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My bank went under and now I'm getting raped!!!!

matt77

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Mar 18, 2010
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Well I have a loan at a local bank with a balance just over 100k on a 12 month term amoritized for 20 years. The 12 month term is coming to an end with a ballon at the end. Now I have always just re did the loan over the past few years with no issues. Now my bank went under and the new bank that bought them out is not renewing any loans that are high risk! Mine is considered high risk because the collateral is worth half the balance after the economy went to crap. I have 5 acres of land, a car, and business equipment secured with it. I have tried to sell all of it even at a loss and had no luck yet. The land was worth 200k in 2005 now its worth 40k... sad huh! So now unless I can write a 100k check Im screwed. I guess they will get it and my credit is gone. I can't think of any way out if they won't work with me.

So if they take it should I file BK or just keep paying my other debts and move on? At the moment I have nothing they can take in my name thats paid for. All it will do is hurt my credit and ego! I hate the thought of messing my 12+ year perfect credit up but do not see a way out.

Ok you money smart guys help a bro out! If theres help to give?
 

speed

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hell if i know about money fixing, i just got on welfare like alot of others, but luckly for family im hangin in there
 

J_Diggs

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I've worked in the financial services industry for over 13 years with some of the biggest corporations around. While I don't want to give you explicit credit council, I will inform you that if you have any accounts written off as bad debt (charged off), it will not matter that you paid off other loans per terms in the eyes of future creditors.

I have observed charged-off balances report on credit bureaus LONGER than a BKO filing. Generally BKO's are eradicated after 8 years of file notice...sometimes less. If you are writing off that much as bad debt, then you may want to consider finding a BKO attorney. Since the BKO revisions in 2005/2006, attorneys have become more and more savvy for their clients so once again it is becoming easier. And considering your predicament, I don't think you'll have an issue.

At the end of the day, I would consider the fact that you'll more than likely need to pay cash for most things for the next several years, so you might as well take the extra disposable income that you would be sending into your other existing balances and place it into savings. Make sense? Best of luck.
 

J_Diggs

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Can you also clarify what you mean by a '12 month term' with a balloon thereafter? Do you mean that you have a 12 month term at a fixed rate, say 5.75%, and then thereafter from month 13 to 20 years there is a balloon up to a certain capped interest rate? For example, after year 1 it becomes 6.5%, then year 2 up to 7%, year 3 8%, etc. ?

If this is the case, you should look into your original loan terms. If you signed a 20 year loan, then that bank is obligated to carry out the remainder of that loan regardless of which bank now owns it (whether it was sold). The FDIC allows banks to purchase dissolved banks for pennies on the dollar and on top of that, insures the bad loans that are a result of the loans that the bank purchased with Federal Reserve funds. If you are supposed to have that loan for 20 years, then they should be legally obligated to fullfill that loan until you either pay it off, refinance with another institution, or write it off as bad debt.

The Truth in Lending Act in addition to the Fair Lending Act should cover your rights as a consumer in this instance. Again, the key here is to confirm that you signed a loan term for 20 years, regardless of what happens to the interest rate after 12 months. A civil suit lawyer in addition to the OCC (Office of the Comptroller of Currency) would have a field day with this one...on your behalf. I highly advise that you look into this.
 

matt77

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Mar 18, 2010
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I've worked in the financial services industry for over 13 years with some of the biggest corporations around. While I don't want to give you explicit credit council, I will inform you that if you have any accounts written off as bad debt (charged off), it will not matter that you paid off other loans per terms in the eyes of future creditors.

I have observed charged-off balances report on credit bureaus LONGER than a BKO filing. Generally BKO's are eradicated after 8 years of file notice...sometimes less. If you are writing off that much as bad debt, then you may want to consider finding a BKO attorney. Since the BKO revisions in 2005/2006, attorneys have become more and more savvy for their clients so once again it is becoming easier. And considering your predicament, I don't think you'll have an issue.

Well according to FICO one default loan will not kill your credit like a BKO. They state your report will start to rebound after 2 year and the bad loan will stay on your credit for 7 years. So is what FICO saying not really th case?

At the end of the day, I would consider the fact that you'll more than likely need to pay cash for most things for the next several years, so you might as well take the extra disposable income that you would be sending into your other existing balances and place it into savings. Make sense? Best of luck.
Can you also clarify what you mean by a '12 month term' with a balloon thereafter? Do you mean that you have a 12 month term at a fixed rate, say 5.75%, and then thereafter from month 13 to 20 years there is a balloon up to a certain capped interest rate? For example, after year 1 it becomes 6.5%, then year 2 up to 7%, year 3 8%, etc. ?

If this is the case, you should look into your original loan terms. If you signed a 20 year loan, then that bank is obligated to carry out the remainder of that loan regardless of which bank now owns it (whether it was sold). The FDIC allows banks to purchase dissolved banks for pennies on the dollar and on top of that, insures the bad loans that are a result of the loans that the bank purchased with Federal Reserve funds. If you are supposed to have that loan for 20 years, then they should be legally obligated to fullfill that loan until you either pay it off, refinance with another institution, or write it off as bad debt.

The Truth in Lending Act in addition to the Fair Lending Act should cover your rights as a consumer in this instance. Again, the key here is to confirm that you signed a loan term for 20 years, regardless of what happens to the interest rate after 12 months. A civil suit lawyer in addition to the OCC (Office of the Comptroller of Currency) would have a field day with this one...on your behalf. I highly advise that you look into this.
The way the terms work is the loan is under a 12month contract at a certain rate amoritized 20 years for that 12 month period. After 12 months is up the ballon payment which is the balance of the entire loan. To continue the loan a new contract must be written with new terms and rates.
 

J_Diggs

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The way the terms work is the loan is under a 12month contract at a certain rate amoritized 20 years for that 12 month period. After 12 months is up the ballon payment which is the balance of the entire loan. To continue the loan a new contract must be written with new terms and rates.

Uggh. Balloon payment vs Balloon Interest rate is very different. That is unfortunate. As I mentioned before, and even more so considering these circumstances, I would suggest at least talking over your scenario with a BKO attorney. While I don't know your entire financial situations, it appears that you probably would not have been in the current situation if your bank did not dissolve. The bank dissolved because of the downstream impact of the lack of FI regulation. So consumers should similarly be protected in these instances. In other words, your case would be more unique and potentially viewed more favorably by a judge.
 

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