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Interest on judgment debt

by Clara
(Goochland County, Virginia)

about 5 years ago my husband cosigned for a vehicle for our granddaughter and it was repossessed and being retired and on social security we applied for reverse mortgage. The mortgage co. was notified a lien had been place on our mortgage for $12,716, the amount the still owed after auction of the vehicle. Two weeks later the reverse mortgage company notified us it had gone up to $21003., and the difference was interest added on. We live in Virginia and I was wondering if they could add all that interest on or can only collect money owed after the auction off of the vehicle. The company is Wells Fargo and does their laws apply to the state of Virginia?

Comments for
Interest on judgment debt

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Sep 12, 2010
 interest on debt after judgment
by: Gerri & Mary

We are really sorry to hear how badly this turned out for you when you tried to help out your granddaughter.

There are a couple of things that bother us here. First of all, it sounds like the debt ballooned pretty quickly. According to the sources we consulted (and we are not attorneys), the amount of interest that can be charged after a judgment is either the amount stated in the contract, or 9%. But it sounds like the amount jumped pretty quickly, and that's of concern.

In addition, in most states, before a creditor can place a lien on your property it must first take you to court and get a judgment. Were you ever taken to court over this debt? (Every state is different, so it may be that there is a different procedure in Virginia, but still we are wondering whether you were properly notified here.)

Finally, since it sounds like you and your husband are on very limited income, and have to get a reverse mortgage, you may be better off consulting a bankruptcy attorney about discharging this debt. We know that probably doesn't sound like a great option, but it is important for you to look into it. You may need every penny of equity you have in your home to take care of your financial needs when you retire, and if interest continues to accrue on this debt, you could end up losing a substantial portion of your equity.

If you don't want to file bankruptcy, the attorney may be able to negotiate a settlement for you with the creditor so you can avoid bankruptcy and still pay a reasonable amount to resolve it.

We would strongly suggest you at least set up a a free consultation with a bankruptcy attorney to find out what your options are. You can ask that attorney whether the amount they are charging you is legal as well. The consult will be free and confidential so there really is no reason for you not to at least get some expert advice here.

Hang in there and let us know how this goes for you.

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