Bankruptcy or Age Off Bad Credit?

[Kimmer]

I want to buy a house before the end of the year (like that's going to happen in southern California!) My question is what will improve my FICO more and faster?

 

My current FICO is 548 (pulled yesterday, all 3 are very close) and this is my credit history. The bad stuff is what happened at my divorce 6 years ago:

 

* 1 Chap 7 BK, joint (6 years old)

 

* 1 auto repossession, joint (6 years old)

 

* 1 foreclosure, joint (6 years old)

 

* Judgement, mine ($280, unpaid, 3 years old)

 

* 15 federal/state student loans ($43,000) - should have been in forebearance for disability, but are in the process of being discharged now for disability (THAT was an ordeal!). They will still show >3 years late since I never paid any portion (6 years old)

 

* 1 private student loan where the CA has served a summons for June ($21,000)

 

* 10-12 miscellaneous lates/CO's (mostly medical, about $8,000 total)

 

I only have 1 positive TL, a small furniture store account, paid off. There are a few old positive trade accounts that were paid as agreed but they will age off soon, I think?

 

I applied and was approved for 2 "toy" credit cards online yesterday. I know it's not ideal, but it's the best I can do right now. I have no extra $ for a higher limit secured card. I have no other debt and my car is paid off.

 

In my area of California there's a special program where you can pick a house to "buy", except that it's like a lease-option. It's a government program. At the end of 3 years you're expected to qualify for the mortgage (credit).

 

If I do a BK right now, I can qualify for FHA loans in 24 months but I'll have the BK for 7-10 years.

 

If I don't do the BK and wait for the baddies to age off, that can take 3-7 years (some hospital bills are new, but I have insurance now).

 

So, what's the best way? I've already disputed some baddies and had them dropped. I'm thinking that even if I improve the CAs it won't matter since I have several big things like the BK, judgment, foreclosure and repo. I also owe my ex $1800 and it's in our divorce decree. I would include that in the BK.

 

Regarding the CA that served me a summons for a private lender student loan (taken out 7 years ago), will they get a judgment even if I don't have a means to pay? My income is Social Security disability and foster care. My foster payments are to care for the children and their needs, not pay off my personal debts.

 

Opinions? Do another BK? Wait? What??? Would a "good will" letter to the student loan people help, asking them to show the accounts as deferred since they should have been?

Edited February 20, 2005 by Kimmer

[hoapres]

Assuming that the $21K debt in the lawsuit is legitimate then BK may be the only vialble option. Judgment can and will be rendered irregardless of your ability to pay. Presumably, the lawsuit was filed in the limited jurisdiction since the prayer of the complaint is under $25K. The June date of the summons is probably for the mandatory CMC - case management conference. Given that it is in the limited jurisdiction division, most likely the CMC judge will set the matter for trial.

 

You need to respond to the summons within 30 days after being served. Private student loans unlike government student loans can probably be discharged in bankruptcy.

[Kimmer]

Thanks so much!

 

I didn't know I had a time limit to answer the complaint so long as it was reasonabe before the hearing date (I was thinking April). The summons upset me because I've explained to the CA that I couldn't pay and the 4 previous CAs left me alone. The irony is it's for 1 semester at a private law school ... see how that's working for me now!

 

The $21K is valid ($15K for one semester, the balance in interest).

 

Could anything of benefit to me happen at the CMC? Any chance the mediator would tell the CA that even if they get the judgment, that I'm judgment proof (assuming I keep my cash out of a bank)?

 

I'm seeing the light now. Even if I were to agree to pay, then I couldn't afford a mortgage payment (plus usual maintenance and repairs).

 

 

Thank you again!

[hoapres]

CMC is only for case management. Check your local court rules, your case is probably a simple routine collection case and the CMC judge most likely will set the matter straight for trial. ADR - alternative dispute resolution - depending on the county may not be required for limited jurisdiction cases.

 

Your CMC hearing is likely to be under a minute. Usually, CMC hearings have 30+ cases to be disposed of within an hour.

 

The answer is due within 30 days after you are served with the summons.

 

Given that the Plaintiff is a law school, then I am surprised to say the least that an outside CA is involved. If the OC is involved and you file an answer then I would expect the law school to file a motion for summary judgment after you file your answer.

