Recently I had a case where my clients were the victims of just this scenario.  They had been owners of several rental properties, fell upon hard financial times, and had to file bankruptcy.  One of the banks filed a foreclosure action on its mortgage, but then dismissed it, seemingly because it didn’t want to be a “property owner” or it didn’t think it’d be able to sell the house to re-coop its loan.  Later, the house sold at a tax foreclosure sale.  Because the house was worth more than the taxes owed, there was actually money left over and being held by the court.

The clients hired me to help them obtain the excess funds.  The concern was that under Ohio law, they had to give notice to the bank that they were applying to have the funds distributed to them, and that the bank would try to intercede to satisfy its mortgage.

Luckily, I was able to successfully argue several points.  First, under Ohio law, the filing of an Entry of Confirmation of Sale frees the real estate of all liens and encumbrances, including mortgages, so that the new buyer takes title free and clear.  Second, the bank had failed to appear and assert its interest in the tax foreclosure.  The Ohio Supreme Court has held that a bank’s failure to appear, answer, establish, or defend a claim forever bars it from asserting a claim.  Galt Alloys, Inc. v. KeyBank Natl. Assn., 1999-Ohio-383, 85 Ohio St.3d 353, 708 N.E.2d 701 (Ohio 1999).  Third, the bank failed to respond to the notice of distribution, which acts as a waiver to participate in the distribution.  And finally, the bank’s failure to pursue its own foreclosure, or participate in the tax foreclosure, is a violation of public policy because they fail to follow through on taking title to homes, leaving the houses susceptible to break-ins, vandalism, and blight.

The judge ordered the excess funds to be distributed to my clients.  Score one for the little guy.

I get calls very frequently from people who tell me they received a phone call from a debt collector who said they were going to come and arrest them if they didn’t pay a certain amount of money to them. This is simply not true!

There is no such thing as debtors’ jail in most states including Kentucky and Ohio.  Unless you are writing bad checks, bad debt is not a criminal action, so you can’t go to jail.

I get a lot of other calls from people who say that the debt collector tells them that they are going to sue them or that they have to be in court the next day.  None of those things can happen unless you’ve received a certified letter in the mail, and your wages won’t be garnished unless you have received papers from the court.

Start by understanding your rights and the rules regulating debt collection.  The Federal Trade Commission (FTC) has set debt collection rules, so take time to visit its website and request information regarding your rights and what the debt collectors can and cannot do.  The National Consumer Law Center is another good information resource.  You will also want to enlist the services of a debt attorney. Only a personal attorney will be well acquainted with debt collection laws in your state.

In the 1970s, Congress passed the Fair Debt Collection Practices Act (FDCPA) to regulate debt collection companies and attorneys.  Remember, this law does not regulate the creditors to whom you owe money.  FDCPA covers all personal, family and household debts, including car payments, personal credit cards and medical bills.  Under the law, creditors can contact you about your debt via mail, phone, fax or in person; but they may not call you before 8 a.m. or after 9 p.m. unless you specifically agree to it.  Collectors must speak with your debt attorney if you have one.  If you do not have a debt attorney, creditors may contact people you know to learn your address, phone number or where you work.  Usually, debt collectors cannot contact a third party more than once.  In most cases, the collector will only tell you and your attorney that you owe money.

Under FDCPA, debt collectors are not allowed to harass or abuse you; these prohibited actions can include threats of violence or obscene language.  They cannot give false or misleading representation by implying they are from a government organization or that you have committed a crime.  Debt collectors are also prohibited from collecting more money than you owe, taking your property when they do not have the authority to do so or forcing you into a foreclosure filing.

If you are contacted by a debt collector, keep thorough records of any dealings you have with the person.  Consider taping any phone conversations you have so there are no “he said, she said” moments down the road.  If you choose to do this, make sure the person you are speaking with is aware they are being taped.

If you believe you do not owe the money or the amount given by the debt collector is incorrect, request verification.  They are required to mail you a verification letter within five days of their first contact with you.  If you believe the debt is yours and correct, set a payment arrangement in writing before sending a check or money order.

Never allow a debt collector access to your checking or savings accounts.  In fact, consider sending money orders instead of personal checks.  Never assume you will get goodwill from a debt collector – it’s their job to clear your debt and they may tap into your personal bank accounts to do it.  Always control information when speaking with debt collectors.  Do not tell them where you work, where you bank or where you live.  Give them as little personal information as you possibly can.

Calls and other contact from debt collectors can be scary.  Instead of dealing with them yourself, try to find a lawyer who is experienced in debt collection law.  A personal attorney will look out for your best interests and keep you from any unintentional slip ups – like sending a check when you should send a money order – that could end up costing you.  This lawyer may also be familiar with bankruptcy law and can educate you on your best options.

Start by understanding your rights and the rules regulating debt collection. The Federal Trade Commission (FTC) has set debt collection rules, so take time to visit its website and request information regarding your rights and what the debt collectors can and cannot do. The National Consumer Law Center is another good information resource. You will also want to enlist the services of a debt attorney. Only a personal attorney will be well acquainted with debt collection law in your state.

In the 1970s, Congress passed the Fair Debt Collection Practices Act (FDCPA) to regulate debt collection companies and attorneys. Remember, this law does not regulate the creditors to whom you owe money. FDCPA covers all personal, family and household debts, including car payments, personal credit cards and medical bills. Under the law, creditors can contact you about your debt via mail, phone, fax or in person; but they may not call you before 8 a.m. or after 9 p.m. unless you specifically agree to it. Collectors must speak with your debt attorney if you have one. If you do not have a debt attorney, creditors may contact people you know to learn your address, phone number or where you work. Usually, debt collectors cannot contact a third party more than once. In most cases, the collector will only tell you and your attorney that you owe money.

