Many people struggling to pay the mortgages are motivated to consider a short sale. I am often told that it is considered because of their concern that if a short sale is not done, and the property is allowed to foreclosure, they will never be able to own a home again. Today, I want to tackle the perception of that…and present a bit of reality, from my point of view.
Posts Tagged ‘credit’
Rumor Control: Credit Reports and What’s Dischargeable in Chapter 7
Thursday, November 8th, 2007
I received a call today from someone with questions about Chapter 7. I receive many calls a day, but what made this call interesting was that the caller told me that they conferred with another attorney and was told that with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, only 50% of debt was now dischargeable in a Chapter 7. My response was “nope, not true.”
The caller also told me that according this other attorney there was no law that required a bankruptcy filing to appear on the credit report for 10 years. According to what the attorney purportedly stated: “Credit card companies want you to believe there is a federal law out there that requires it, but there is not.” My reponse was “that’s not my understanding.” Since this issue is not a primary one in my practice, it’s not something I can rattle off the tip of my tounge, like I might be able to with regard to discharge exceptions. So I decided to take a quick detour from my petition preparations and research the issue a bit further.
Let me start with the easy one: nothing in BAPCPA declared that only 50% of debt would be discharged in Chapter 7. If anyone is telling you that, they do not bankruptcy law.
The claim that there is no federal law that requires a credit card company to report a bankruptcy filing is also hogwash (I could think of another term, but this is a professional site). Title 15, Section 1681c(a)(1) of the United States Code states that credit reports may not contain information concerning “[c]ases under Title 11 or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.” And there is an exception. Under 1681(b)(2) a credit report may contain information about a bankruptcy that is more than 10 years old if the report is to be used in connection with a “(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more; (2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or (3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.”
So the bankruptcy can stay on the credit report for up to 10 years, an din come cases, even longer. If any attorney tells you otherwise, invite them to call me.
NY Suit Targets Appraisal Company
Friday, November 2nd, 2007
According to a New York Times report, the NY Attorney General filed a lawsuit in Manhattan accusing an appraisal firm of inflating the values of homes. According to the report, the firm – a subsidiary of the First American Corporation – inflated the values of homes because of pressure from Washington Mutual, a claim the bank denies.
Mr. Cuomo’s case is built on e-mail messages obtained through a subpoena to First American. According to the complaint, the messages show that executives at eAppraiseIT initially resisted the pressure from Washington Mutual to raise the values of the appraisals it was conducting for the lender in early 2006. The loans in question were largely used to refinance mortgages and take equity out of homes. Higher appraisals would allow a lender to make bigger loans and earn greater returns when selling them to investors.
In a written statement, Washington Mutual denies any impropriety.
You and Your Credit Card Terms: What You Don’t Know may Bite the Ones You Love.
Saturday, November 12th, 2005
You get yourself a new credit card and think, ‘hey, my kid is going off to school….I’ll give him one too.’ Or perhaps ‘I’ll give one to my elderly mother, just in case of an emergency.’ Then you encounter some financial problems, and end up defaulting on the credit card agreement. You may even contemplate bankruptcy. But you’re confident that your mom and your son won’t get stuck with the credit card bill. After all, you signed it. You applied for it. You made the decision to give it to them. Indeed, you even paid the bill….when you could. They are not going to try and collect it from them.
Think again.
