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How to Answer a Lawsuit Filed by a Bank

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  • 11-30-2017, 05:21 AM
    ransomedbyfire
    How to Answer a Lawsuit Filed by a Bank
    My question involves collection proceedings in the State of: South Carolina

    I'm being sued by Bank of America for $5,400. I don't dispute the fact that I owe the debt, and I don't believe I have grounds to dispute it.

    I'm trying to get help through LawHelp.org, but it's taking longer than I expected, and I'm barreling toward the deadline to answer the suit.

    I think I may be judgment proof, but I'm not sure. That depends on how the equity I have in my house is measured and how the homestead exemption is handled for married couples in my state.

    Should I bother answering the lawsuit? If so, how should I answer it?
  • 11-30-2017, 07:11 AM
    flyingron
    Re: How Should I Answer This Lawsuit
    You can't answer the lawsuit that you are "judgment proof." That won't stop the judgment, it just indicates that you have no means to satisfy it.

    As for your house, they will only get a junior lien on the property which just means they are in line to get their money if the house is sold (or foreclosed upon). The lien is only good for ten years (and not renewable). The homestead exemption protects $59,000 (or so it scales up periodically) of from the judgment creditor(s). It really doesn't end up meaning anything to you unless you end up in bankrutpcy.
  • 11-30-2017, 07:46 AM
    ransomedbyfire
    Re: How Should I Answer This Lawsuit
    Can a junior lienholder try to foreclose if I am in good standing with my mortgage lender? Is that something they ever try to do?
  • 11-30-2017, 08:51 AM
    adjusterjack
    Re: How Should I Answer This Lawsuit
    Quote:

    Quoting ransomedbyfire
    View Post
    Can a junior lienholder try to foreclose if I am in good standing with my mortgage lender? Is that something they ever try to do?

    It's possible if the equity outweighs the cost of the foreclosure and sale. Foreclosure sale prices are typically well below market and the junior lien holder will have to pay off the other mortgage before getting its own money.

    The other side of the coin is that the attempt at foreclosure by a junior lien holder may be defined as default on your first mortgage which could allow the first mortgage holder to call in the balance and foreclose, too. You'll have to study your mortgage contract to figure out if that is possible.
  • 11-30-2017, 09:38 AM
    hr for me
    Re: How Should I Answer This Lawsuit
    You would need to check your 1st mortgage contract to see what happens if a junior lien is attached. Your state is not mine, but I know sometimes the mortgage holder will do something about a junior lien and it might not be to your benefit. Don't assume you are judgment proof.
  • 11-30-2017, 09:54 AM
    Mr. Knowitall
    Re: How to Answer a Lawsuit Filed by a Bank
    We're getting way ahead of things by talking about foreclosures. Until you say otherwise, I'm going to assume that this is a credit card debt, or something similar, and an ordinary collection lawsuit (i.e., they're asking for money). I'll say this much: If this is a foreclosure of a junior lien (of only $5,400) and you have equity in your home, find a way to pay off the $5,400 -- but given the cost of foreclosure, if there is a senior lienholder and not much equity that's not a step that a junior lienholder is apt to take.

    You need to file some sort of answer with the court to avoid default.

    If this is a credit card, between the fact that the debt is dischargeable in bankruptcy, the fact that collection efforts actually cost them money (that they can try to recover from you, but only if you have it -- and that, too, would be dischargeable in bankruptcy), adn that they have little incentive to spend many thousands of dollars to try to chased down and collect a @$5,400 judgment when you may not even be able to pay the judgment itself, you can relax a bit.

    In most cases, with a judgment of that size, the creditor might try to collect through garnishment of financial accounts (e.g., checking and saving, but not retirement accounts) or through wage garnishment.
  • 11-30-2017, 10:20 AM
    ransomedbyfire
    Re: How Should I Answer This Lawsuit
    Quote:

    Quoting adjusterjack
    View Post
    It's possible if the equity outweighs the cost of the foreclosure and sale. Foreclosure sale prices are typically well below market and the junior lien holder will have to pay off the other mortgage before getting its own money.

    The other side of the coin is that the attempt at foreclosure by a junior lien holder may be defined as default on your first mortgage which could allow the first mortgage holder to call in the balance and foreclose, too. You'll have to study your mortgage contract to figure out if that is possible.

