Virginia’s Automobile Repair Facilities Act

The Virginia Automobile Repair Facilities Act, (59.1-207.3 of the Code of Virginia), sets forth requirements for automobile repair facilities’ contracts with consumers. Written estimates are required (e.g. labor costs, part costs, time to repair, description of problem) if requested, and must be provided before work of more than $25 is commenced. A repair facility may impose a reasonable diagnostic fee but it must disclose this fee upfront.

Unauthorized charges for repairs that exceed 110 percent of the estimated costs are prohibited. The repair facility is also required to offer to return the replaced parts, as well as to provide a written invoice that clearly states the work performed and the charges for parts and labor. A violation of the ARFA is a violation of the Virginia Consumer  Protection Act and is subject to its enforcement provisions.

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Student Loan Burdens and Forgiveness

An interesting starting point if you are dealing with student loans you can’t handle.

http://thecollegeinvestor.com/student-loan-forgiveness-programs-by-state/

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Understanding your insurance premiums?

Consumer Reports has a great story about how insurance companies set
rates.  The link is below and you do not have to have a subscription
to read it.

http://www.consumerreports.org/cro/car-insurance/auto-insurance-special-report/index.htm

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Debt Settlement or Bankruptcy?

If anyone tells you that either debt settlement or bankruptcy is the better route without knowing the details of your situation, you should stop listening to them. They either don’t know what they are talking about or they are lying to you. There are benefits and detriments to both, which is the better alternative depends on your situation. Below are some things to keep in mind when deciding which path you want to pursue. This list is by no means exhaustive, but it should shed some light on the issue.

Leverage

Negotiating a compromise on a debt can be pretty straight forward. You have leverage or you don’t. Common sources of leverage are the threat of bankruptcy, a valid legal defense (i.e. you don’t actually owe the money), and the time cost of money, i.e. $80 today is better than maybe getting a $100 next year. Without leverage to negotiate a settlement, don’t expect great results, particularly if you are employed and your wages are garnishable.

Avoid current delinquencies on your Credit Report

Various things kill a decent credit score. Delinquent debts, debts that are identified as settled or charged off are others, all of which do significant damage to one’s credit score. Often debts that are not current, but are being paid on, can be damaging because they show up as current debts not in good standing, when they are really old debts not in good standing but are getting better. Time is one of the great cures for a bad credit score. An old bankruptcy filing on one’s report will be better than a current delinquency on a credit report.

Discrimination

Employers can legally discriminate against you for having bad credit. The law forbids an employer from discriminating against you for filing bankruptcy, at least once you have a job. Though the bankruptcy law forbidding employer discrimination is somewhat unclear, Courts have generally held that the law just forbids discrimination against employees who have filed bankruptcy. Discrimination against a job applicant is probably legal.

Settlement Language

The devil is in the details of the settlement agreement. Though conceivably a settlement can afford you much more flexibility than bankruptcy, creditors are generally upset that they have not been paid, so one shouldn’t expect great flexibility from creditors unless one’s situation is unique.

Tax Implications

Forgiveness of debt is an accession to wealth as far as the tax code is concerned. This means that even if you settle your debts, you may end up with a significant tax liability. Tax liabilities are generally not dischargeable in bankruptcy. If you settle your debts you need to make certain that you will not be saddled with a non-dischargeable debt that you can’t afford.

Fighting the Credit Reporting Agencies

Having good credit generally matters to people. Credit Reports are routinely inaccurate. If you are able to clear up your financial situation, expect to have to sort out the status of your prior debts with the credit reporting agencies. In bankruptcy, you have a court order which makes things simple. In a settlement, you have a settlement agreement. If your credit matters to you, you need provisions in your settlement agreements that will protect you from adverse credit reporting from your creditors.

Sometimes creditors will refuse this. They may tell you that by law they have to report adverse items. This is not true. They have to report accurate information, but there is nothing that states they have to report the information.

Unforeseen Circumstances

In a Chapter 7 bankruptcy, there is no repayment plan. Occasionally, there are assets that need to be liquidated for the benefit of creditors. In a Chapter 13 bankruptcy, there is a plan. It lasts for three or five years depending on the facts of the case. Settlement works best when a single lump sum can be paid to satisfy the debt. In both a Chapter 13 and debt settlement, there are usually significant and damaging repercussions for missing a payment. It just depends on the circumstances of the case. If you have a change in circumstances in a Chapter 13, you may be able to get a modification in your plan.

If you are not sure whether to file bankruptcy or to try and settle your debts, don’t ignore the problem. If you need help, don’t engage an organization that is going to push you in one direction or the other. You don’t want to be spending money trying to settle your debts, when bankruptcy is the only realistic solution and you don’t want to be filing bankruptcy when you could settle your debts and not have to deal with the complications of filing bankruptcy. As your legal counsel, we can help you navigate through this situation, settle your debts for you or file bankruptcy for you.

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BUYING A HOME AFTER FILING BANKRUPTCY, IS IT POSSIBLE?

A lot of things on one’s credit report can keep one from being able to get credit or buy a house. Whether or not someone is going to extend credit to you is up to the prospective lender. Banks have their own guidelines they follow. Individuals and prospective sellers will generally be more flexible in extending credit. If you have a down payment and terrible credit, your best bet might be to buy a house where the seller is willing to do seller financing. This is not that difficult if you have a meaningful downpayment. See for example www.sellfinanced.com.

