I’m a member of a Credit Union and have several accounts with them. I’ve heard of this mysterious ‘cross-collateralization’ CLAUSE and thought I would do some investigation so we can all sleep better. Arizona Bankruptcy Attorney John Skiba wrote, Bankruptcy, Credit Unions & Cross Collateralization Agreements, over at JDSupra, which provides a very brief and technically incorrect overview of Credit Union’s dirty little tricks to get you to pay all your debts owed to them. What we all need to know is, Can they get away with it?
The term cross-collateralization is not an agreement on its own, but rather it is a clause contained in other agreements that you might enter into with your credit union. A contract clause is a term or condition that is written into the agreement that becomes part of the contract. The trouble with these nasty little clauses is that credit unions are the only entities that think they’re a good idea and these clauses are not disclosed to the consumer and buried in the fine print or what we call ‘boilerplate’ language. I liken this baby clause as happy when you’re paying your debts and an incessant whiner when you stop.
Whenever you borrow money to buy say an automobile, or home, you list that property as collateral. The promissory note you sign has certain Truth in Lending Act (“TILA”) Disclosures that are required. The problem comes in when you obtain unsecured credit lines with the credit union that contain this cross-collateralization clause that says that they can attach other debts to any collateralized loans obtained from this credit union. This clause is buried in the credit agreements that are usually discarded by debtors without so much as a glance and do not contain any TILA disclosures. At their most fundamental level, these clauses violate Truth in Lending.
What also jumps out to me is Unfair and Deceptive Trade Practices in the Credit Union’s use and enforcement of these junk clauses. It is patently offensive and unconscionable to include this cross-collateralization clause buried in a consumer loan agreement that is not disclosed to the consumer prior to entering into that agreement. Then, when a consumer defaults on the loan or credit, then the Credit Union violates Fair Debt Collection Practices in their attempts to enforce this clause.
What happens in bankruptcy is that we must look at whether the agreements are enforceable. If they are enforceable, then the debts owed are secured. If the agreements are unenforceable, we will treat them as unsecured debts.
For a nation consumed by bankruptcy, this information will not be as shocking as it would have been for previous generations. Isn’t that fact, itself, reason to be worried? From the state with a 19% increase in bankruptcy filings (especially chapter 13 bankruptcy), to the surprising dip in credit card debt, learn all you want to know about the financial state of the U.S. in 2011 in this graphic.
Bankruptcy in 2011
Chapter 13 bankruptcy cases have claim deadlines by which date the debtor’s creditors are supposed to file claims in order to be included in the roster of creditors entitled to distributions of money out of the Chapter 13 plan. I represent a debtor who prior to filing owed money to a law firm which represented him in a pre-bankruptcy legal matter. Three months after the Chapter 13 claim deadline the law firm filed an unsecured claim.
The first question is whether or not the debtor cares if an unsecured creditor files a late claim. If a debtor is paying all of their disposable income into a plan, but the plan will not pay 100% of unsecured claim, then a late claim does not change the amount of the debtor’s monthly plan payment or total payments under the plan. No harm no foul. If the debtor’s plan must be a 100% plan for any number of reasons (such as the debtor’s desire to reaffirm an investment property) then a late filed claim is important to the debtor because the claim would increase plan payments.
In this case, my client is required to pay 100% of unsecured claims, and therefore, opposed the late claim. The creditor argued that they had actually signed a claim form before the deadline, but that it was incorrectly addressed and that the error was not discovered until recently. The court denied the creditor’s claim. The court said that late claims can be filed if there is an “excusable neglect” but that the attorney’s clerical error of not properly filing or mailing a claim form is not one of the excuses accepted by bankruptcy courts.
Question: What happens if one cannot pay the Ontario bankruptcy fees charged by the trustee? $200/month for 9 months will mean we don’t eat or have heat or some other necessity. What happens then?
Answer: All trustee firms in Ontario are private companies, so they require a contribution from you to cover the costs of administering your bankruptcy. In addition, the trustee must incur costs to mail the documents to your creditors, and to complete other duties.
However, all trustees will work with you to come up with a payment arrangement that works for you. Here are some things to consider:
First, what are you currently paying to service your debts? Once you file bankruptcy in Ontario you are no longer making payments on your unsecured debts, so in most cases the cost of bankruptcy is much less than what you are currently paying.
Second, the reason most people file for bankruptcy is to prevent their wages from being garnisheed. If you are not currently working, you have no wages to garnishee, so it may not be necessary for you to file bankruptcy at this time.
