of last payment. You will also want to ask for proof that the debt collector has standing to collect on the debt. Your request for verification must happen within 30 days of getting a written notice of the debt. Debt collectors can’t collect debt until they provide verification. If the debt is outdated, you can use the written verification as proof of its expiration if the collector continues to come after you.

Stop annoying calls and letters trying to collect the old debt: By law, debt collectors must stop unwanted telephone contact if requested by the consumer in writing, no matter if the debt has expired. Document when you make your request. Specifically you should ask not be contacted again regarding the debt in any manner. Send by certified mail and get a return receipt. Keep a copy of the letter and return receipt for your records just in case the debt collector continues to call. This could be grounds for a FDCPA violation and statutory damages to you in the amount of $1,000.

Don’t ignore a court summons related to the old debt: You should never ignore a summons and complaint. Doing so could result in a default judgment against you and then attorney fees, interest, and penalties could be tacked on. Some debt collectors still try to sue for outdated debt as a pressure tactic. If the debt is time barred, you can use this as a defense to win your case. If you ignore the suit, you could end up having your wages or bank accounts garnished, not to mention a judgment showing up on your credit report.

If you pay the old debt, make you sure you get documentation: If you have decided to pay the old debt or negotiate a settlement, make sure you get the terms in writing. The agreement should state that the amount settles the entire debt and you are released from any further obligation. Never send a good-faith payment because it could restart the statute of limitations clock and allow the debt collector to sue you. Keep in mind however, that you making a payment on the expired debt will validate any negative reporting on your credit report, although the debt would be updated to satisfied, or settled for less than the full balance, rather than delinquent. However it could stay on your credit report for another 7 years.

Know how the old debt affects your credit scores: Even if a debt is past the statute of limitations, it can still show up on your credit report and hurt your credit score. Negative items don’t fall off credit reports until after seven years from the date of your last account transaction. That means although creditors may be time-barred from suing to collect your credit-card debt after only six years, the debt can remain on your credit report for another year. Making a payment can validate a debt and cause the debt to be reported as settled or settled for less than the full balance for another 7 years. If you are going to pay the debt, you should first try to ask for a “pay for deletion” where the debt collector agrees to delete the item off your credit report entirely. Many debt collectors may agree to this If you pay them in full, while others will just refuse to take you up on this offer.

Object to the old debt in bankruptcy: If you’re filing for Chapter 7 or 13 bankruptcy, review each proof of claim from every creditor. In chapter 13 case you can monitor your claims activity online. You can challenge a claim for many reasons, including expiration, by filing a written objection with the court. A judge will determine if the claim is valid. I would expect we should be seeing more time bared claims filed in the future

If you live in Washington State and are looking for assisting in managing your old debt, give Symmes Law Group a call at 206-682-7975 to speak to a debt relief attorney and learn about your options.

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Can an Attorney Help You Buy and Sell Real Estate?

attorney to buy and sell real estateYes! In fact this can be a way you can save a significant amount of money on your real estate transactions.  I had the opportunity to discuss whether an attorney can help you buy and sell real estate on 1150 AM KKNW which you can listen to here:

Do I Have to Hire a Traditional Real Estate Broker to Sell My House?

The short answer is no you don’t have to hire a real estate broker to sell your house, but like any situation there are benefits and drawbacks either way you go.

Can I Hire an Attorney to assist with a Real Estate Transaction?

Yes. The web has transformed the way people buy and sell real estate. Today there are not many secrets to buying or selling a house. Most people just need an experienced professional to assist in negotiating and closing the deal, and they should not have to pay a full commission. We work for a 1.5% commission that is less – sometimes WAY less – than what you would pay a typical agent.

What if I Just Want to Make an Offer on a house without an Agent?

A lawyer can assist with this, however most buyers agents are paid by the seller at closing, unless the transaction is a non MLS transaction in which the seller states the buyers agent will not be paid by the seller. Therefore in an MLS transaction an attorney can rebate back to the buyer a percentage of the commission or charge a flat fee for each offer drawn up on behalf of the client.

What are the professional costs associated with a Real Estate Transaction and How Much Can I save by Hiring a Lawyer?

Most residential real estate transactions in Washington involve licensed real estate brokers, in which a buyers broker is paid 3% commission and sellers broker is paid 3% of a commission. These brokers are usually part of the Multiple Listing Service (MLS) in which MLS forms are used and the language in the forms are standard and required if listing a property on the MLS. Brokers are allowed to fill out the forms but not make changes to the forms.

