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Unsecured Debt

FindLaw Answers Started by Ellengrb , Dec 10 2013 01:26 PM Please log in to reply 11 replies to this topic 6 posts Posted 10 December 2013 - 01:26 PM 2 years ago, I bought a house with the intention of fixing it and selling it for a profit. I could not find  a traditional lender that would give me a short term loan while the home was listed so I unfortunately used a company that did give me a loan if I let them hold my primary residence as collateral. I did that, got the loan but the house did not sell for  years - during the majority of that time, I made monthly loan payments to the lender with a 19% interest rate since the loan term expired. Eventually the payments became too much and I let the house go "deed in lieu of foreclosure". As part of the aggreement, the lender had me sign an unsecured note to pay them 100.00  per month with a balloon payment at the end of 3 years. I felt like I HAD to sign this in fear of losing my primary residence and signed. I was scared to death of losing my home. I made 8 months worth of payments on time until all of sudden I stopped getting billed. I tried to call the lender and the number changed. The office location was gone and the chamber of commerce indicated that they went out of business. 18 months later I got a letter from a random company indicating that I should now make payments to them for the company that closed. Can they do this ? Is there a time limit on them having the right to collect ? Thanks 58,189 posts Posted 10 December 2013 - 01:30 PM I'd like to think you'd google "breach of contract statute of limitations" along with name of your state.  Almost certainly, the SOL has not run on this debt.  (Regardless of whether a given company goes out of business, it was foolish to expect that they'd not sell/transfer their assets elsewhere.  Just because you don't receive a bill doesn't mean you oughtn't have kept on sending payments.  If you spent that money, that's a problem, because you defaulted on the debt and hopefully the successor in interest won't exercise an acceleration clause.) I'll echo PG's advisory "warning" with a twist: (Many) legal issues are complicated. Explanations and comments here might not fully identify or explain the ramifications of your particular problem. I do not give legal advice as such (and such is impermissible here at any rate). Comments are based on personal knowledge and experience and legal info gleaned over a quarter century, and every state has differing laws on and avenues to address most topics.  If you need legal advice, you need to consult (and pay) a professional so that you may have someone to hold accountable.  Acting on personal and informational advice from a stranger on the internet is a bad idea -- at least not without your own thorough due dilience/research and confirmation as it applies to your situation.  43,213 posts Posted 10 December 2013 - 03:46 PM It's not clear why "Fallen" "like[s] to think" folks come here only as a last resort (and that folks know exactly how to phrase google searches for these sorts of issues).     As part of the aggreement, the lender had me sign an unsecured note to pay them 100.00  per month with a balloon payment at the end of 3 years. I felt like I HAD to sign this in fear of losing my primary residence and signed.   I think what you're saying is that you signed this unsecured note in exchange for the lender releasing the lien http://socallawsupport.com/ on your primary residence.  Is that right?  If so, you're lucky.   95 posts Posted 11 December 2013 - 08:51 AM So the answer to can they do this is yes since they did it you know they can do it.  Whether they have the right to collect is a different issue.  It is possible that the original mortgage holder went out of business and sold your debt to this new company.  There are a couple of doctrines that would limit their ability to collect from you.   The first is the statute of limitations .  I don't know what jurisdiction you're in, but for example, in California the statute of limitations for bringing suit on a breach of contract claim is 4 years if the contract is written and 2 years if the contract is oral.  In Arizona it's 6 years if the contract is written and 3 years if the contract is oral.  I know of no jurisdiction where the statute of limitations to bring a breach of contract claim is less than 18 months.   The other option would be the equitable doctrine of laches .  Basically laches would require a showing that the debtors unreasonable delay hampered your ability to make a defense to a breach of contract claim.  Because this is an equitable limit instead of a statutory limit, you would have to actually go to court and the court would have to make this determination.   I believe that you are required to continue to pay under the contract regardless of whether you were billed by the debtor.  You would have breached when you neglected to continue to pay when they stopped billing you so this new company would likely be able to sue you for breach of contract as the successor in interest to the original debtor.  However, it seems like they are wanting to have you continue making the payments under the old contract, so you might consider talking to them about where you stand with them (since if I do the math right you are approximately 10 months from owing the balloon payment).   You might consider asking the new company to see the documents showing they are the successor on the loan before you start forking over money to them. Looking for legal self-help tools?  Try one of FindLaw?s free legal information guides !  These free, downloadable PDFs guides focus on everyday legal issues that many of us experience. 59 posts Posted 11 December 2013 - 09:14 AM Debts can be assigned.  Check your credit report and see if your non payment shows up there.    Before you stop paying, talk to an attorney about demanding evidence of chain of title on the debt.  If a debt buyer cannot prove chain of title in court then they probably wont be able prove that you owe the debt to them at all.  And remember business records on their own are hearsay and need to be introduced by a custodian of those records (to say that these are records kept in the normal fashion) before they are admissible.  Do you think a debt buyer is going to have access to someone who can legitimately introduce those documents?  And if the debt gets cancelled before you default on it, then your credit rating should not take a hit.   There's a risk, though...if they CAN prove chain of title (meaning if they bring a witness), you will lose and they will probably accelerate the loan and make you pay it all right now...   it really all depends on what company bought that debt, and where you are bringing the case...talk to a local consumer rights attorney
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