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There’s no clause in a credit card contract that speaks to your morality. Nor, for that matter, the morality of the lending institution.
The reason? This is a commercial contract – one party borrows money, the other lends it based on the agreement that the lender will reap a financial benefit in the form of interest.
Aside from the agreement to pay interest, there are no strings attached. Use the money to buy a new bed, a bottle of booze, or an outfit to wear on a date that may end up in the bed after consuming the bottle of booze.
It doesn’t matter if the lender’s leadership has an opposition to any of your activities. So long as you pay back the money, you’ve held up your end of the bargain.
The problem arises when the obligation to repay the debt is unmet.
Isn’t there an obligation to repay debts?
Yes, there is. When you make a promise, you’re expected to keep that promise.
And yet.
If there’s morality in the transaction, it must go both ways.
A good person wouldn’t lend you $1,000 and then demand payment if doing so would render you homeless. They’d change the payment amount, extend the term, or reduce the interest to account for your change in circumstances.
A good person wouldn’t give you $500 to tide you over until next payday and require $550 as payment in full just a few days later. That’s called loansharking, and it’s illegal – and immoral.
And yet.
The credit card companies create agreements that deliberately eliminate morality in favor of profit. There’s nothing inherently wrong with that, though; it’s capitalism, and it’s how the system was set up.
In an effort to balance the scales a bit, the law provides for a way for you to renegotiate your side of the contract.
That’s bankruptcy, and it’s how the law brings fairness if not morality back into an otherwise unfair system.
It’s not always easy, and it’s not always quick. Sometimes you lose a little money, a little property, or a great credit score for a few months.
All of those costs can be turned around in time through some hard work and patience.
But make no mistake – the process of taking out a loan isn’t moral or ethical. It’s a construct of our society, a one-sided transaction designed to provide stability and profit to lenders.
Failing to live up to your side of that Faustian bargain isn’t a moral failing. It doesn’t make you a bad person, and it doesn’t mean you’re somehow unethical.
If you need to file for bankruptcy, you’re giving up something in exchange for balancing the scales in a small way. It’s not penance, at least not in a spiritual way.
Rather, the law extracts from you that which is fair. If you accept the costs as they apply in your individual situation, you’ve taken the moral high road.
And anyone who disagrees with your decision hasn’t walked the proverbial mile in your shoes.
Credit Unions If you are a member of a credit union and you have debt with that credit union, you need to be aware of certain circumstances as they relate to your bankruptcy case. Credit unions operate under different rules than ordinary banks. When you place money in a credit union account it is known+ Read MoreThe post Credit Unions And Your Bankruptcy Case appeared first on David M. Siegel.
Should You File? Let’s talk about a bankruptcy scenario that comes up from time to time. Let’s say you’re someone who is struggling with debt, you’re single, and you finally found someone you want to marry. Your future spouse does not have any debt and he or she has a very good income. The question+ Read MoreThe post Filing Bankruptcy Before You Get Married Is Typically Best appeared first on David M. Siegel.
I’m happy to let you know that my latest recording is now available! It’s the second volume in my Joyless Noise series, and it’s on my Bandcamp site for listening or downloading for a simple, virtu…
The post More Joyless Noise! appeared first on Vonda S. McLeod, Attorney at Law.
When It Makes Sense There are circumstances where it makes perfect sense to convert a chapter 13 to chapter 7. One of the reasons why someone would want to convert their bankruptcy case is due to an inability to make chapter 13 payments. This can happen when someone loses their job, gets a divorce, becomes ill or+ Read MoreThe post Converting Your Bankruptcy Case From Chapter 13 To Chapter 7 appeared first on David M. Siegel.
There’s a line in the classic movie, The Producers, when one character says to the other, I lieb you, baby. I lieb you. Now lieb me alone.
The speaker clearly wants the other person to vacate the premises immediately. Leave him alone with an empty space, so to speak.
