Need Advice On Debt Due To Foreclosure
In 1995, my brother in law bought a condominium for $70,000 here in California and since he did not have enough credit, I was a co-signer. He was the one living in the house and making the payments.
A year later, he lost his job and subsequently, the house went to foreclosure and he declared himself on bankrupcy since he could not pay existing debts.
A month ago, I received a letter from the Mortgage stating that I owe them $36,000. No details were given.
Need advice on what to do. I though that since the house went to foreclosure, I was not responsible for any costs. Why it took the Mortagage Company 8 years to notify me? :-?
Good question.
Check the SOL 1st to see if it's a valid claim.
Check what the "co-signing" or "personal gaurantee: clause actually commited you to. Did it say something nasty like "We can come after you, the kids, the grand kids until we get our money"
If it is legit, most worth a call to an atty.
When I lived in CA I believe lenders could only use the house to recover what they were owed. The trust deed will have the specific details.
As someone on the loan who did not live there you might be in a slightly different position. The details should also be specified in the trust deed you signed. You can get a copy from the recorder's office or ask a title company to get it. There will likely be a small fee if you speak with a title company unless they like you (you do business with them on a regular basis).
Unless you like doing your own homework have an attorney review things and see where you stand. The attorney can respond to the letter from the lender if you find that they have no leg to stand on.
Pull your credit report and see if there is anything there. Watch to see if they try to report anything.
John
PS. Care to post something to the forum about what people should do or be prepared to do if they are asked to cosign?
[addsig]
You might, before doing anything else, check at the courthouse in the county where the condo was situated ... to see if there are any default judgments against you. If they're collecting on a judgment, you want to get all your ducks in a row before facing them ... money should be in an out-of-state bank, property needs to go in wife's name or into a land trust, etc.
And if you never got served with any papers, you want to fight to vacate the judgment before the attorney can use it to give you a mountain of trouble.
thanks to cjmazur, active_re-investor, and flacorps for their advices.
Once this is over, I will share with others as "lessons learned"........
The SOL in California is 4 years so they can't legally collect even if it is a valid debt. They are stating that you owe them 36k. I am assuming that they are within their rights to come after you if there was a deficiency in what they sold the condo for and what your brother in law owed, but since the debt is outside of SOL then it doesn't matter. I would still do some research and find out what they sold the condo for after the foreclosure.
4 yrs is the SOL for what?
If this was a judgement of some sort there it would have the SOL of a judgement would it?
Thanks for such good news GregTanner......I just got a printout from a Title Company and the property was sold for $73,681.06...also, my quitclaim deed was recorded....and this company charging the amount is not on the "transactions list".
Plus the collector is asking me for money so he can send me documentation that I have asked for (valid claim??).
The SOL on a judgment is much longer than the SOL on getting the case into court. For instance, one might have 4 years to file the case (then it drags on in court for a while), and the judgment might be good for 10 years, renewable for another 10.
The company demanding the money is likely not on the "transaction list" because they bought the "debt" from the original creditor ... or from someone who bought the debt from someone who bought the debt from the OC. They're called "junk debt buyers". The original debt might have been quite small (a couple of thousand dollars in "junk fees" and actual hard costs [attorneys, court filing fees] banks start racking up when a default occurs). So there might be some legitimacy to the dollar figure even where the property sold for more than what was owed on the note.
Did the holder of the debt actually seek a judgment? I doubt it ... you likely would have heard about a judgment long before now.
Assuming there's no judgment and it's outside SOL, this CA (or more accurately, JDB) should be told to go to hell in no uncertain terms. That's called a cease and desist letter, which tells them you'll sue for FDCPA violations if they:
1. Report to any CRAs.
2. Pull inquiries (hard or soft) with any CRAs (remember, hards lower your FICO--CAs sometimes pull them a lot, it's called "poisoning" a report, but even one CA inquiry can keep you from getting loans regardless of your FICO).
3. Contact you by phone, fax, in person or e-mail, or file a time-barred suit.
In short, they can continue to mail you dunning letters (which you will dutifully shred) at their discretion ... nothing more.
[ Edited by flacorps on Date 07/06/2004 ]
Thanks to all of you for your advice.......
As a summary, the Mortgage Company bought the loan from the original Mortagage Company after the foreclosure took place.
There was never a court case or judgement file. So, the Mortagage Company sent me letters and was calling me at home and work. The trick here is that I had to send some money. Even if I send one dollar, the SOL will restart again.
I wrote a letter to the Mortagage Company stating that I was aware of the expiration of the Statue of Limitations and to stop contacting me unless there was a legal actions allowed under FDCPA.
I never received any other letters or phone calls.
I learned that we should be careful when co-signing.