Tuesday, August 3, 2010

The Must Know Rules of Debt Defense

The basic rules of Deficiency Debt Defense 101 are a ever growing list of MUST DO RIGHT NOW & MUST IMPLEMENT RIGHT NOW!! in order to achieve the goal of deficiency debt defense.

The primary goals of deficiency debt defenses are to:

1. Reduce the Risk and Amount of Deficiency Debt.
2. Strengthen Your Defenses Against Deficiency Debt.
3. Lengthen The Time To Pay Back The Deficiency Debt.

A proper defense requires that you plan and prepare now. So make sure to implement all of these rules. Make sure you come back and read these rules every month. We will be adding new rules along the way. Also, each rule will be further detailed and expanded in future blog posts. We will do our best to apply each rule to a real life scenario.

In the meantime start reading and start preparing.

1. Always respond to a legal action in writing. It LENGTHENS the time and STRENGTHENS your defense 100% of the time.

2. Save every debt collection message on your answering machine.

3. Save every debt collection letter mailed.

4. Always send a RESPA request letter to determine if lender or creditor 
still has the paperwork and can prove that it has the right to collect.

5. Send all letters to lender via certified mail (no return receipt is necessary) and regular mail. Always mail one letter to the lender’s designated address and to the lender's corporate office.

6. Become familiar with your states anti-deficiency laws. In states that allow deficiency judgments make sure you know the rules and, if necessary, speak with qualified counsel.

7. Keep in mind once a deficiency judgment is obtained it can last as long as twenty years.

8. Avoid fraudulent conveyances at all costs.

9. Learn strategies and techniques to legally shield your assets from creditors. Use legal strategies and techniques that do not expose you to fraudulent conveyance.

10. Never ignore a foreclosure action or any other lawsuit to collect on a loan. Always respond in writing.

11. Make it a habit to send a complaint letter to the bank each and every time you are treated improperly, unreasonably and disrespectfully. Make sure to detail the particulars of your treatment.

12. Never accept any verbal agreement with a lender or creditor- always insist for evidence in writing.

13. Always seek debt forgiveness or forgiveness of debt in writing when negotiating a principle reduction, deed in-lieu, or shortsale.

14. Always ask for a principle reduction as part of any debt negotiation, workout, or modification strategy. If the lender says “NO” ask for the reason in writing or ask for the lender's principle reduction policy in writing. If the lender does not have it in writing, then send a letter confirming the conversation rejecting the principle reduction. Make sure to put the time, date, and representatives identification number in the letter.

15. Always send a letter demanding a complete financial history of all payments and charges as it relates to your debt.

16. Use a “do not call” letter as a means to stop harassing phone calls. This letter must be sent several times via certified mail and regular mail.

17. Keep a detailed diary of any negotiation discussions with the lender and mail a copy of your notes to the lender “once a month”.

18. The same defenses that is available in a foreclosure action area available in a deficiency judgment action.

19. Remember to read any document that requires a signature. Keep a look out for any clause or sentence that says you "waive" or give up any of your rights or defenses against the loan or the debt. Make sure you have the clause or sentence removed.

20. Be aware that 3rd party debt collection agencies are purchasing deficiency debt for cents on the dollar.

21. Be prepared to negotiate any deficiency and/or outstanding debt with a lender, After all, you cannot blame a lender for trying to collect on a loan.

22. Become familiar with your states and the federal government fair debt collection rules and regulations. A violation of the laws can be a strong defense to a deficiency debt legal action. A violation of any of the appropriate state and/or federal laws can potentially offset the amount you currently owe.

23. Speak to a qualified attorney or legal agency regarding the use of bankruptcy to eliminate deficiency debt. Seek the advice of a qualified attorney, legal aid organization and accountant regarding the risks involved with defending deficiency debt.

24. Just because you borrowed the money does not mean you can’t use legal means to pay less than what you owe or gain more time to pay.

25. Make it a habit to constantly challenge all fees, interest, costs and charges. Ask the lender to send written proof establishing it's right to collect the debt.

26. Demand that any third-party debt collector provide proof of the ownership of any claimed debt.

27. Never send a lender more information than what the lender asks for.

28. Always assume that the collection of debt is improper or invalid, even if you borrow money. Remember, you are challenging the collection tactics and you are challenging the amount owed. 

29. If you are in court for a debt collection case, always ask for discovery. This is a process that allows you to request documents proving the lawsuit and loan. It also allows you to question the debt collector, live in person, and on the stand. If, during the debt collection case, the debt collector does not produce the documents or an individual to testify, then ask for a DISMISSAL WITH PREJUDICE. 

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