That’s what it means to vacate a judgment – the entire thing vanishes in a puff of smoke, leaving no judgment behind. The lawsuit remains active, but the clock is turned back so that the judgment is erased.
There are two ways for a creditor to get a judgment against you. They are:
- A judge can make a ruling that the creditor has proven all aspects of a case against you; or
- A judge can make a ruling that a creditor is entitled to a judgment because you didn’t fight the lawsuit.
The first way is usually called a judgment on the merits and the second way is called a default judgment.
In both situations, it is possible to get the judgment wiped out as if it never happened.
The process of wiping out a judgment entirely is called vacating the judgment.
SEE ALSO:
- What Does A Judgment Mean?
- Here’s What It Means To Have A Judgment Filed Against You – And What You Can Do About It
- Credit Card Lawsuit – Why You Should Always Fight.
- Here Are Your Options When Served With A Collection Lawsuit
Two Ways To Vacate A Judgment
Just as there are two ways for a creditor to get a judgment against you, there are two ways to have the judgment vacated. They are:
- Appeal the judgment and have the appeals court render the original judgment void; or
- Ask the original court to vacate a default judgment so that you can fight the lawsuit.
Grounds For Vacating A Default Judgment In California
Under California Code of Civil Procedure Section 473(b), a judge can vacate a default judgment taken due to mistake, inadvertence, surprise, or excusable neglect so long as the request is made within 6 months of the date of the judgment.
If you didn’t respond to the lawsuit because you were never served, you can file a motion to set aside the default or default judgment and for leave to defend the action. You must serve and file the motion no later than the earlier of the following dates:
- two years after entry of a default judgment against you; or
- 180 days after service on you of a written notice that the default or default judgment has been entered.
If the court finds that your lack of actual notice in time to defend the action was not caused by your avoidance of service or inexcusable neglect, it may set aside the default or default judgment allow you to defend the action.
Vacating A Judgment And The Impact On Your Credit Report
Just because the judgment is vacated doesn’t mean that the lawsuit disappears. In fact, vacating the judgment means that the lawsuit is active once again.
The lawsuit will continue to show up on your credit report, though the judgment will not longer be reported to the credit reporting agencies.
If you win the lawsuit that will be reflected on your credit report. And if you lose, the new judgment will be reported.
Don’t Let It Get That Far
If you get lawsuit papers, either file an Answer or get to a lawyer like me who defends collection actions.
Waiting for a default judgment in the hopes that you can get it vacated isn’t a very good plan of attack. After all, the judge may deny your motion – and then you’ll be sitting with a judgment against you and nobody to blame but yourself.
A report issued by the Consumer Financial Protection Bureau (CFPB) found that a debt buyer dismissed 70% of its lawsuits when the consumer filed a written answer to the lawsuit.
As part of a debt collector examination, Supervision reviewed collection lawsuits initiated by the entity. Examiners found that in 70% of the cases, when the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims.
Junk debt buyers purchase nothing more than a list of names and amounts owed, but they do not receive any real proof of the debt. They receive no copy of the credit card contract, no record of the payments and charges to the account, no copy of the multiple amendments to the contract, no evidence of whether the contract is written or oral, and no explanation of of how the finance charges were calculated.
Despite the entity’s express or implied representations to consumers that it intended to establish that consumers owed a debt in the amount claimed in court filings, in numerous instances, the entity misled consumers because it demonstrably had no such intention.
Do we have consumer fraud issue here? Debt buyers are intentionally misleading consumers by filing lawsuits they have no intention of litigating since they lack meaningful proof of the debt.
What about the remaining 30% of cases not voluntarily dismissed? The CFPB report does not answer this question, but we may assume that the vast majority of those were settled before going to trial.
Although I do find that many junk debt lawsuits filed by Midland Funding, Cach LLC, Portfolio Recovery, Sherman Acquisitions and others will be dismissed when a written answer is filed with the Court, the more common experience is that the debt buyer will hit the consumer with lame discovery requests to lay the groundwork for a Summary Judgment motion. ("Please admit or deny that you owe the amount stated in the lawsuit." Hint, your reply should be Deny!) Failure to respond to such discovery gives the debt buyers the right to seek a judgment without any real proof of the debt.