Under FDCPA, debt collectors are not allowed to harass or abuse you; these prohibited actions can include threats of violence or obscene language. They cannot give false or misleading representation by implying they are from a government organization or that you have committed a crime. Debt collectors are also prohibited from collecting more money than you owe, taking your property when they do not have the authority to do so or forcing you into a foreclosure filing.

If you are contacted by a debt collector, keep thorough records of any dealings you have with the person. Consider taping any phone conversations you have so there are no “he said, she said” moments down the road. If you choose to do this, make sure the person you are speaking with is aware they are being taped.

If you believe you do not owe the money or the amount given by the debt collector is incorrect, request verification. They are required to mail you a verification letter within five days of their first contact with you. If you believe the debt is yours and correct, set a payment arrangement in writing before sending a check or money order.

Never allow a debt collector access to your checking or savings accounts. In fact, consider sending money orders instead of personal checks. Never assume you will get goodwill from a debt collector – it’s their job to clear your debt and they may tap into your personal bank accounts to do it. Always control information when speaking with debt collectors. Do not tell them where you work, where you bank or where you live. Give them as little personal information as you possibly can.

Calls and other contact from debt collectors can be scary. Instead of dealing with them yourself, try to find a lawyer who is experienced in debt collection law. A personal attorney will look out for your best interests and keep you from any unintentional slip ups – like sending a check when you should send a money order – that could end up costing you. This lawyer may also be familiar with bankruptcy law and can educate you on your best options.

Mark E. Godbey, Attorney at Law
Mark E. Godbey & Associates
708 Walnut Street, Suite 600
Cincinnati, Ohio 45202
(513) 241 – 6650 phone
(513) 241 – 6649 fax

When you think of Ohio, what do you think of? Football? The Ohio River? Lake Erie? The Buckeyes? Well, add this to your list: Home Foreclosures.

In Ohio, more than anywhere else in the United States, people are losing their homes. In the first six months of 2007, Ohio recorded 44,594 foreclosures. The state’s foreclosure rate has been higher than the national average for every quarter since the end of 1998. Ohio has had more home foreclosures than any state except Florida and California.

While the exact reason for this phenomenon isn’t certain, several factors play key roles: Ohio’s sagging economy, unwise investments by mortgage brokers, and increased payments under adjustable rate mortgages (ARMs). An estimated $14 billion in Ohio ARMs will see their rates adjust over the next five years. It’s possible that many people with ARMs will see their monthly mortgage payments nearly double in the near future.

If you are behind on your home payment and the bank is threatening foreclosure, give us a call to speak with an attorney about your legal rights and options.

Joseph H. Spring, Esq.
MARK E. GODBEY & ASSOCIATES
708 Walnut Street, Suite 600
Cincinnati, Ohio 45202
(513) 241 – 6650 phone
(513) 241 – 6649 fax

WASHINGTON, D.C.//October 4, 2006//As the controversial federal bankruptcy overhaul approaches its first anniversary, a new survey of 700 members of the National Association of Consumer Bankruptcy Attorneys (NACBA) is the latest proof that the ill-conceived law is failing on an across-the-board basis. More than two-thirds (68.5 percent) of those surveyed said that their bankruptcy filings are up in the third quarter of 2006, compared of the first half of the year. Almost three out of five bankruptcy attorneys (57.5 percent) now expect filings to reach their pre-overhaul levels by or before the laws second anniversary in 2007.

Key findings of the survey include the following:

Contrary to what proponents of the law projected, fewer than a third of bankruptcy attorneys are seeing an increase in forced Chapter 13 repayment filings. Only 31.4 percent of attorneys have seen an increase in filings since the bankruptcy law changes went into effect last year. Fewer than one in 20 (4.5 percent) reported seeing a major increase.

More than three out of five bankruptcy attorneys report a jump in consumer inquiries about bankruptcy. Comparing the third quarter to the first half of the year, 71.6 percent of those surveyed are seeing increased demand, with more than one in five (21.7 percent) reporting a major increase.

Very few filings are about wasteful spending. In the vast majority of cases, consumers are forced into bankruptcy by major and unforeseen expenses (joblessness at 39.6 percent and medical expenses/other medical costs at 33 percent) or combinations of factors (mortgage/home-related debt at 64 percent and increased credit card interest rates at 41.1 percent). Fewer than one in 10 cases (8.1 percent) handled by bankruptcy attorneys were linked to discretionary spending habits, according to the survey. (Note: Two responses were permitted to this question, which is why the reported total exceeds 100 percent.) 

The NACBA survey of 3,000 U.S. bankruptcy attorneys resulted in a strong response rate of 24 percent (714 completed surveys). The survey was conducted on a secure, Web-based site from September 25-28, 2006. Only one response was permitted per individual. Full survey findings are available online at http://www.thehastingsgroup.com/NACBASurvey/Summary.html.

The new survey is the latest NACBA look at the practical impact of the 2005 bankruptcy law. On February 22, 2006, NACBA released the first analysis of tens of thousands of consumers seeking protection since a new federal bankruptcy law went into effect inOctober 2005. The data showed that of 61,355 of the earliest consumers seen by credit counseling firms the required first stop under the new bankruptcy law nearly all (97 percent) were unable to repay any debts and that an overwhelming majority were forced into dire financial straits by circumstances beyond their control, such as the loss of a job, catastrophic medical expenses or the death of a spouse.

EDITORS NOTE: A streaming audio replay of the news event will be available on the Web at http://www.nacba.org as of 6 p.m. ET on October 4, 2006.