If you use an attorney, they can use their own forms or amend the MLS forms to whatever language they want to use which doesn’t require the standard commission fee’s be paid if the property is not listed on the MLS. Therefore your attorney could charge a commission of 1.5% instead of 3% or a flat fee and then state that the buyers broker has to be paid by the buyer. This would create a significant savings for a seller even if the seller has to contribute something to the buyers agent which can be negotiated.

Why Hire a Lawyer Instead of a Real Estate Broker?

(1) In this crazy hot Seattle metro market just about everything is going fairly quickly and you could list as a FSBO non MLS or submit through an MLS directory or hire a lawyer who is also a broker to list on MLS which will get picked up by Redfin, Trulia etc. My take is that most active buyers are on Redfin constantly checking houses so the MLS is becoming less necessary, especially in the Seattle market.

(2) You could also always go MLS/Broker if you don’t get the price you want initially.

(3) The amount you could potentially save by not having to pay high agent fee’s most likely exceeds what an agent would increase the sale value by actively marketing the property. As an example you could save up to 4.5% and on a $700k house that is $31,500!

(4) You don’t need to list the property online as you already have a buyer lined up.

(5) A lawyer is better equipped to negotiate a short sale on your behalf should the need arise and deals need to be worked out with the bank as well as a buyer/seller so that the bank will accept less than they are owed if a property is underwater.

(6) A lawyer has much more formal education than a broker and in essence you are getting the benefits of having your own lawyer on a transaction as well as an agent to review for what most people is the largest purchase/sale they will make. In fact a handful of lawyers or both licensed attorneys and brokers.

(7) Additional home tours, staging, videos etc. and the more traditional broker services can always be added to any transaction at cost or for a flat fee, although most basic transactions would not include these services.

When would hiring a Traditional Real Estate Broker make more sense?

(1) You feel that your property would benefit significantly from the contacts of your agent in marketing and showing your property outside of what listing the property online would bring.

(2) You simply don’t have any time to deal with showing your property and don’t mind paying the extra cost for more hand holding, house tours and house staging throughout the buying and selling process.

If you live in Washington State and are looking for a Seattle attorney to help you save money when buying and selling real estate, give Symmes Law Group a call at 206-682-7975 to speak to a real estate attorney and learn about your options.

Confessions of a Seattle Bankruptcy Attorney: 5 Myths About Filing Bankruptcy

Seattle bankruptcy attorneyIn every day life, nobody goes into a business venture or every day life thinking that they will have to someday talk to a Seattle bankruptcy attorney, however one unplanned event can sometimes send people and families on a path to bankruptcy. Most Americans would rather not have to file for bankruptcy however, most consumers simply don’t have a lot of room for error in their monthly budget for unplanned expenses.  

The Federal Reserve reported in 2016 that 46% of U.S. families said they would have trouble paying emergency expenses of $400. And a 2015 MagnifyMoney survey found 56.3% of Americans have less than $1,000 in their savings account.  This means there is not a lot of room for error and one emergency room visit or auto expense or accident could send a consumer down the path to bankruptcy.

In an effort to help consumers understand all options that are available, here are 5 myths about filing bankruptcy.  You can also listen to the discussion on this topic I had on the New Urban Unlimited radio show on 1150am KKNW here:

1. Say “Goodbye” To All of Your Assets….


Filing bankruptcy doesn’t mean you’ll lose everything.

The two most common types of consumer bankruptcy are Chapter 7, or liquidation, and Chapter 13, sometimes called a wage earner’s plan.

If you successfully file a Chapter 7 bankruptcy, the court will appoint a trustee and you will in most cases receive relief from your debts in 90 days from filing. The trustee is tasked with reviewing your assets to determine if any of them can be liquidated for the benefit of your creditors.  Most assets are protected through bankruptcy rules call exemptions, but you should talk to an experience Seattle bankruptcy attorney to make sure you are not at risk of losing anything. 

But not everyone is eligible for Chapter 7. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), an individual must make below their states median income for their family size  or pass the “means test,” which determines if, according to the government, that you have other expenses that would allow you to qualify for chapter 7 when you would otherwise be above your median income.  If you are below the median income you do not have to pass the means test. 

Chapter 7 bankruptcy is cheaper, easier and quicker, but it doesn’t always fit everyone’s needs.

In a Chapter 13 bankruptcy, an individual sets up a three- to five-year plan, depending on their income level, to repay their creditors. All debts are reorganized and consolidated, and the filer pays a chapter 13 trustee, who pays creditors. If you’re behind on your mortgage and want to keep the bank from foreclosing on your home during bankruptcy, a Chapter 13 can help you make up your bankruptcy arrears over five years. In chapter 13 bankruptcy, assets are not liquidated. 

