Yet another judgement in Texas

[MyNamesCara]

I live in Texas - specifically Collin County.

I discovered that there is a judgement against me with a lien on my house.

The original debt goes back to the early 90's and is a credit card. I went through a divorce in the late 90's and was struggling to pay my bills and keep my utilities from being cut off. I had to choose between good credit and food, lights & water.

The credit card debt went in to collections around 1997 and a judgement was filed/awarded in 2003. The judgement amount was for around 14,000 that included interest & fees, and an annual interest rate of 12%.

My daughter is grown now and I am trying to do the right thing and clean up my credit. I called the attorney/collection agency that has the lien/judgement and they were really ugly to me. All I requested was a copy of the judgement and the lien and any information they could give me about who the original debt was through (I didn't know until now). She did her best to humiliate, patronize, and judge me. I called because I WANT to pay it off and take care of it. I guess in addition to having the right to more than double my original debt to over 20,000, they have the right to abstain from being courteous or respectful.

I read in another post that certain items are exempt from liens/judgements. My home has a homestead exemption, however, the title records show that this collection agency has a lien against it because of the judgement.

They will not talk to me about the lien, except to say they have the right. When I tried to get the payoff - it escallated from 16,000 to 20,000.

In addition, one of my credit reports reflects the same debt 3 times, once for the original creditor, and then twice more for when it was sold.

Can they legally put a lien on my house? I've read a page from the judgement and it read that the collection agency/attorney was awarded 9,000 plus around 5,000 in interest and fees, and an annual interest rate of 12% until paid. Does this add up to 20,000 in two years??

Is there ANY relief for a person in my situation?

[Chien]

The amount ($20,000) seems strange, since post-judgment interest was 10% in Texas, the last time I looked, and that wouldn't get a $14,000 judgment to $20,000, even if it was 3 years ago. I can check again. Is it possible that the 12% was prejudgment interest?

I suppose that it's conceivable that they recorded a lien, even if they couldn't reach the house. Don't know the reason for doing it, but also don't know if it would be prohibited, if they wanted to try. Can't recall the question coming up before and would have to check Texas law.

What is your primary concern now? Since you mention "payoff" and the strange credit record, what is the first problem? If it's a desire to effect a payoff, we may be able to help.

[MyNamesCara]

Originally Posted by Chien

The amount ($20,000) seems strange, since post-judgment interest was 10% in Texas, the last time I looked, and that wouldn't get a $14,000 judgment to $20,000, even if it was 3 years ago. I can check again. Is it possible that the 12% was prejudgment interest?

I suppose that it's conceivable that they recorded a lien, even if they couldn't reach the house. Don't know the reason for doing it, but also don't know if it would be prohibited, if they wanted to try. Can't recall the question coming up before and would have to check Texas law.

What is your primary concern now? Since you mention "payoff" and the strange credit record, what is the first problem? If it's a desire to effect a payoff, we may be able to help.

My primary concern is to pay the debts that I owe, that I wasn't able to pay before. I paid off my mortgage so I decided to apply for a home equity loan to pay off debt and clean my credit. I successfully contacted two other collection agencies and they were respectful and courteous and faxed me over payoff letters to settle those accounts.

I found out about the judgement & lien through the loan officer for the equity loan. They won't grant me the loan because of the lien. The loan officer contacted the collection agent/attorney to request a payoff letter and they were rude to him and wouldn't answer any of his questions. He suggested I call them. I was treated with the same disrespect and rudeness - the person he talked to wouldn't give me any information, then transferred me to someone else. Apparently the account is so old she had difficulty finding information on it and took her frustrations out on me. The call ended in her telling me that it would take them 30 days to send me the information I requested. My guess is that they are having trouble finding it.

[Chien]

Just checked Texas statues again and now think that $20,000 or something very close to it could be correct. The rate can change depending on whether or not it's stated in your contract (credit card agreement), but the rate used must be recited in the judgment and you say the figure of 12% was recited. Depending on the date in 2003, that could get you to $20,000.

But back to the main question. What do you want to do? If make a payoff, did you want installments or could you make it a lump sum with the equity loan? If a lump sum via the equity loan, my hope would be that it wouldn't be as hard as the bloody law firm first made it appear

Members may not be able to solve the problem, and a retained attorney is always a good idea, but don't be completely discouraged by the "other Texas judgment" or by the law firm. This was another single mother going through your experiences.
[URL="http://forum.freeadvice.com/showthread.php?t=311072"]http://forum.freeadvice.com/showthread.php?t=311072[/URL]

[Chien]

What kind of information was the loan officer trying to get?

If the figure is a "hard" $20,000, is that feasible and would you still want the resolution? (I ask it that way, because I hope a lower figure could be negotiated.)