Third, your Ontario bankruptcy trustee will explain all of your options, so it may not be necessary to file bankruptcy.
Whether you’re recovering from a personal bankruptcy filing or simply trying to prepare your finances for buying a home, you may have wondered what kind of financial preparation you should do in order to maximize your chances of getting an affordable mortgage. And, with many mortgage lenders wary right now, it’s wise to plan ahead if you’re ready to buy.
Here’s a look at some tips for potential homebuyers, adapted from an article from WalletPop.com.
Without a car, you have to face numerous problems especially when your office is too far from home. Most of the people are scolded by employer everyday because they do not reach office on time. Obtaining a car can be dream of any individual. However, monthly salary and bad credit score can create various troubles. In order to resolve the issue of bad credit borrowers, lenders introduced bad credit car loans. With this money, people with bad credit history can buy their dream car and repay the money in easy monthly installments. Yes, you can buy old or new car with this money.
Bad credit car loans are provided to loan seekers in two formats, like
Secured loan – If you are planning to purchase an expensive car then go with this option. By pledging collateral against the loan amount, individual can secure good amount ranging from £5000-£75000. This amount can easily help you to buy Ferrari, Bentaley, BMW, Mercedez etc.
Unsecured loan – Consumers who can not place collateral against the loan amount can go with unsecured loan. Here, you can get amount ranging from £500-£25000. Approval completely depends on the repayment capability of borrower.
I don’t know about you, but I’m tired of seeing those bankruptcy lawyer advertisements that say, “Low Cost,” “Cheap Bankruptcy,” and “$100.00 Starts.” For $100.00 dollars that lawyer will do nothing more than deposit your money into their business account. Always remember that advertising is advertising even when a lawyer does it. We just have more rules than the rest of the marketplace. I start with the fact that we must declare that,
“We are a debt relief agency. We help people file under the Bankruptcy Code,”
in all our advertising because Congress said so and the Supreme Court upheld this in a recent decision.
The truth is that there are costs that you must pay when filing bankruptcy. First, you must take a pre-filing credit counseling course that costs anywhere from $5.00 to $50.00 depending upon whether you’re filing a single or joint case, or on an emergency basis. There is also a post-filing financial management course that is required with costs in the range of $25.00 to $50.00. Then, there is your filing fee of $299.00 for a Chapter 7 case, and $274.00 for a Chapter 13 case. The total so far is over $300.00 and we haven’t even begun to talk about whether you’ll hire a petition preparer or an attorney.
Remember that you can file bankruptcy without a lawyer, but I suggest that you at least get a free consultation before you go it alone, or Pro Se. You can also find important information from our local court’s website to guide you along this process; just click on “don’t have an attorney?”.
You can hire someone to prepare your petition that is not a lawyer. A petition preparer service has pitfalls to it because they cannot tell you how to answer the questions and what information to include in your petition. Also on the court’s website, under news and publications, you can locate a list of enjoined petition preparers that have fowled up many a debtors cases. Be sure to do your research before you hire someone to prepare your petition for you.
If you decide to hire an attorney to represent you, be sure you meet with them personally. Many of these low cost starting campaigns are run by law firms that mill you through the process and have you work with non-lawyer staff. They’re a breeding ground for malpractice and you miss out on having an attorney review your entire financial situation to partner with you toward your strategic goal of financial freedom from your debts. You need a partner, not another creditor.
Caveat Emptor~~Buyer Beware!
A member of parliament has heightened concern which the general liability for payment protection insurance claims and its mis-selling could get to £4 billion.
Jonathan Evans rates how the full bill of mis sold ppi could be within the billions range, with more than recent years the significant statistics becoming enormous.
The MP said: “I’ve observed indications that in due course the general liability with regards to PPI is apt to be not in the hundreds of millions nevertheless the billions of pounds. I noticed a figure of possibly even £4bn mentioned being an end game figure.”
MPs and members of the House of Lords informed that even though compensation is very important, the existing structure of the Financial Services Compensation Scheme (FSCS) means professional insurance brokers are compensating the problems of a large number of businesses; from banks and mortgage brokers to car dealers, doctors, dentists and vets.
The Financial Services Authority is now being requested to start talking to on a new financing model for the FSCS with time to have new rules in position for their 2012-13 financial year.
The funding model may independent professional insurance brokers kind other sellers of basic insurance to get rid of the cross-subsidisation of one class by others.
For help managing your mis sold payment protection claim, speak to Belmont Thornton today.