2. “My credit will be destroyed for life.”

Yes, a bankruptcy can stay on your credit for 10 years after you successfully file. But look at it this way — if you’re facing debts so high you’re considering bankruptcy, it’s likely your credit is already suffering. And it’s going to be pretty difficult to start rebuilding your credit if you’re burdened by a large amount of debt. 

A large part of your credit score is looking at the amount of unsecured debt that you have at any given time.  I you have maxed out all of your cards you will never be able to improve your credit while carrying the debt load.  In many cases, those who file chapter 7 bankruptcy see increases in credit the moment they get a bankruptcy discharge order from the court.  While having a bankruptcy on your credit is a negative item, it may not be as bad as having several negative items reporting on your credit every month and having a high debt load.

Clients often report that after filing for bankruptcy they wish they had gone through with the bankruptcy filing. 

3. “I’ll never get approved for new credit again after filing bankruptcy.”

There’s no quick fix for having a bad credit score in most cases, but that doesn’t mean that you’ll never be approved for a new credit card or home loan again.  In fact it is quite the opposite after filing bankruptcy.

Many of my clients receive offers for car loans and credit cards before we have to go to court, 30 days after the case is filed. That’s because credit card companies and auto dealerships market directly to people who have filed for bankruptcy. Many of these companies can obtain your information from a list obtained from the court since a bankruptcy filing is public record.

Credit card companies and auto dealers assume people who have gone through bankruptcy have no fiscal discipline, will rack up more charges and pay more interest. Companies also know that debtors cannot file a chapter 7 bankruptcy case again 8 years since the last filing which makes it likely they will make a profit on providing new credit. 

To rebuild your credit, it’s a good idea to start with a secured card if you can’t get approved for one with a reasonable interest rate. 

4. “Only my co-signer filed bankruptcy, so it doesn’t affect me.”

If you’ve co-signed a debt, and the other person successfully files for bankruptcy and has their debt discharged, creditors can still come after you for the full amount. This happens frequently with spouses, ex-spouses, parents and children.

If you’re divorcing your spouse and bankruptcy is a concern, you should consider taking a domestic support obligation rather than something like a property settlement so you will not be responsible for debt associated with the property, like a mortgage. 

Domestic support obligations are debts in the form of alimony or child support and are not dischargeable under Chapter 7 or Chapter 13. If your ex-spouse has has filed for bankruptcy and were supposed to be liable for a debt that was discharged, you could always have the matter heard in family court if a creditor is now perusing you for a debt that your ex spouse was supposed to be responsible for. 

5. “Any Seattle bankruptcy attorney will do.”

When looking for a Seattle bankruptcy attorney I recommend working with somebody who is local, experienced in bankruptcy matters and a good communicator.

You also want someone with experience in Chapter 13 cases, not just Chapter 7 cases as you will want to know all of your options, not those just associated with chapter 13. 

When an attorney quotes a fee, make sure you understand what’s included. Some attorney will quote a low fee to get you in the door but may tack on fee’s later in the representation. The court filing fees are $335 for Chapter 7 and $310 for Chapter 13.

You will also want to check and see of your attorney will appear with you in court or send someone else and it is advised that your attorney be a member of the National Association of Consumer Bankruptcy Attorney (NACBA), as it shows your attorney is in touch with the latest updates in bankruptcy law. 

Your attorney will ultimately be responsible for guiding you during one of the most financially difficult times of your life, so take your time and choose wisely. Cost should be just one of the factors you consider when hiring an attorney, as you should ultimately feel comfortable with your decision as this is the person you will be working with for the next 90 days in Ch. 7 or possibly 5 years in Ch. 13 bankruptcy. 

If you live in Washington State and are looking for a Seattle bankruptcy lawyer to help you get out from under your debt, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

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How Can Bankruptcy Help You Keep Your Home?

help-keep-my-homeFiling for bankruptcy is not something that consumers initially set out to do or are thinking about when purchasing a home.  However if the economic circumstances of a borrower change, bankruptcy can be a tool that can be utilized to help you keep your home by making up payments you are behind, stop a foreclosure sale, or even allow you to qualify for a loan modification post bankruptcy filing.

Chapter 13 Bankruptcy Can Help You Keep Your Home

Chapter 13 bankruptcy is the most common type of bankruptcy to help you keep you home.  This is because filing chapter 13 bankruptcy stops a foreclosure sale immediately at the time of filing through something called the automatic stay, chapter 13 bankruptcy allows consumers to make up payments that they are behind over a 5 year period, and even allows consumers to strip 2nd mortgages to be treated as unsecured debts if the first mortgage is worth more than the actual value of the home.