[Chien]

I think that we also have an answer about the lien. Apparently it can become valid against either the buyer or seller when/if you attempt to sell the property, but the homestead exemption applies so long as it's your residence.

Texas homestead laws protect a person_s residence from general (unsecured) creditors. Secured liens can be placed on the homestead in three situations: for the original purchase money, for improvements and for taxes. General creditors acquire liens on nonexempt property by securing a judgment against the debtor. The judgment is then recorded (abstracted) in the county or counties where the debtor owns property,automatically casting a lien on the debtor_s nonexempt assets. If the judgment is not paid, the nonexempt assets can be seized (levied on orattached) and sold by the sheriff on behalf of the creditor. But what happens when the judgment lien is recorded in the county of the debtor_s homestead? Is the lien latent, attaching to the homestead property when the residence is sold? If so, the judgment lien becomes a valid lien upon sale. Either the buyer or seller must satisfy the lien as a condition for clear title. The general rule in Texas is that no enforceable lien can be created against the homestead by recording a judgment, nor can the existence of the recorded judgment lien prevent a purchaser from taking title free of the lien. Only when the debtor continues to own the property, but no longer uses it as a homestead, does the judgment lien become valid

If that's the case, I would not think that should be a huge impediment to a resolution.

[MyNamesCara]

Originally Posted by Chien

What kind of information was the loan officer trying to get?

If the figure is a "hard" $20,000, is that feasible and would you still want the resolution? (I ask it that way, because I hope a lower figure could be negotiated.)

That's a good question - initially, I was prepared to pay as much as 16,000. Now I'm not so sure. I have to question whether or not the attorney is being honest about the case and if I were to retain my own councel, would they be able to present sufficient evidence/proof of their claim against me. And I also wonder if I were to challenge the lien on my house, if I could clear it.

[Chien]

OK. Think about it and then post back, if you wish.

I can tell you this: if there's a recorded Abstract, there's a judgment, so please be clear about what/where you think the attorney is not being honest. (This will be a public record and should be independently verifiable, even if the firm can't find their papers).

I think that having counsel operating on your behalf is a good thing, but now for the purpose of negotiating. When you talk about clearing the lien, that implies first vacating the judgment. I doubt very much if there are grounds for that now and that doing it would have to be part of your settlement negotiations. If you think you can attack the lien without attacking the judgment, I believe that you'll find you're mistaken. If you attack the judgment and aren't successful (which I think is likely), your chances of a negotiated settlement will either disappear or the final figure will be higher.

Finally, and this is just an opinion, I think you should have a good chance at settling for $16,000 or less. Talk to local counsel.

[MyNamesCara]

Originally Posted by Chien

Finally, and this is just an opinion, I think you should have a good chance at settling for $16,000 or less. Talk to local counsel.

I'm just curious - why would they "settle" for less when if they wait for me to die or sell my house, they could get all of it - and more if the interest just continues to pile up...

[Chien]

OP - I don't know if they would settle at all, but you stated that they indicated they would accept a pay-off of $20,000, which leads me to believe that they're open to something other than waiting for you to die or sell.

What are some of the reasons that a creditor might be receptive to accepting a pay-off:

1. Present value of a dollar.

2. At $16K or $20K, they're making a profit on a judgment that already included a profit of $5K in interest.

3. They're in the credit extension business, not the real estate speculation business.

4. A Texas judgment is good for 10 years and renewable for another 10. If you live in the house for 20 years, they've lost the asset.

5. There is a cost to maintaining and renewing a judgment. They're spending with no guaranteed pay-back.

6. Texas has a unique provision requiring enforcement activity within the 10-year life of the judgment or it goes dormant, requiring additional court action and expense to "re-activate".

I could go on about the market value of the house, your possible intention to sell, your health and expected life-span etc. etc. But either they will or they won't and you won't know without asking. What did local counsel suggest?

[MyNamesCara]

THANK YOU for the wealth of information you've provided me. This website is GREAT, especially when you just don't know where to start.

You not only answered my question, you actually gave me MORE information about judgements that I didn't know.

Now I am curious, what happens to the lien & judgement after ten years...or if they "renew" the judgement, what happens after 20 years? I have ten, maybe even 15 years before I can retire - so what if I don't do anything?

I've read a lot of information on this forum and I have a lot to consider/think about as far as what course of action I need to take. As in what is right for me.

I feel like I have a lot to consider and think about now. I've tried working with some of my creditors/debtors - not sure who is who anymore. Some appreciate that I want to pay my debt, some are rude and abusive. It's obvious who's going to get their money first.

