foreclosure bully

[texbetty]

What is the name of your state? TX

My daughter had a home that she had to walk away from (due to divorce) and it was in her name. The mortgage company foreclosed and said that she owes them $ 30k from the
2nd mortgage. They've been harrassing her with phone calls and a few letters. First they said that they would settle for $ 15k but that it had to be paid immediately. So when she came back to negotiate a settlement they then said that she would need to pay the full amount. Now they are saying that they might settle for $ 10k but that they can't wait 30 days to get it. She would have to wipe out her 401k in order to pay most of the $ 10k.

Since it's a bad mark on her credit anyway with the foreclosure.... what's the harm in her making payments to them? Sending them a letter with the payment schedule should be enough? She's not working and is a stay-at-home mom. Bankruptcy is not an option at this time.

This is causing ALOT of stress in the new marriage... any good advice out there?
Much appreciation!

 

[Texas Pooh]

Do not let her touch the 401k - that's bad on so many levels.

You are correct that the damage to her credit report has been done, but the real concern is that they might sue her for the deficiency (the shortage). Under the circumstances, it sounds like a judgment would be certain. Then, the judgment can be collected on any current assets - talk about bad on a new marriage

She can certainly try to negotiate a settlement - there's lots of advice about how to do that (and document it) on this site.

In the meanwhile, she can continue to make voluntary payments - it will reduce her debt, but may not make much of an impact because interest, penalities, etc. will continue to grow. That's why a formal settlement is preferable.

 

[texbetty]

Many thanks for your advice.

I think she's going to tap out her IRA in order to settle this matter... that way it's over & done with. She doesn't have any other means to fund this settlement, unfortunately. I don't want her to wipe out her IRA either.... but she's got no choice at the present time.

She's going to give me Power of Atty. in order to negotiate this settlement... she's to emotionally involved with this situation. We will document (& possibly record) the negotiations and settlement decision.

many thanks from Texas !

 

[VeronicaLodge]

what i want to know is why is this titled "foreclosure bully" when she willingly and knowingly walked away from her obligation to pay for the house she promised to pay for? how are "they" now bullies?

 

[ecmst12]

Money in a 401k is COMPLETELY exempt from seizure for any debt. She should absolutely NOT use this money to pay off the debt - they can't touch it no matter how many judgements they get.

 

[TigerD]

If she wants a settlement -- she'll get the money. If she wants to pay the full amount plus interest -- she'll make them sue her then garnish wages, bank accounts and do all the other mean nasty stuff a judgment holder gets to do.

$30k isn't going to go away. Frankly, a settlement of $10 or 15k is a dream offer for her.

DC

 

[NEOhioChick]

I know you said that bankruptcy wasn't an option but really, in this situation it has to be an option. If I owed that much money I would be taking the money that I was going to use to start paying them and get a bankruptcy lawyer to get them to stop trying to collect. Also, make sure you are really careful about negotiation's with a debt collector. Make sure you get a settlement offer IN WRITING....not just by tape. Some states have two party laws about recording a conversation. It doesn't matter how much YOU document everything if you don't have something IN WRITING from them no court will believe that they said you could just pay $10K on a $30K debt. They will take the $10K and then say they want the other $20K. Collection Agency lie 100% of the time about everything. Visit http://creditboards.com/forums/index.php? They have a lot of good advice there.

 

[CollectionGuru]

They will take the $10K and then say they want the other $20K. Collection Agency lie 100% of the time about everything. Visit http://creditboards.com/forums/index.php? They have a lot of good advice there.

Just like debtors are lowlife, deadbeat, lying thieves 100% of the time huh?

 

[Ladynred]

No wages can be garnished in TX.
However, a judgment goes on forever in TX. Tapping out the 401K is a VERY bad idea. Not only will she be wiping out her retirement fund that is 100% exempt, she's going to take a NASTY tax hit for taking that money out. There has to be a better way.

If she has no income, no assets, and little in a bank account, it might be better to just wait it out until they'll come to some payment arrangement. That bit about 'they have to have it all' is nothing but a TACTIC - don't take them at their 'word' at all.

I don't know why BK isn't on the table, but it would certainly be an option to get out from under this type of thing.

 

[Chien]

No wages can be garnished in TX.