Sometime consumers use chapter 13 bankruptcy simply to stop a foreclosure sale in order to buy them some time to apply for a loan modification or sell the property by filing an emergency case filing which consists of filing a list of your creditors, the voluntary petition section of the bankruptcy petition, a statement of social security number and taking a credit counseling class.  Your additional bankruptcy schedules which include listing all of your assets, debts, income and expenses would then be due a couple weeks later in order to keep the case and the automatic stay active.  Filing an emergency bankruptcy case can keep a case active for 2 weeks to several months without making a plan payment depending on whether a consumer files all the required docs, attends 1 court meeting and goes through the motions of the chapter 13 bankruptcy process.  If plan payments are made and the debtor is within the income limits of filing chapter 13 bankruptcy, a case can last 3-5 years and can be voluntarily dismissed as any time.

If a consumers main goal is to make up the payments that they are behind on a mortgage, they can do so through chapter 13 if their household income allows them to make payments that consist of the original loan payments as well as the payments you are behind divided by 60 months.  There are also other factors involved such as other debts owed by a consumer or assets that are owned which may affect a chapter 13 plan payment.  As long as your case is active, the automatic stay will remain in affect to protect your property as long as the bank has not obtained relief from the automatic stay and as long as you are not a serial filer in bankruptcy.

Chapter 7 Bankruptcy Can Help you Keep Your Home

A chapter 7 bankruptcy is usually not the recommended method to help you keep your home, however there may be some benefit to filing chapter 7 bankruptcy if you owe other unsecured debts in which you can receive a discharge from and your home does not have too much equity.  In general, the filing of a chapter 7 bankruptcy case will stop a foreclosure sale in most cases due to the implementation of the automatic stay.  With that said, a chapter 7 is different from a chapter 13 bankruptcy in that the bankruptcy will discharge most unsecured debts within 90 days of filing.  The catch is that a trustee is appointed to your case whose has a job to liquidate non exempt assets for the benefit of your creditors.  When you file for bankruptcy you are allowed to keep a certain amount of assets based on rules called exemptions.

In Washington you can choose to use the state exemptions or federal exemptions.  The Washington state exemptions allow for a debtor to protect up to $125,000 of equity in a primary residence.  This means that if your home may have more than $125,000 in equity, then chapter 7 bankruptcy would not be recommended unless you want to risk losing your home.  Additionally, if you are thinking about moving soon, the exemption also specifies that any funds received from the sale of a home must be reinvested in a primary residence within 1 year of selling a home.  If you are current on your mortgage payments and below the exemption limit and don’t have any other non exempt assets, then your case may be wrapped up in 90 days.  If however, you have assets that need to be administered your case may be left open by a trustee until the assets can be administered.  You would still receive a discharge of your other debts in 90 days in most cases, but a trustee may wait and see if you will qualify for a loan modification or not to determine if there will be an asset that needs to be administered.

Bankruptcy Can Help You Keep Your Home by Helping You Obtain a Loan Modification

Most debtors who have fallen behind on their mortgage payments will receive several notices from their lender, informing them that they may apply for a loan modification in order to help the debtor better afford their mortgage payment.  This is called the notice of pre-foreclosure options.  The government’s HAMP program came to an end at the end of 2016, but most lenders have their own in house modification programs that borrowers can apply for.  Every bank may have difference guidelines when looking to see if you qualify for a loan modification, however all bank will be looking at a borrowers debt to income ratio to determine whether a borrower could afford the loan.  This is why bankruptcy can help you keep your home by helping you obtain a loan modification.  By filing chapter 7 bankruptcy you can eliminate debt which could improve your debt to income ratio and therefore help you obtain a loan modification.

Additionally, most lenders will review loan modification applications while a borrower is in a chapter 13 repayment plan.  If a modification is approved during a chapter 13 repayment plan, then court permission would have to be obtained to move forward with the modification.  Court approval is generally not unreasonably withheld.  Therefore if a modification is approved and is the only reason the consumer filed bankruptcy in the first place, the modification can add the arrears on to the end of the loan, and then a debtor can voluntarily dismiss their chapter 13 case.  This is different from a chapter 7 bankruptcy case where a debtor cannot voluntarily dismiss a case.

If you live in Washington State and are looking for a lawyer to help you keep your home, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.

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Do You Feel Threatened By Debt Collectors?

Threatened by Debt Collectors

If you feel threatened by debt collectors you would not be alone.  A recent survey by the Consumer Financial Protection Bureau (“CFPB”) found that 1 in 4 consumers feel threatened by debt collectors.  This is not surprising to me at all based on my experience in dealing with consumers who are facing debt collection combined with the amount of scams out there who make debt collectors look even worse.