    It doesn't sound like it to me.
    (For what it's worth, my mortgage was originated by and is serviced by Quicken Loans and was sold to Fannie Mae.)

    Quote:

    Quoting Mr. Knowitall
    View Post
    We're getting way ahead of things by talking about foreclosures.

    I bring that up because, other than my credit (which stinks already), I feel that's about the only thing I have to lose here.

    Quote:

    Until you say otherwise, I'm going to assume that this is a credit card debt, or something similar, and an ordinary collection lawsuit (i.e., they're asking for money).
    That's correct.

    Quote:

    You need to file some sort of answer with the court to avoid default.
    Default on the credit card or my mortgage?

    Quote:

    In most cases, with a judgment of that size, the creditor might try to collect through garnishment of financial accounts (e.g., checking and saving, but not retirement accounts)
    There is a $5,000 exemption in my state for financial accounts. Doesn't that mean they can't touch my bank accounts unless the balances exceed $5,000? If that is the case, couldn't I just keep my deposits under $5,000 and sock anything extra away either into paying off my mortgage or a retirement account until the judgment expires? (Judgments expire in 10 years here and cannot be renewed, as far as I know.)

    Quote:

    or through wage garnishment.
    My state doesn't allow wage garnishment.

    Given all this, is there even any point in answering the suit? Wouldn't that just drive up court costs which, since I am likely to lose the case, would just increase my debt?
  • 11-30-2017, 11:15 AM
    flyingron
    Re: How Should I Answer This Lawsuit
    Quote:

    Default on the credit card or my mortgage?
    Wrong kind of default. He's talking about the default judgment that will be entered if you don't answer.

    You are right SC can not garnish you for credit card debts. Child support, taxes, and student loans are the only debts that have that ability.

    Note that the $5000 protection against levy is for all your liquid assets in total, not just any particular account.
  • 11-30-2017, 11:49 AM
    adjusterjack
    Re: How Should I Answer This Lawsuit
    Quote:

    Quoting ransomedbyfire
    View Post


    Given all this, is there even any point in answering the suit? Wouldn't that just drive up court costs which, since I am likely to lose the case, would just increase my debt?

    Whatever you do to make their lawyer do more work the bigger his bill gets so the bigger the debt gets.

    Plus, the judgment grows with post judgment interest.

    I 5 to 7 years your debt is likely to double.

    Where will you be in 5 to 7 years?

    Will you want things that credit will buy? Will you be making more money? Will you live in another state where wage garnishment is permitted? You really don't know what the future will bring.
  • 11-30-2017, 11:54 AM
    ransomedbyfire
    Re: How Should I Answer This Lawsuit
    Quote:

    Quoting flyingron
    View Post
    Note that the $5000 protection against levy is for all your liquid assets in total, not just any particular account.

    Woops. Looks like I can't take that exemption anyway. I'd still have the wildcard exemption (and a few others) though. I seriously doubt anything I own is worth any more than $800 by itself. If it were and if it weren't essential to my daily living, I would've sold it already.

    Quote:

    Quoting adjusterjack
    View Post
    Where will you be in 5 to 7 years?

    I'm guessing I'll either still be where I am now, in roughly the same financial boat Or things will have improved to the point where tackling $20,000 worth of seriously delinquent debt doesn't seem like such a hilarious punchline to a cruel joke.

    Quote:

    Will you want things that credit will buy?
    Right now, the idea of credit turns my stomach. Using it has been a survival mechanism up until now. And I am just now getting to the point where I am managing to stay ahead of my bills (minus the credit card bills). For now, the thought of never touching a credit card again makes me smile.

    Quote:

    Will you be making more money?
    I hope so. Which makes me think maybe I'd be better equipped to handle this mess then. I know letting it wait can make it worse, but foregoing basic necessities can be an even bigger mistake. I'd prefer to stay alive to regret my decisions than to die trying to make better ones.

    Quote:

    Will you live in another state where wage garnishment is permitted?
    We're both disabled and have stuck close to family for a reason. I only really foresee leaving the state if my in-laws die.

    Quote:

    You really don't know what the future will bring.
    I figure, if the future does bring a better job, etc., I'll be better equipped to settle then.
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