[Kimmer]

Thanks again for taking time to answer. You sound like an attorney and I'm always impressed by their generosity in public forums.

 

The loan for the private law school was through a private lender, TERI (The Education Resource Institute).

 

The OC tried collecting initially, Since then it's been transferred 3 times to various CAs. I explain my situation and they leave me alone. Except the new CA which is headed by an attorney (all they do is collections).

 

But what if they get the judgment and I still don't/can't pay? Is that when a bank levy happens? Are there any stays or remedies available for me for prevention?

[Kimmer]

Hoapres, is there any point to me contacting the OC, explaining my situation and ask for their help ... plea for mercy, so to speak ... since they won't recover any $$$ anyway?

 

It's almost impossible to get a federal student loan discharged for disability, but I qualified. TERI doesn't know this.

[hoapres]

Thanks again for taking time to answer.  You sound like an attorney and I'm always impressed by their generosity in public forums.

 

I am not an attorney, but involved in too many lawsuits.

 

 

The loan for the private law school was through a private lender, TERI (The Education Resource Institute).

 

The private student loan probably will be dischargeable in BK.

 

 

The OC tried collecting initially,

 

Fortunately, the law school did not directly loan you the money.  Usually, when the OC gives up the account is sold to a CA.

 

 

Since then it's been transferred 3 times to various CAs. 

 

If the debt has been sold to more than one CA then maybe the CA has paid pennies on the dollar.

 

 

I explain my situation and they leave me alone.  Except the new CA which is headed by an attorney (all they do is collections).

 

Probably, the attorney has numerous lawsuits in your local courthouse. 

 

You should file an answer along with a fee waiver.  The fee waiver should be automatically approved when one is on disability.  Otherwise, to file an answer requires a filing fee of about $300

 

You probably should read the Nolo Press Book Sue in California without a lawyer which is an excellent reference for prosecuting and defending a limited jurisdiction case.

 

 

 

But what if they get the judgment and I still don't/can't pay?  Is that when a bank levy happens?  Are there any stays or remedies available for me for prevention?

 

The best book regarding judgment enforcement from the creditor's prespective is the Nolo Press Book How to collect when you win a lawsuit ?

 

Bank accounts usually are protected up to $1,500. Wage garnishments can be contested in court.

 

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[hoapres]

Hoapres, is there any point to me contacting the OC, explaining my situation and ask for their help ... plea for mercy, so to speak ... since they won't recover any $$$ anyway?

 

You still need to file an answer, but your problem is that the CA attorney probably does not care about your judgment proof status.  The simple fact is that your inability to pay a debt is not a defense.

 

While probably no harm can come in informing the OC and CA that you are judgment proof, it appears that the OC and CA are going to try to collect.

 

 

 

It's almost impossible to get a federal student loan discharged for disability, but I qualified.  TERI doesn't know this.

 

See above, If the CA gets a judgment then it will most likely be recorded and attach to any future real property.  If you want to buy a house then most likely you will have to file BK to discharge the judgment.

 

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[Kimmer]

Hoapres, attorney or not, you're a doll! Off to do research and some prelim drafting.

 

This was a very productive thread for me. Thank you!

[Kimmer]

For Hoapres or anyone, I have a question about SOL for the private lender student loan.

 

I was looking at the summons and attachments. They've included the original loan request with several 'affadavits' for missing documents (disbursements) all signed by the same person ... not the OC.

 

I live in southern California. Is there a SOL for court action on a debt? The loan was taken out in 1996.

 

In looking at my credit report last evening, I also notice two $2000 Cap One accounts originally dated 1996, have been updated to 2005 so I guess that means they won't age off until 2012 (when they'll probably do it again).

Edited February 21, 2005 by Kimmer

[joshbgosh]

For Hoapres or anyone, I have a question about SOL for the private lender student loan.

 

I was looking at the summons and attachments.  They've included the original loan request with several 'affadavits' for missing documents (disbursements) all signed by the same person ... not the OC.

 

I live in southern California.  Is there a SOL for court action on a debt?  The loan was taken out in 1996.

 

In looking at my credit report last evening, I also notice two $2000 Cap One accounts originally dated 1996, have been updated to 2005 so I guess that means they won't age off until 2012 (when they'll probably do it again).

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That private lender SL was not IIB?

 

YOu go by the DOLA (date of last activity) to determione the 7 years. That cannot be "updated" to 2005.

