Effects of providing too much financial info to creditors?

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walkin

LoanSafe Member
May 1, 2012
361
6
18
About 5 months ago, I gave the banks EVERYTHING they asked for, foolishly hoping for a SS to get approved. It was eventually denied.

I've read a lot in here, and the general consensus seems to be NOT to provide the banks, creditors, etc. ANYTHING.

In my situation, we make decent money (enough to survive), but our income is pretty much covered by debts, bills, childcare, diapers, food, etc. So, on paper there really isn't any room for savings, investments, play money, etc., and I thought I painted that picture very clearly when I submitted all of the paperwork.

Going forward, I will not provide anything to these banks, but I'm curious how bad off am I, since I already gave them everything 5 months ago? Did I set myself up to be sued later, for charge-offs and unpaid debt? Unless the banks saw something that I didn't see, I would almost consider myself "judgement proof", or whatever the proper term is, i.e. There isn't much left after putting food on the table, I have no assets, aside from vehicles covered by debt, and a 401k. No IRA's, no investments, no stocks, nothing...

I understand that people who make good money are probably viewed by the banks as cash cows, and if they see that in their financials, they will most likely go after them. I completely understand why people in those income ranges wouldn't want to share financial info. We are nowhere near that kind of income range, so I'm not sure how bad I screwed up, if I did.

Besides the obvious reasons, can someone help me understand some other good reasons to NOT give up anything?
Thanks!
 

Evan Bedard

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I understand that people who make good money are probably viewed by the banks as cash cows, and if they see that in their financials, they will most likely go after them. I completely understand why people in those income ranges wouldn't want to share financial info. We are nowhere near that kind of income range, so I'm not sure how bad I screwed up, if I did.

Besides the obvious reasons, can someone help me understand some other good reasons to NOT give up anything?
If you do not have any major assets or cash saved up it is really not going to harm you providing your financial information. Also banks must abide by state foreclosure laws so if you are in a non-recourse/non-judicial state they will not come after you for a judgement if you end up in foreclosure. What state are you located in?
 

walkin

LoanSafe Member
May 1, 2012
361
6
18
Thanks Evan. I just spent a few minutes familiarizing myself with the state FC laws (SC). Yes, they can come after me, even after FC, for deficiency.
Looks like I will have a chance to order an appraisal after the sale, to reduce or eliminate any potential lawsuit, depending on what the auction brings. But then again, we really have nothing, so I'm not sure they would waste resources coming after me (hoping).

Oh, and it looks like there is a minimum of 90 days from the NOD/Lis Pendens being filed before a sale can be scheduled, then, once the sale date occurs, the house is still mine for 120 days... Hopefully there's a holdup in the system (between NOD and sale date), and I can keep this thing for 12+ months. I've not received any NOD. I'm looking into HAMP to save it ; )
 
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walkin

LoanSafe Member
May 1, 2012
361
6
18
Hmm...ok, did some more reading. I think the only real thing I was worried about was wage garnishments, after losing a lawsuit by a CC company, mortgage, or HELOC. I was surprised to find that SC is one of 3 states that does not allow wage garnishments for this kind of debt/judgement. I think I will sleep well tonight.....


"At present three U.S. states — North Carolina, South Carolina and Texas — do not allow wage garnishment at all except for debts related to taxes, child support, federally guaranteed student loans, and court-ordered fines or restitution."
 

freedomwon

LoanSafe Member
Oct 30, 2010
2,794
23
38
California
Hi Walkin - Here's my general thoughts on providing financial info to the banks. Your servicer wants updated details of your financial condition in order to decipher if it is cost affective to sue you for a deficiency judgment after your home is taken (if it is to be sold in the near term, they will want the fastest sale, not the highest sale), it is not primarily, as you may be told, to determine qualification for a modification, short sale, or DIL.

For example, they would like to know where your bank account is so that they can attach it, and they would like to know where you work, and see a recent pay stub, so they can eventually garnish your pay.


Knowledge is power. The more knowledge they have about your financial situation, the more vulnerable you become to their power. The good news here is you've already begun the process to arm yourself with knowledge. Looks like you're out of the woods in terms of wage garnishment which was a big concern of yours. If they eventually get a judgement against you for deficiency, they could take it from your bank account.

If I were you, I would close out the current banks accounts & open new ones at a different bank. That could help protect you providing you DO NOT hold a credit card with your current bank where you'll be closing the accounts.
 

walkin

LoanSafe Member
May 1, 2012
361
6
18
Thanks for the info freedomwon! I have switched banks since last submitting financials. The acct is still open, but with nothing in it. I do have a cc with the same bank, which is maxed out, but I can't afford the payments anymore, due to increasing costs of living, etc.

I will continue reading, and hope to discover some creative ways of dealing with all of this, when it happens. Thanks again for replying.
 

freedomwon

LoanSafe Member
Oct 30, 2010
2,794
23
38
California
Walkin - Here's where I was going with that line of thought about a credit card issued from your previous bank where you had your other accounts. Once you open new accounts at a different bank (which you already have) & make a payment on that credit card using your new checking account at the new bank, they will have access to your new checking account number at your new bank. YOU DON'T WANT THAT. That's feeding their hand with information on where you've moved your accounts to.

Sounds like you've already got that covered. You'll have to decide what to do about that credit card. You could try to negotiate just before they turn it over to a collection company. The only time I recommend trying to make those payment or even some negotiated payments is if it's one of your oldest trade lines on your credit report. The older it is, the more it contributes to your credit history. But that's a whole different topic.

Actually since this is your thread, you're in charge of what you'd like to discuss here.
 

walkin

LoanSafe Member
May 1, 2012
361
6
18
Thanks again. I believe I am guilty of sending a payment from my new account...perhaps an account number change would fix that, if it may be necessary down the road. Or else I'll move on to another bank.

I've been following a couple threads that deal with settling cc's. Unfortunately, my 2 oldest accounts are the 2 that I am unable to maintain anymore. In 6 months or so, I hope to be able to settle them for 10% or so....maybe Santa will put some money in my stocking, and I'll be able to offer something to the banks. If they don't want it, I can play the waiting game.
 

freedomwon

LoanSafe Member
Oct 30, 2010
2,794
23
38
California
Sounds like for now, your best plan of action is to save as much money as you can. With no house payments & no credit card payments, start banking those benjamin's! Give yourself a target goal to save for settlement on those credit cards.

Regarding the payment you made on your credit card from your new bank account, you can easily wait until you get wind you're being sued for a deficiency judgement (which may or may not happen) & then take action on the bank account situation. Just don't forget!
 

walkin

LoanSafe Member
May 1, 2012
361
6
18
Well, I do currently pay rent, so I'm not going to be as fortunate as others, and live "rent free" and save a lot, but I'll come up with something. Thanks for bouncing some ideas around, I appreciate it. I'll let you go help others now : -)