First thing I am going to focus on is getting the duplications off my credit report. Then I'm going to pay off the creditors that treated me with respect. The attorney that has the judgement...I'll have to think about that one...

[MyNamesCara]

To answer your question...I have not yet gotten local legal councel. I've sent a few emails but haven't gotten any responses. You may ask, why don't you just call - it's easier to communicate this way, or through email to discuss personal matters when you're at work all day.

I have made a couple decisions...

I'm not going to pursue a home equity loan. The reason for getting the loan was to pay off debts, but as DC put it in his list....when you call them to negotiate, you have to have the $$ in hand to settle. It's a catch 22. I can't get the money in hand until the account is settled, and I can't settle the account until I get the money in hand.

For now, I'll continue to learn as much as I can and pay off the creditors that will work with me. I'm lucky to be in a position where I don't need credit and I'm thankful that I have a house, I have a car and I have a job and I don't have to worry anymore if there's food in my frig, or if my utilities will be cut off.

And now I won't worry that some collection agency will take my house away from me so they can turn a hefty profit from someone elses misfortune.

[Chien]

Q. what happens to the lien & judgement after ten years...or if they "renew" the judgement, what happens after 20 years?

A. There is a fee and forms to file to renew the judgment. Once it is renewed, the same thing must be done for the lien. After that, they're both gone - unenforceable.

Duplications on your credit record should be easily removed by just bringing them to the attention of the CRA. The real problem - the one that affects your cost of credit - is the valid line items themselves. Ideally, you want to get rid of those as well.

If you pay a judgment, the judgment creditor must "satisfy" or "release" it with the court. Then, your credit report will still carry a line item like "judgment - paid" or "judgment - satisfied". But it will still show that there was a judgment (or judgments). Creditors will tell you that there is nothing that they can do about that, but it's not true. If you're told that, it's by someone who is being lazy or just doesn't know more.

A cooperative creditor can work with you to eliminate the tradeline on your report, but the operative word is "cooperative". That's why working with the attorney who has the judgment, despite your feelings, is not a bad idea. Because, to erase the tradeline, you must first vacate the judgment.

There's no point discussing the procedural steps, if you've already decided on a course of action. But I pointed you at the thread of someone whose position had been similar to yours. If you read it, you will have noted that the final resolution included an agreement to vacate the judgment. That's was the reason for what was done - to clear the tradeline.
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Edit: I misread your prior post and thought you now had counsel. When/if it happens, I hope it will make the decisions easier.

[Chien]

OP - After your reference to the Catch 22 (for you) in DC's negotiation "how-to" list, there's something I thought was worth mentioning. The list is an excellent guide for situations in which you may find yourself. At the same time, I don't think the Catch 22 necessarily exists. I regularly issue "conditional" satisfactions or releases of Abstracts to facilitate settlements. The condition works like this: filing of the Satisfaction of Judgment is authorized when the creditor's attorney receives guaranteed settlement funds (and a cashiers check, trust account check or escrow account check is guaranteed funds). It doesn't mean that funds are "in hand" as negotiations proceed, but they are "as good as", because everyone understands and has agreed to the conditions from the start. I've never known an attorney who wants to get his client paid, or who wants to get his client off the hook or a lending officer who wants to make a loan to refuse that kind of an arrangement. That may not change your decision to skip the equity loan, but I thought you should know that it may not be an insurrmountable problem.

[Chien]

OP - I mentioned earlier in this thread that a Texas judgment can go dormant. If it does, the recorded property lien dies.

I also said that the judgment and the property lien can be renewed and that the life of the judgment is 10 years.

In doing research unrelated to your question, I ran across the assertion that, if a Texas judgment goes dormant and is then revived, the property lien can only be revived for 2 additional years. The assertion was made without reference to authority and I have not been able to find support for the proposition anywhere, including Texas property and civil remedy statutes, where the subject is covered. But you may want to check with the lending officer that you first mentioned and see if he's familiar with this restriction, because it is possible that, under the right circumstances, the property lien can exist for a lesser time than I believed and led you to believe.

You may also want to periodically check the court file to see if the judgment is renewed or goes dormant. Following are the conditions under which a Texas judgment can go dormant and, if the law firm is not keeping good records, I suppose it could happen too:

§ 34.001. NO EXECUTION ON DORMANT JUDGMENT. (a) If a writ
of execution is not issued within 10 years after the rendition of a
judgment of a court of record or a justice court, the judgment is
dormant and execution may not be issued on the judgment unless it is
revived.
(b) If a writ of execution is issued within 10 years after
rendition of a judgment but a second writ is not issued within 10
years after issuance of the first writ, the judgment becomes
dormant. A second writ may be issued at any time within 10 years
after issuance of the first writ.