The lesson here is that when you are sued by a debt buyer you should always file a written response to demand proof of the debt.
A report issued by the Consumer Financial Protection Bureau (CFPB) found that a debt buyer dismissed 70% of its lawsuits when the consumer filed a written answer to the lawsuit.
As part of a debt collector examination, Supervision reviewed collection lawsuits initiated by the entity. Examiners found that in 70% of the cases, when the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims.
Junk debt buyers purchase nothing more than a list of names and amounts owed, but they do not receive any real proof of the debt. They receive no copy of the credit card contract, no record of the payments and charges to the account, no copy of the multiple amendments to the contract, no evidence of whether the contract is written or oral, and no explanation of of how the finance charges were calculated.
Despite the entity’s express or implied representations to consumers that it intended to establish that consumers owed a debt in the amount claimed in court filings, in numerous instances, the entity misled consumers because it demonstrably had no such intention.
Do we have consumer fraud issue here? Debt buyers are intentionally misleading consumers by filing lawsuits they have no intention of litigating since they lack meaningful proof of the debt.
What about the remaining 30% of cases not voluntarily dismissed? The CFPB report does not answer this question, but we may assume that the vast majority of those were settled before going to trial.
Although I do find that many junk debt lawsuits filed by Midland Funding, Cach LLC, Portfolio Recovery, Sherman Acquisitions and others will be dismissed when a written answer is filed with the Court, the more common experience is that the debt buyer will hit the consumer with lame discovery requests to lay the groundwork for a Summary Judgment motion. (“Please admit or deny that you owe the amount stated in the lawsuit.” Hint, your reply should be Deny!) Failure to respond to such discovery gives the debt buyers the right to seek a judgment without any real proof of the debt.
The lesson here is that when you are sued by a debt buyer you should always file a written response to demand proof of the debt.
Our law firm will soon be expanding the scope of our practice to include representing Oregon and Washington debtors with respect to their student loan issues. Since most consumers in the pacific northwest have never even heard of student loan law, I thought I would take this opportunity to describe many of the services that we will be offering to Oregon and Washington consumers.
For Recent Graduates as well as Borrowers in Good Standing
- We will provide a detailed analysis of your student loan portfolio in order to determine your best options with respect to consolidation, income-sensitive repayment, loan forgiveness or cancellation
- We will help Oregon and Washington consumers complete the forms and applications for repayment plan selections and consolidations
- We will help resolve bureaucratic problems related to federal loans.
For Borrowers Falling Behind on Payments
- We will provide a detailed analysis of your student loan portfolio in order to help you pick the best options for reducing your monthly payments under federal law
- We will help you find the best repayment management and loan prioritization options
- We will help you complete the required paperwork for deferment, consolidation and forbearance arrangements.
- We will directly represent you in communications with both lenders or servicers
For Borrowers in Default or Collections
- We will help you find the best paths for getting your loans out of default and provide strategies for keeping them that way.
- We will directly represent you in communications with collectors so that you will be left alone
- We will protect you from harassing, abusive and unfair conduct by debt collectors and sue those collectors who violate the Fair Debt Collections Practices Act
- We will defend you in debt collections law suits
- We will negotiate settlements and repayment plans.
- We will help prevent tax refund intercepts and wage garnishment orders
- We will analyze loan cancellation options and assist with the cancellation/discharge process
- Where absolutely necessary, we will file petitions for relief under the bankruptcy code so that your monthly outlay to your creditors is substantially reduced.
Commencing July 12, 2014, I will be available to consult with Oregon or Washington consumer with student loan issues at any of our bankruptcy law offices in Tacoma, Vancouver, Seattle, Portland or Salem. If these locations are not convenient, please feel free to set a phone appointment on our website.
The original post is titled Oregon Student Loan Attorney , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
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