If you can’t find seller financing or private financing, it is still possible to buy a home with credit after filing bankruptcy. The easiest way is with an FHA loan. If otherwise eligible, it is possible to get an FHA loan while still in a Chapter 13 so long as your payments to the trustee have been on time and you can get permission from the Courts.
If you have filed Chapter 7, you can obtain a new FHA mortgage loan 2 years after discharge provided you have not included a home in the Bankruptcy. If you are not a first time home buyer and will be seeking conventional financing, you will probably have to wait three to four years due to the prior bankruptcy.

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Virginia’s Modest Rescission Rights

Certain states have very generous rescission rights. In other words, there are various situations and contracts where someone can enter into a written contract and then cancel or terminate the written contract in a certain amount of time and have no liability regardless of what the contract states. Most laws of this nature are state laws.

In Virginia, your rights of rescission are fairly limited. Here is a list of some of the more common rescission rights in Virginia that are specifically set forth by statute. This list does not address rescission rights that are based in the common law such as fraud, mutual mistake, or failure of purpose.
1. Timeshares – even days to cancel without penalty, 55-376
2. Condominiums – when purchasing from the developer, five days from the later of the date of the signed contract or the delivery of the then current public offering statement, 55-79.90 and 55-79.88
3. Condominiums – within three days after receiving the resale certificate or being notified that the resale certificate will not be available, 55-79.97
4. Condominiums – any time prior to settlement if not notified that the Condo is in fact a condo and you have a right to a resale certificate, 55-79.97
5. House in a home owner’s association – the Buyer may cancel the contract within three days after receiving the association disclosure packet or being notified that the association disclosure packet will not be available. 55-509.4 This period can be longer if the contract does not disclose certain required provisions.
6. Home Solicitation Sales – the buyer has the right to cancel a home solicitation sale until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase which complies with 59.1-21.4., 59.1-21.3
7. Health Clubs – three days from day of contracting or unable to use facility for 30 consecutive days, 59.1-297
8. Sale of goods – timely rejection of conforming goods subject to Seller’s right to cure, 8.2-508
9. Residential Home Financings – Under the Truth in Lending Act, a borrower may rescind any residential mortgage transaction until three days after the lender provides the disclosures that TILA requires, i.e. two copies of the TIL Disclosure and two copies of the Notice of Right to Rescind. If the lender provides the disclosures at the closing (as it should), the right to rescind is gone three days later, but if it doesn’t then the rescission period can continue for three years.

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PRIVATE CAUSES OF ACTION AGAINST CREDIT REPORTING AGENCIES

Credit Reports often contain inaccuracies. These inaccuracies can be costly. Sometimes, the errors can be fixed by identifying them and notifying the Credit Reporting Agency of the inaccuracy. Often though, the Credit Reporting Agency will not make the correction.

Credit Reporting Agencies are obligated to take reasonable steps to investigate one’s credit report once notified of the inaccuracy by the consumer. They are also required to have reasonable procedures in place to do so. The Fair Credit Reporting Act provides individuals with a private cause of action to enforce these rights. The Fair Credit Reporting Act does not provide a private cause of action for reporting an inaccurate entry on a credit report.

An inaccurate entry may give rise to a common law defamation claim in egregious cases. Credit reporting agencies report the information they get from furnishers. A furnisher can be just about anyone. It can be a credit card company, a debt collector, a bank, etc. Often furnishers are not the original creditor. Both the furnisher and the credit reporting agency need to take reasonable steps to investigate disputes once notified by a consumer of a dispute.

It is the reasonableness required of furnishers and credit reporting agencies that is at the heart of private causes of action against furnishers and credit reporting agencies. In this regard, the Fair Credit Reporting Act “FCRA” is quite consumer friendly conceivably providing damages to an aggrieved consumer of actual damages, statutory damages, costs and attorney’s fees. What though is a reasonable investigation or a reasonable investigation procedure?

Basically this is going to depend on the circumstances of one’s case. In some instances the credit reporting agency and the furnishers may be able to get away with very minimal investigation. A very broad and unspecific complaint might not even merit a response from the furnisher’s or credit reporting agency. A lot of the form letters that credit repair companies send out fall into this category.

To obtain a thorough investigation a consumer can take various steps. Ideally a complaining consumer should:

1. Send the letter himself, return receipt, both to the furnisher and the credit reporting agency. An attorney can do this but it is probably best for the consumer to do so himself. 15 U.S.C. § 1681i makes reference only to disputes made by the consumer, not his agents, employees, attorneys or any other third party on his behalf. The Federal Trade Commission interprets this provision strictly.

2. Suggest investigation procedures that should be taken, for example, if you were an authorized user on a card but not the cardholder, then you should request that the furnisher look at the credit card application.

3. Point out inconsistencies to both the furnisher and the credit reporting agency. There may be inconsistencies on a credit report or with some document or information being provided by a third party. Provide such information if you have it, e.g. a bankruptcy petition or a court order dismissing a suit in which you were a defendant.

4. Cite independent problems with the information being provided by the furnisher. For example, if there is bad blood between a furnisher and the consumer, the consumer should explain this to the credit reporting agency. The purpose of this is to raise the credit reporting agency’s suspicions regarding the validity of the information being provided by the credit reporting agency.

5. If the dispute is more legal than factual in nature, the focus of this argument needs to be with the furnisher.

If you can’t sort out a dispute with the furnisher you should be able to get them to notify the credit reporting agencies of the dispute. They are required to do this per 15 USC § 1681s-2(a)(1)(3) and 15 USC § 1681c(f). A lawyer can guide you through this process, but generally the initial efforts to get one’s credit report fixed should be done by the actual consumer.

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