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ScottyMacEsq
ScottyMacEsq, Attorney
Category: Legal
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Experience:  Licensed Texas General Practice Attorney
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I signed a quit deed claim on my residence in Florida with

Customer Question

I signed a quit deed claim on my residence in Florida with the loan originator,a credit union.They have sent a letter to me stating I have a charged off account with a balance of 20,000.00 dollars and would accept a much lower lump sum payment or even payments over time.Am I responsible for this balance?
Submitted: 1 year ago.
Category: Legal
Expert:  ScottyMacEsq replied 1 year ago.

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

Did you sign this quitclaim over to them in exchange for an agreement by them not to foreclose? Or was it unilateral on your part alone? (that they didn't give you any promises in return?)

Customer:

when i signed the paperwork there was language in the quit deed that stated that they would try to collect the balance if there was any.I didn't want to sign then and the rep from the bank said their lawyers had to have that provision in the claim

ScottyMacEsq :

Was there any representation or other writing that otherwise says that you would not be liable? And I assume that this balance is after they sold the residence, correct?

Customer:

Balance is after the sale of residence and no statement that said I would not be liable.They made it sound like it was just a formality to have that provision in the paperwork,I am disabled and I am also wondering if that would help my situation

ScottyMacEsq :

Thank you. First of all, the fact that they say you owe on it does not automatically make it so. I would really want to verify the sales price, the calculations, etc... before entering into any agreement, if any, for repayment. Sometimes in deed-in-lieu of foreclosure cases, they will "waive" deficiencies (the difference between what the property sells for and what is owed), but not always, and a waiver would have to be in writing. Here, the opposite is true, in that it says that you will be liable for the difference.

ScottyMacEsq :

As to a charge-off, that is an accounting procedure, and does not relate to debt forgiveness. That is, for accounting books to lineup, with assets and liabilities, where it appears that there no longer will be in the money coming in, a company can write off that debt, to make the books add up. It does nothing to whether or not you owe the debt.

ScottyMacEsq :

It merely is an accounting procedure.

ScottyMacEsq :

Now if the debt was forgiven (and you received a "cancellation of debt" statement and income document) then that would be different.

ScottyMacEsq :

But just because something is "charged off" does not mean that it's cancelled, although the two concepts are not mutually exclusive. They're just independent.

ScottyMacEsq :

So legally speaking, you almost certainly would be liable for this amount, particularly in the absence of there being anything in writing saying you wouldn't be.

ScottyMacEsq :

But the fact that you're disabled might be why they're willing to accept far less...

ScottyMacEsq :

I don't know all about your situation, but if you're not getting a paycheck, etc... and just getting disability income, most (if not all) of that is going to be exempt from garnishment.

ScottyMacEsq :

That is, while you are still liable, they might not be able to actually collect anything.

ScottyMacEsq :

Furthermore, if they do take you to court for the balance, get a judgment, and start trying to collect, you could file for bankruptcy (if you otherwise qualify) and that debt would likely be discharged.

ScottyMacEsq :

The credit union knows this, and so they're going to try to work with you and get you paying towards that without them taking the legal action against you (which is expensive, time consuming, and like I said before, risky due to the possibility of bankruptcy).

Customer:

What do I do from here? Lump sum payment is out of the question. Will I be able to set what I pay them monthly without financial disclosure? I do get a pension from my wifes employer from her death which is her retirement.

ScottyMacEsq :

If I were you (and if repayment is not an option) and you don't have wages or other income other than disability (if applicable) or this retirement, you can really say that you can't afford much of anything. Again, the reason is that while they can still take you to court, these income streams are exempt from garnishment.

ScottyMacEsq :

So they would have a document that would give them a judgment, but nothing to get from you.

ScottyMacEsq :

(if that makes sense)

ScottyMacEsq :

The downside is that it does affect your credit, and so if that is a consideration, that might make you more apt to try to work something out.

ScottyMacEsq :

But if you don't have any other wages, then you really do have a strong bargaining position.

ScottyMacEsq :

You don't have to disclose anything to make an offer.

Customer:

So do I tell the bank I can't pay and wait for legal action? I am not worried about my credit.I payed off all my debts and have no revolving credit.

ScottyMacEsq :

Yes, you can do that, if you don't have any other income streams other than that (because those would be exempt). They probably would not actually pursue legal action because of the costs (and no benefit) of doing so.

Customer:

Thank you for your help

ScottyMacEsq, Attorney
Category: Legal
Satisfied Customers: 12217
Experience: Licensed Texas General Practice Attorney
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ScottyMacEsq
ScottyMacEsq
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Licensed Texas General Practice Attorney