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Vincent Howard and our Claremont consumer bankruptcy lawyers were interested to see a bankruptcy case involving a debt whose ownership was passed along from a bank to an individual without being paid off. In Carter v. Estate of Leon J. Heimer, the Eighth U.S. Circuit Court of Appeals Bankruptcy Appellate Panel declined to allow Walter and Debra Carter to avoid a lien on their 2005 Cadillac Escalade held by the estate of Leon J. Heimer. The Carters, of Iowa, originally pledged the truck as collateral for two loans from a bank, but they later lost a lawsuit by the estate, to the tune of $30,230.74. Before a lien sale could take place, however, the Carters filed for Chapter 7 bankruptcy and sought to avoid the estate’s lien. The BAP agreed with the bankruptcy court that they could not.

The opinion did not say why the Carters took out the loans or why they were sued by the estate. However, after judgment was entered on the lawsuit by the Iowa state court, the court issued a writ of execution allowing a sheriff’s sale of the Escalade to satisfy the judgment. The Heimer estate paid off a loan balance of $21,299.79 to the bank, a requirement for a sheriff’s sale.

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Every consumer benefits from a good credit score, however, it’s a misconception that individuals who have a negative mark on their credit report are irresponsible consumers. If there is a glitch in a creditor’s system and a payment isn’t reported on time, your credit score can plummet. If a consumer is involved in an automobile accident and the insurance company delays payment to the hospital or doctor, the same thing can occur. In such cases the consumer must contact the credit bureaus to remove the mark from the report.

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In our last few posts, we have been discussing the historic $25 billion settlement agreement between the attorneys general of more than 40 states and the five major banks (Wells Fargo, JPMorgan Chase & Co., Bank of America, Ally Financial and Citigroup) concerning widespread abuses in the mortgage industry and fraudulent foreclosure practices.

Interestingly, there is another component of the settlement that is now generating a significant buzz across the country: relief for active duty and deploying armed forces personnel whose lenders violated federal laws prohibiting mortgage abuses among service members.

According to federal officials, those military members who lost their homes due to deceptive foreclosure tactics or who were otherwise denied interest rate reductions on their homes will be eligible for some measure of relief.

Specifically, Ally Financial, Citigroup and Wells Fargo are required under the terms of the settlement to provide every service member who was victimized by wrongful foreclosure with a minimum of $116,785, as well as interest and lost equity.

JPMorgan Chase has already provided some measure of financial compensation to many victimized service members under the terms of a private settlement.

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The Corona foreclosure defense lawyers at Howard Law, P.C., have written here several times before about calls for widespread reductions in loan principal for homeowners whose homes are underwater. This solution is strongly opposed by the banking industry and its lobbyists, but economic studies have shown that it’s the best, and possibly the only, way to help the housing market recover from its downturn. A Jan. 25 article in the Washington Post reinforced that call, quoting economists from Moody’s and other organizations not generally considered political. They say more and more economists believe principal reductions would be most effective, echoing calls fair housing advocates have made for several years. The article contrasted this with the approaches taken by President Obama and the Republicans seeking to replace him, both of whom proposed less drastic solutions.

The president’s proposal outlined in the article would allow refinances even for borrowers who are underwater. This would allow them to take advantage of the current very low interest rates, freeing many from the high interest rates they were locked into during the housing bubble.

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A credit report provides a snapshot of a persons ability to manage credit over time. The report includes most revolving credit lines, automobile loans, home mortgages, student loans and other debts. Information such as bankruptcies, tax judgments, and other public records may also appear on the report.

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