[Kimmer]

Michelle, thanks for answering!

 

Hate to sound like a dunce ... and I checked the Newbie acronym thread ... but IIB isn't listed. What does it mean?

 

The credit reports I pulled were the 3-in-1 from a site that charged $34.95. URL says "qspace.iplace.com" and ended up coming through AOL.

 

On this report, where Equifax, Transunion & Experian are lined up side by side for comparison (and you see that not all accounts are listed with every CRA), they have two dates for the Cap One card:

 

Date Open: Dec 1996

Balance: $2199

Balance Date: Jan 2005

Payment Status: Charge off

 

The last activity date would have been 1996 since that's when the divorce started and I couldn't pay anything, which is why I lost my house. I'm kicking myself over that one, mortgage was $1055 which was astronomical to me at the time ... except now I'm paying $1438 for a 3 BR apartment. Doh!!!

 

My question about the student loan is entirely based on whether I would need to file a BK if it's invalid or the SOL has run.

Edited February 21, 2005 by Kimmer

[Kimmer]

OK, I kept searching and found IIB is Included In Bankruptcy. It was! So were the federal/state student loans. The attorney said you include everything, and that the student loans are automatically exempt.

 

But the attorney told us that ALL of the student loans would be exempt. He was wrong!

 

Well, I guess the SOL question doesn't matter now. OK, let me fine the BK papers (I've only moved 3 times since then ... which box will they be in, LOL?)

 

I'm going to post about my Cap One question separately since this is such a long and detailed thread.

 

Thanks everyone! IIB ... who woulda thunk?

[hoapres]

For Hoapres or anyone, I have a question about SOL for the private lender student loan.

 

If the private student loan was discharged in bankruptcy then raise that as an affirmative defense.  Also, the SOL is probably 4 years from the date that the payment is due.  You need to check your loan papers.  One should raise the SOL as an affrimative defense.

 

If the loan was discharged in bankruptcy then maybe you can contact the bankruptcy attorney to contact the CA's attorney.

 

 

I was looking at the summons and attachments.  They've included the original loan request with several 'affadavits' for missing documents (disbursements) all signed by the same person ... not the OC.

 

The original loan request should have a payment schedule or at least an origination date.

 

 

I live in southern California.  Is there a SOL for court action on a debt?  The loan was taken out in 1996.

 

Probably the SOL is 4 years

 

 

In looking at my credit report last evening, I also notice two $2000 Cap One accounts originally dated 1996, have been updated to 2005 so I guess that means they won't age off until 2012 (when they'll probably do it again).

 

If the DOLA was 1996 then you have re-aging.  Dispute with the CRA's as obsolete. The above accounts should have come off 7 years + 180 days from the last payment

 

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[Kimmer]

Hard to imagine I could feel happy reading these replies, but I do! I was sooooo dreading filing bankruptcy again.

 

hoapres, while I'm finding my BK papers and/or contacting the BK attorney (who doesn't work at the firm anymore) do I still need to file the response to the summons? Should I include my defenses?

 

I have experience in family law, but civil law is ???

[hoapres]

Hard to imagine I could feel happy reading these replies, but I do!  I was sooooo dreading filing bankruptcy again.

 

If the debt is SOL time barred then the debt should be uncollectable.

 

 

hoapres, while I'm finding my BK papers and/or contacting the BK attorney (who doesn't work at the firm anymore) do I still need to file the response to the summons?  Should I include my defenses?

 

You definitely should file an answer along with the affirmative defenses.  You will need to raise the SOL defense, not a lawyer and this advice, should not be considered as legal advice, but my SOL affirmative defense is :

 

"This action is barred by the appropriate statue of limitation, including, but not limited to the following separate and distinct sections of California Code of Civil Procedure 337.15,338,339,340, et seq."

 

I am not sure how to raise the affirmative defense of debt included in bankruptcy as assuming that this debt was included in the bankruptcy proceeding and discharged continued collection activity violated the automatic stay.  You should check your bankruptcy papers, in particular the discharge papers, to make sure the loan was discharged.  Bankruptcy court is a federal proceeding so any further state actions are void.  (Unless the debt was ruled nondischargeable, not included in the bankruptcy papers, or in an unlikely event a relief from automatic stay to continue collection efforts)

 

I would probably file an answer with the affirmative SOL defense and debt included in bankruptcy.  (Even though, the affirmative defense of debt included in bankruptcy may not be a valid affirmative defense.  You should check a law form book). 