I had the opportunity to talk about the recent survey by the CFPB on 1150AM KKNW on the New Urban Unlimited radio Show with James Gore this past weekend. Below you can hit play on the player and listen to our candid conversation.

The survey reported that 40% of consumers who were contacted asked the debt collector to stop calling them but to no avail.  One pro tip is that if you really want a debt collector to stop calling you, you should send them a notice in writing telling them to stop calling you on the phone.  Make sure the letter is signed and dated and provides your contact number and address.  If the debt collector is a third party debt collector they would be bound by the fair debt collection practices act (FDCPA), and would be forbidden from contacting you by phone once the letter is received.  It is important to note that they could still contact you via mail or potentially file a lawsuit against you to collect on the debt.

Debt collection is a multi-billion dollar industry affecting 70 million consumers who have or are contacted about a debt in collection. Banks and other original creditors may collect their own debts or hire third-party debt collectors. When they fail to collect debts on their own, they often sell these debts to debt buyers. The buyers may try to collect on these debts, or hire third-party debt collectors to do so. More than 6,000 debt collection firms are estimated to operate in the United States.

More consumers complain to the CFPB about debt collection than any other financial product or service. To date, the CFPB has taken several steps to improve the debt collection marketplace and study the industry. Since 2011, the Bureau has brought more than 25 debt collection cases against first- and third-party collectors. These cases allege violations of the Fair Debt Collection Practices Act, or unfair, deceptive, and abusive collection tactics that violate the Dodd-Frank Wall Street Reform and Consumer Protection Act. These cases have brought a total of $100 million in civil penalties against debt collectors, more than $300 million in restitution to consumers, and $4 billion in debt relief for consumers.

Here are the highlights of the CFPB survey:

According to the CFPB debt collection survey, about one-third of consumers – or more than 70 million Americans – were contacted by a creditor or debt collector about a debt in the previous 12 months. Consumers are most often contacted about medical and credit card debt. The CFPB survey also found that:

  • Over one-in-four consumers report threatening contact: Twenty-seven percent of consumers approached about debt said they felt threatened by the conduct of the creditor or collector who most recently contacted them. Debt collectors are generally prohibited from tactics that tend to harass, abuse, or oppress consumers.
  • Three-in-four consumers report that debt collectors did not honor a request to cease contact: About 40 percent of consumers contacted about a debt in collection said they asked at least one debt collector or creditor to stop contacting them. Of these consumers, three-in-four said the debt collector did not honor the request to cease contact attempts.
  • More than half of consumers report incorrect contact for at least one debt: Fifty-three percent of consumers contacted about a debt in the year prior said at least one collection effort was mistaken in some way. These consumers reported that the creditor or collector sought the incorrect amount, that the debt was not owed, or that the person owing the debt was a family member.
  • Over one-third of consumers report being contacted at inconvenient times: Thirty six percent of consumers contacted about a debt in collection said that the creditor or collector who most recently contacted them called between 9 p.m. and 8 a.m. Debt collectors generally cannot call at times they know to be inconvenient unless the consumer specifically agrees to it.
  • Nearly 40 percent of consumers report that a debt collector attempted contact four or more times per week: Thirty seven percent of consumers contacted about a debt in collection report that the most recent creditor or collector to contact them usually did so four or more times in a week. About 20 percent of consumers approached by debt collectors reported contact attempts by debt collectors usually four to seven times per week. Another 17 percent said a creditor or debt collector tried contacting them eight or more times per week.
  •  One-in-seven consumers contacted about a debt report being sued: Fifteen percent of consumers contacted about a debt in collection over the prior year report being sued. The share ranges from 6 percent sued among those contacted about a single debt to 35 percent sued among consumers contacted about five or more debts. About 75 percent of those sued do not go to the court hearing, which generally makes them responsible for the debt.

In addition to the debt collection survey, the CFBP also will publish a white paper which will shed light on the debt buying business, including online marketplaces which reveal that several accounts can be purchased for less than a $1.  The new debt owner has legal rights to seek to collect the full amount of the original debt or to resell debts that are uncollected.  Even more alarming is that these accounts contain personal information including social security numbers and put in the wrong hands can do serious damage to a consumer.  The report indicates that payday loans and credit card debts are the most likely types of debts to be bought and sold.

If you live in Washington State and are dealing with a third party debt collector and have questions about it, give Symmes Law Group a call at 206-682-7975 to speak to a debt relief attorney and learn about your options.

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