LNR – I basically agree with your post. I also think that BK could be a consideration, reluctant as I am to encourage anyone in that direction, and we may never have a completely congruent view about “tactics”. However, I don’t think that the quoted statement should continue to be offered as a blanket truth without an asterisk.

Perhaps this is more academic than practical for the forum, but I think that a TX exception will continue to grow in importance and to be extended in the foreseeable future. Based on Texas statute 63.004, I’ve also cited TX as one of the four states that don’t permit garnishment, but I’ve begun to add the asterisk.

A line of cases has recognized an exception when the judgment underlying the garnishment arises outside of TX in a state that does permit garnishment and that also exercises jurisdiction over the employer. The reasoning has been used and extended to enable garnishment when the payroll office of the TX employer/employee is in such as state.

(See Bard v. Charles R. Myers Ins. Agency, Inc., 839 S.W.2d 791, 794 (Tex. 1992); Bergman v. Bergman, 888 S.W.2d 580, 583 (Tex. Ct. App. 1994); Knighton v. IBM Corp., 856 S.W.2d 206 (Tex. Ct. App. 1993) and Texaco, Inc. v. LeFevre, 510 S.W.2d 173, 176 (Tex. Civ. App. 1980) and their progeny).

Citing LeFevre, the Appellate Court found that Texas could not deny full faith and credit to another state’s judgment merely on the grounds that enforcement might offend public policy in Texas. Things have gone from there.

I see no reason that this same argument could not be used for the other three states. If so, with economic factors justifying expansion by decentralization for many industries, I see no reason why the exception, while comparatively rare today, could not become as important as the rule. If that were the case in 5-10 years, one might even question the continuing utility of the rule.

Several times, DG has expressed a preference for uniform SOLs. Why not the same for garnishments?

 

[TigerD]

While standardization would make things easier, I'm not entirely comfortable with establishing federal rules that restrict the States' right to set their own laws and procedures. Although, it would make explanations here much easier.

LNR -- I addressed the potential for garnishment because the OP said the issue was her daughters and not where her daughter lived. While the OP may live in TX, we don't know where the issue is taking place.

DC

 

[Chien]

I favor states’ rights over federalization too, DC. And that portion of the post was posited as food for thought – an intellectual exercise rather than a possible reality. However, if you wished to carry it further, why would the only options be those two extremes?

The Uniform Commercial Code affects the work that we both do. It includes SOLs and rules governing the types of transactions with which we deal daily and seldom engenders the emotionalism and disputes that can feed the forum. It’s neither federal nor state law but (in my opinion) an enlightened, joint effort to bring homogeneity, when disparity was causing friction and blockage in a growing and changing world. Acceptance wasn’t mandated. Common sense ultimately motivated adoption of one form or another, one part or another by every state. There are a number of Uniform Acts that have been adopted in response to an evolving world. Further effort could be made.

Post on FA long enough and you have reason to look at certain areas of law in virtually every state. Anachronisms exist that I speculate can no longer even be explained, much less justified.

 

[texbetty]

Many thanks for all your comments..... it's greatly appreciated!
My daughter also lives in Texas.... doesn't work anymore, no assets, etc. She is going to try to get some "settlement funds" from somewhere else than her 401k/IRA. But if not then she feels that it would give her peace of mind to just settle the matter once & for all.

We are not saying that she doesn't owe the debt.... it was a bad deal all the way around and they (the mortgage co.) sold it for much less than they should have. Plus they are not giving her a copy of the closing statement. Is the mortgage company obligated to give her a copy?

Again many thanks !

 

[seniorjudge]

Many thanks for all your comments..... it's greatly appreciated!
My daughter also lives in Texas.... doesn't work anymore, no assets, etc. She is going to try to get some "settlement funds" from somewhere else than her 401k/IRA. But if not then she feels that it would give her peace of mind to just settle the matter once & for all.

We are not saying that she doesn't owe the debt.... it was a bad deal all the way around and they (the mortgage co.) sold it for much less than they should have. Plus they are not giving her a copy of the closing statement. Is the mortgage company obligated to give her a copy?

Again many thanks !

I know there has been a lot of predatory borrowing going on and this is one of the things that happens.

The closing statement is something she already has a copy of; if she's lost hers, the lender is not obligated to give another one.