Debt Mortgage on my credit

[ericakj]

I took a loan out for a house to help a friend. Dumb, I know.

Well, it didn't get paid off from my friend, and i am stuck with it. The Collection company has been calling me to pay on 30,000. I don't have that type of money and don't have enough to give them 50 bucks. The house got sold and my portion is the 30,000 of the loan. The collection company have been calling me everyday and harassing me over the phone.

Should I wait the 7 years for it to get off my credit?

Can they seize my pay check?

What should I do?

[arthurb999]

Tough call here... you owe the money.

They can bring you to court and a judge could garnish your wages. I am not sure how likely that is though.

[disneysteve]

Originally Posted by ericakj

I took a loan out for a house to help a friend.

I don't have that type of money

I'm wondering how you qualified for the loan if you had no means to repay it, but I suppose that's why the housing market is such a mess today. Lots of people took out loans they couldn't afford.

Have you taken any legal action against your "friend" to get the money? I would certainly speak with an attorney and see what your options might be.

I don't believe they can garnish your wages for a mortgage but I'm not sure about that.

Has the property been foreclosed? I thought if you didn't pay a mortgage, they foreclosed and took back the property and that was the end of you owing anything. It wrecks your credit but you wouldn't owe any money at that point.

[arthurb999]

They have the right to sue the homeowner for the difference... although they usually don't.

The question is... should she pay the money or not?

[disneysteve]

Originally Posted by arthurb999

The question is... should she pay the money or not?

Well, if she doesn't have the money, its kind of a moot point.

If she had the money, she should pay it as she agreed to.

I'd repeat my advice to speak with an attorney to see what your options are.

[ericakj]

I dont have the money to pay this. Should I send them a letter stating my current financial situation?

I talked to an attorney and since its in my name, they is nothing i can do about suing my friend for the money.

[disneysteve]

Originally Posted by ericakj

I dont have the money to pay this. Should I send them a letter stating my current financial situation?

I talked to an attorney and since its in my name, they is nothing i can do about suing my friend for the money.

I can't imagine that sending them a letter is going to change anything. Bottom line is you borrowed the money. It is your responsibility to repay it. If, for some reason, you are not able to make the payments you agreed to, they can certainly come after you. You may have to consider filing bankruptcy to get out of this mess. If you are willing to post your income and expense info, we'd be happy to take a look and see if there is any way for you to work this out.

[deadgoon]

Originally Posted by ericakj

Should I wait the 7 years for it to get off my credit?

I don't think anyone has commented on this question. This debt will not go away until you pay it off. Once you have paid it, it may drop off your credit report after 7 years, but it will remain on there as long as you owe them even $1.

As far as the harassing phone calls, if it is a cell phone you can program in their number as a contact then set their ringtone to silent. That way you won't be disturbed when they try to call. If not, you're going to be stuck with them calling and there isn't much you can do about it unless they break the law. Here is a web page about stopping the calls.

Stop Debt Collection Calls - How To Stop Debt Collectors From Calling

Also, remember to remain calm while on the phone with them and if they start getting you upset, just hang up. You don't have to talk to them if you don't want to.

[Seeker]

Originally Posted by deadgoon

This debt will not go away until you pay it off. Once you have paid it, it may drop off your credit report after 7 years, but it will remain on there as long as you owe them even $1.

It will remain as a debt until fully paid and cleared. Sever years after that clearing date, the debt will revert to a "cleared history" with that lender; but since it's 7 years old, nobody can use that history item to deny you credit in the future.

[jIM_Ohio]

if you own the house and it was sold, who received the proceeds of the sale.

if you are legally required to pay the debt, but were not required to sign over the deed or similar, I'd want to find an attorney who saw it the same way.

[disneysteve]

Originally Posted by jIM_Ohio

if you own the house and it was sold, who received the proceeds of the sale.

if you are legally required to pay the debt, but were not required to sign over the deed or similar, I'd want to find an attorney who saw it the same way.

I'm guessing there was negative equity and she was upside down on the loan.

[jIM_Ohio]

Originally Posted by disneysteve

I'm guessing there was negative equity and she was upside down on the loan.

Either way, if the loan is showing up on credit as borrower, the OP should have needed to either
a) get a notice before foreclosure
or
b) sign something as part of foreclosure

I would consult an attorney again and ask better questions.

[SnoopyCool]

Send the collection's agency a note telling them to cease and desist calling you. Google a template for the note (this may be what deadgoon's link says, I didn't click on it).

[cptacek]

Judge Judy might take your case...

[leonoratisdale]

Hi,
You do not say what your monthly income is. Mortgage companies look to debt ratios to determine your ability to repay. Thus, you need to take your total monthly obligations and divide by your total monthly income in order to determine your debt ration. Include your prospective mortgage payement in this calculation.

[creditcardfree]

I'd get a second lawyer's opinion.

[Seeker]

ericakj,

Did you take out a "personal loan" and give the money to your friend for the house?

Any documentation of this loan with your friend and the fact that s/he was to pay you back?

Were you named on any legal document as having any proportional interest in this house?

Depending on the answers to these questions, determines whether or not you have any legal recourse. But if the house was upside down and your friend has nothing left either, the questions/answers may be moot anyway.

---

As far as seizing your paycheck, or garnishing wages, or having a creditor sue and win a judgement against you, what happens depends on your income amount and the state in which this has happened. There are limits to amounts that can be taken from wages.

Generally I believe (and it varies by state and this info may be outdated), that people must have a "survivable" amount of 30 times the federal minimum wages (this amount is exempt from seizure). Any amounts over 30x federal minimum wages (again some HCOL states have different minimum wages), is garnishable/seizable but only 25% of that overage. There are some exclusions that up the percentage (child support garnishments for instance), but all of that is a case-by-case issue and usually decided in a court of law.

If you do not "have enough to give them 50 bucks" then you may be "judgement proof" in the sense that they could not win a lawsuit judgement over you and/or they could win but not be able to garnish anything. But the courts would be "digging" though your income and expenses to determine whether you are "judgement proof" due to your income levels being too low, or due to your own spending choices, or extenuating circumstances (the auto accident that you posted about previously).

Do what "deadgoon" suggests in response #8 above, and if they continue the calls after receiving that letter, report them. They are at that point, breaking the Fair Debt Collection Practices Act.

Your only other alternatives:

1) ignore the harrassing calls and wait it out (ruining your credit for the next seven years or so)

2) declare bankruptcy (which will ruin your credit for the next decade or so)

3) if you have any documentation with your friend owing you 30k, then pursue it with another lawyer. But if you have no supporting evidence, then you have no case.

[tripods68]

If you can't pay back the loan, what's the point of getting a lawyer, its just another way for you to get screwed.

Your FICO is already tarnished for at least 7 years---ignore those collection call. Get a new phone number.