Does clicking acceptance of the “Terms and Conditions” of an online credit card application create a written contract?

I recently received information about a bankruptcy colleague who was successful in dismissing a collection lawsuit based on the Statute of Limitations. The background is that his client was being sued by a collection agency for $40,000. His client had applied for the credit card online in 2006 and the last payment was in May of 2007 before he went into default. The debt was then sold to a collection company did not file suit for more than four years after the last payment was made. The attorney for the debtor argued that under Utah’s four year Statute of Limitations applied to the suit and therefore barred the action. The collection attorney argued that Utah’s six year Statute of Limitations applied claiming it was based upon “an instrument in writing”. The collection attorney claimed since the debtor had to click a button agreeing to the written terms and conditions of the credit card agreement, the act was sufficient to constitute “an instrument in writing”. When the time came for oral arguments on the issue, the collection attorney cited to Empire Land Title v. Wyerehaeuser Mort., 797 P.2d 467 (Utah Ct. App. 1990) claiming a writing does not need a defendant’s signature. However, the defense argued the court in Empire Land Title held that all of the key terms necessary must be part of the instrument including the principal amount of the debt, the interest rate, the monthly payment, etc., and none of these key terms were found in the Terms and Conditions of the online credit card agreement. The Defense cited Portfolio Recovery Assoc., LLC v. Fernandes, 13 Fla. L. Weekly Supp. 560a (2006) which held that the terms and conditions of a credit card agreement by themselves do not establish a liability to pay sufficient to constitute an instrument in writing. If the terms and conditions by themselves were put into evidence before a jury they would not establish a liability to pay. Instead, the only address the manner in which a future liability might be created. No instrument in writing and the shorter four year Statute of Limitations applies. This could go up on an appeal as it could have significant impact on how and when collection firms sue debtors. Only an experienced bankruptcy lawyer can tell you your rights contact one today!!

Help! I don't want to file bankruptcy.

I often hear from clients that they don’t want to file bankruptcy, because of the affect it will have on their credit score. It usually goes something like this, “I have had a 720 credit score! Is there any way to avoid bankruptcy?” Why yes there is…don’t get into debt and if you have, pay your bills on time. However, they are not sitting across from me because they have the ability to pay all of their bills on time. They may be paying some of their bills, usually some favorite credit card at the store at which they enjoy shopping. (“I get 10% off every purchase didn’t you know.”) Or paying just enough each month to keep the bank from sending a tow truck for one or both of the cars they enjoy driving. (“What do you mean $1,200 per month is car payments seems excessive? Have you ever been in that car?”) If they have thought about it at all they may be current on their mortgage and allowed the rest to slide. This is smart thinking if you need to do it. You can’t live under a credit card, not enough protection from the rain. But all too often they are also behind on the mortgage. The bad news is your credit score has already been affected by your missed mortgage payments, and bankruptcy is going to lower it even more. The good news is your credit score doesn't need to stay down for long. After receiving a discharge through bankruptcy the fresh start, will allow you to begin almost immediately to rebuild your credit. In fact you will get all sorts of mail saying “Bankruptcy, no problem!” The key to the recovery is steady income and keeping your nose clean for a little while. Since you won’t need to worry about those bills you could only service here or there before bankruptcy you can be sure to pay all of your post-bankruptcy bills on time. This is a huge step to getting your credit score to rise. Although you won't be able to turn around and buy a house, car or any other major purchase right away without paying high interest rate. (Imagine buying a car with one of those credit cards you just got rid of!) You will be astounded how quickly you can put bankruptcy behind you and rebuild your credit. Given we just went through the worst economic downturn since the Great Depression; bankruptcy does not have the stigma it once did. If you can keep your accounts current from now on, creditors will see you as you are -- a fighter, who making the best of their finances and proving to be a lower credit risk in the future.

Bankruptcy discharge of HOA fees.

Chalk one up for Debtors -- HOA fees ARE dischargable in Chapter 13 In a memorandum decision, Judge William T. Thurman, the Chief Judge for the Bankruptcy Court for the State of Utah held that fees and assessments of a home owners association are dischargable under Chapter 13 if the debtor receives a "full compliance" discharge. Red Rock Legal Services represented the debtors in this case where an HOA in St. George, Utah attempted to have the automatic stay modified or a finding made by the court that the stay did not apply at all to the claim of the HOA. This would have allowed them to attempt to collect on the HOA fees/assessments in state court by seeking a judgment against the debtors. St. George Utah bankruptcy firm Red Rock Legal Servcies objected to the request on the basis, supported by the court's opinion that the HOA's claim was one that was addressed as a claim in the debtors' plan and that a review of the statute indicated that the exemption to discharge of post-petition HOA fees/assessments found under 11 U.S.C. sec. 523(16) did not apply to a case of a discharge under 11 U.S.C. sec. 1328(a). We will update with a link to the opinion as soon as the court has it uploaded to its site. However, if you would like to get a copy in advance, email me and I would be happy to send you a copy.

How can I get rid of my second mortgage?

Stripping a Second Mortgage What follows is a simplistic analysis of stripping of second mortgages in Chapter 13 bankruptcies. Your individual circumstances will definitely play a role in what you ultimately decide to do. If you are like many homeowners who owe more on their mortgage than the home is worth, you may be able to eliminate, or "strip," a second mortgage through the process of Chapter 13 bankruptcy. The United States Supreme Court has ruled that you cannot “strip” a second mortgage in a Chapter 7 bankruptcy. However there are some cases, where you can get rid your second mortgage so long as and because it is wholly unsecured. This means that the value of your house must be equal to or less than the amount owed on your first mortgage. For example, if you owe $175,000 on your first mortgage and $75,000 on your second mortgage, but your home is valued at $160,000, there is not enough value in your house to secure the second mortgage. A value decline such as this is not uncommon in today’s real estate market. The real estate bubble caused many homes purchased during the height of that market to have values that have come crashing down in the past 3 years. Although most home mortgage lenders do not oppose the process when presented with the facts regarding the mortgage balances and home values, this process can be complex. A second or subsequent lien on your property can only be stripped once you have completed the chapter 13 repayment plan. This means making all of the payments for the entire repayment period, receiving a discharge in your case and staying current on your first mortgage during your Chapter 13 bankruptcy.