 

 

You might want to send a letter to the CA lawyer stating that the debt was included in bankruptcy.  You might be surprised at how fast the attorney responds to such a letter since there are both negligence and willful penalties for violation of the automatic stay.  Be aware, that the CA attorney is likely to ask you to prove the contention that the debt was included in bankruptcy.

 

 

 

 

I have experience in family law, but civil law is ???

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[Kimmer]

Hoapres, thanks a million! Yes, I fully understand that you are not an attorney merely offering a personal opinion and that no consideration has been set forth ... so, no unlicensed practice of law.

 

Hope you don't mind if I include your verbiage in my answer, plus a bit more of my own?

 

I emailed a family law attorney acquaintance when I posted here this morning. He said if the SOL has run, I should file my answer demurring to the complaint (yes, the complaint is correct, but moot since SOL has run).

 

I will also send a letter to the CA attorney. If I were vindictive I'd seek $$$ for negligent infliction of emotional distress, but since finding out I won't need a BK, I'm in a pretty good mood!

 

I LOVE THIS SITE!!!

[Kimmer]

One last thing. Is there an online site where I can get a boilerplate for the civil answer as to form?

 

Is mail service OK or do I need a process server? The CA is about 50 miles away.

[hoapres]

Hoapres, thanks a million!  Yes, I fully understand that you are not an attorney merely offering a personal opinion and that no consideration has been set forth ... so, no unlicensed practice of law.

 

Hope you don't mind if I include your verbiage in my answer, plus a bit more of my own?

 

Hopefully the free advice is worth more than you paid!  Although, it would still be a good idea to look at law form books.

 

 

I emailed a family law attorney acquaintance when I posted here this morning.  He said if the SOL has run, I should file my answer demurring to the complaint (yes, the complaint is correct, but moot since SOL has run).

 

Technically, a demurrer and answer are DIFFERENT responsive pleadings. A demurrer basically says "If everything Plaintiff says is true then so what ...".  You might want to ask your family law attorney acquaintance exactly what is meant by "answer demurring to the complaint".  If you are going to file a demurrer then check the court rules regarding the hearing.  If the demurrer is granted then the case is concluded -(unless the CA attorney does the unlikely and file an appeal motion to the unlimited jurisdiction) - or you will most likely have to file an answer.

 

 

I will also send a letter to the CA attorney.

 

You should still plan on filing a responsive pleading.  Also, the attorney may be willing to stipulate in delaying your responsive pleading pending his investigation of the bankruptcy claim.

 

If I were vindictive I'd seek $$$ for negligent infliction of emotional distress, but since finding out I won't need a BK, I'm in a pretty good mood!

 

Usually, emotional distress requires you to meet the clear and convicing proof standard which is more difficult than the normal civil preponderance of the evidence standard.  Probably would be difficult to claim an attorney in litigating a lawsuit caused you emotional distress unless you can somehow show that the attorney was aware of the bankruptcy.  You may have a negligence claim with regards to the federal bankruptcy court. 

 

 

I LOVE THIS SITE!!!

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[hoapres]

One last thing.  Is there an online site where I can get a boilerplate for the civil answer as to form? 

 

If you find an online site for boilerplate answers then inform the board.  I recommend that you read the Nolo Press book Sue in California without a lawyer which shows typical answers.  Demurrers are briefly mentioned.  The most relevant section will be the drafting of the defendant's answer.

 

Is mail service OK or do I need a process server?  The CA is about 50 miles away.

 

Your friend and not a party to the lawsuit will have to sign a proof of service.  Read Code of Civil Procedure Section 1013(a) for mail service and consult the book above. If you decide to file a demurrer then contact the court regarding hearing scheduling. 

 

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[Kimmer]

Hoapres, will do as to posting boilerplate site if I find one.

 

My attorney acquaintance didn't say "answer" demurrer, I added it. Sounded right to me (see what a waste 1 semester of law school was )?

 

I was kidding about the NIED, I don't need the stress and I'm reasonably sure I wouldn't meet the burden of proof.

 

OK, have my checklist of things to do, places to call.

 

Thank you!