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JETX - can you offer info on Collection of a Judgement

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O

OnlyOneVoice

Guest
What is the name of your state? TX

Okay here is the perverbial I have a friend story.

A friend of mine sold a house in Nov. of 2000. Before the sale would be closed the buyer's agent required the house be treated for termites.

My friend complied and had the residence treated with the agreement that the company would be paid out of proceeds from the sale at closing by the title company.

As of this date though monies were withheld by the Title Company to cover payment, the exterminator has not been paid.

Over the course of the last 18 months many attempts were made by the exterminator to obtain payment from the title company. The title company never responded or paid the amount due.

The exterminator has turned this invoice over to a collection agency who has over several months made many harrassing phone calls to my friend. When my friend requested verfication of the debt to provide proof to the title company the collection agency said that once it was received my friend had 3 days to pay the amount in full.

Through some fluke, the proof was returned to the collection agency by the post office (stamped addressee unknown) and they have informed my friend that they will pursue it legally.

Let me say that the original invoice was $500, the amount now due the collection agency is over $1100.

If this collection agency gets a judgement against my friend, what is the agency's recourse to collect? She and her husband have 3 children, he is on medical disability (back injury) and are currently on both medicaid and food stamps and have no disposable income beyond paying their living expenses.

Can they force a garnishment of his military disability and further harm this family financially (other than the credit bureau)?

Or are they limited to holding the judgement against any assets they have.

BTW their only assets are their home and 2 cars both of which are over 10 years old.

JETX your expert info would be of help here.


Also, would you recommend bankruptcy for this family. They have a few other unsecured debts that they have not been able to pay on either.
 


JETX

Senior Member
Lets try to sort this out.......

"If this collection agency gets a judgement against my friend, what is the agency's recourse to collect?"
*** First, some thoughts. Why hasn't the escrow company released these funds?? Have both parties (buyer and seller) agreed to release the funds?? If so, the escrow company is REQUIRED to release them. Personally, that would be first action.... is to get the title (or escrow) company involved and force payment.
Second: The collection agency, unless they are the owner of the judgment, has a questionable right to litigate. For example, they cannot use the small claims courts.
So, back to your question:
A judgment creditor can seize or garnish any non-exempt assets owned by the debtor. Wages are exempt in Texas. Also, Texas is 'debtor friendly' and exempts homestead and considerable other property. If your friend is truly as described in the rest of your post, I see little real seizable assets.

"She and her husband have 3 children, he is on medical disability (back injury) and are currently on both medicaid and food stamps and have no disposable income beyond paying their living expenses."
*** Those sources are exempt.

"Can they force a garnishment of his military disability"
*** No.

"and further harm this family financially (other than the credit bureau)?"
*** Probably not.

"Or are they limited to holding the judgement against any assets they have."
*** From your post, it sounds like there is little current chance of enforcing a judgment against them.

"BTW their only assets are their home and 2 cars both of which are over 10 years old."
*** Texas exempts homestead and allows one car per licensed driver in household.

"JETX your expert info would be of help here."
*** Thank you for the confidence.

"Also, would you recommend bankruptcy for this family. They have a few other unsecured debts that they have not been able to pay on either."
*** The decision to pursue bankruptcy is not to be taken lightly. There are some huge potential problems to filing. And though I am generally against most bankruptcy actions, there are some that arise purely due to life-circumstances. This may, or may not, be one of them.
 
O

OnlyOneVoice

Guest
JETX:

Thank you for your response. I'm will relay this info to her. It will certainly set to rest some of her fears.
 
J

justpassingthru

Guest
I am the Vice-president of a pest control firm and your situation is far from uncommon. Your friend needs to locate her closing documents and find the hud settlement statement that has all seller expenses and buyer expenses, itemized. Read every entry carefully. If the termite treatment was to be paid from your friends funds at closing it will be itemized there. If it is there your friend is in the clear 100%. The title company has the obligation to forward funds to service providers if it collected the money from the buyer or seller. No ifs ands or buts about it.

Secondly, who contracted directly with the pest control firm? Your friend? Your friends Realtor? In my area 99% of all real estate related inspections and treatments are coordinated by the Realtor. Many times the Realtors will actually sign the treatment contract. So, my question is who authorized the treatment and who signed the contract? If her Realtor signed it then the pest control firm is going after the wrong person for payment. Even if the Realtor did not sign the contract they had a duty to ensure that all parties to the transaction were compensated.

Right now our firm is sitting on $158,000.00 in uncollected title company payments. Once the seller faxes us a copy of their settlement statement and we see that the title company kept their (our) money then I take the matter up directly with the title company, and the Realtor. Your friend has rights and protection under the Fair Debt Collection Practices Act and the state of Texas also has their own collection laws to protect the consumer. Your friend needs to educate herself as to her rights.

First thing she needs to do is find those closing documents!

I am really curious about how this will unfold. Can you keep me posted here or by E-mail?
 
O

OnlyOneVoice

Guest
Actually my friend contacted the pest control company and no contract was ever actually signed that she is aware of.

Also the collection agency told her that it was her responsibility to pay the debt and then for her to sue the title company.

I will tell her to find her closing documents and check for the itemization section.

They have called her again and when they asked her "what do you intend to do about this debt" she started to tell them the same story and "they screamed all we needed was to hear you say you refuse to pay and then they hung up on her."

They said they sent her "proof of the debt" but that the got it back. They claimed initially they didn't know why it was returned then in the same conversation they said "we got it back marked returned to sender".

Also the collection agency told her they sent it standard mail and not certified and that once she received it she had only 72 hours to pay the debt in full.

Originally the bill was $547 but the agency has added collection fees and interest and the balance now is over $1000.

The title company was sort of a fly by night company set up with a organization called assistance for america and they stung the buyers for $1000's in fees.
 

JETX

Senior Member
Since this debt is being pursued by a 3rd party debt collector, the FDCPA applies.

Have your friend send the debt collector a very nice 'validation' letter (by certified RRR). There is an example of a good format at:
http://www.creditinfocenter.com/forms/sampleletter9.shtml

And since your friend already knows that they have no contract.... and certainly nothing that would show her liability, she can tell them to pound sand.
 

lwpat

Senior Member
"Also the collection agency told her that it was her responsibility to pay the debt and then for her to sue the title company."

Would a collection agency lie? Would they treat you like a grasshopper at a bird convention ? Would you like to buy the Golden Gate Bridge? Not trying to be asinine but they will tell and threaten anything in order to get you to pay. Unfortunately many people just send them the money in order to end the harrassment.

This is the link to the FDCPA

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

Thanks JETX for the other link. Very good information.
 
J

justpassingthru

Guest
Another suggestion that may help...have your friend contact the buyer and explain what has transpired since the closing. I assume the treatment came with a warranty which the buyer is assuming is in effect. If payment has not been made by the title company then the buyer is SOL should they encounter a problem and need the pest control firm to perform a re-treatment. Get the buyer involved. He/she should be made aware of what is going on.

Another wonderful site to look into regarding problems with the collection agency is the forum at creditnet.com
 

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