My friend let me live in his house if I did repairs, but sued me for unpaid rent — and won $50,000. Then he died. What can I do?

Dear Quentin,

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In 2015, I went through a divorce. I helped out an old friend who was living out of state by taking care of his triplex in West Virginia. He evicted one of his tenants and made me an offer: I could move into one of the units, become the unofficial caretaker, and help him out with repairs. He said he would deduct any fees from the rent. All the neighbors told me he would screw me over. I thought he just needed help.

His property was neglected and I dealt with it — everything from raw sewage backing up into the basement to tenant issues. For several years, what he owed me for repairs was more than rent. We called it a quash. In late 2016, I told him I was moving out and buying a new home, and wasn’t going to take care of the property anymore. He freaked out. He served me an eviction notice, which I fought and we stayed until I closed on my home.

Buying a home financially tapped me, so I was shocked when he sued me and claimed I never paid rent. I couldn’t afford a lawyer, and he turned in doctored paperwork to use against me, claiming that I never paid a dime (there were months I did actually pay him rent). With zero legal representation and missing deadlines to turn evidence in, he won a $50,000 judgment against me. He died a year or so later.

He was cranky and estranged from his family. Everything went to his sister. She told me she didn’t want anything to do with our case, and basically said he was a horrible person and died alone. I sold my house and now live in Minnesota, and this judgment is on my record for 10 years. I want to buy a home and I am being refused because of this. His sister will not sign anything, and says she wants to pretend that her brother never existed.

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I was told the only way to get this removed is through bankruptcy.

Do you have any advice?

Unfairly Targeted

Dear Targeted,

You were targeted — and you were tricked.

This is an unusual and unfortunate story — and one with a cruel twist. Given that your friend sued you in court for unpaid rent, I assume you had a formal rental agreement that he alleged you breached. It’s a lesson for us all to get everything in writing: invoices for repairs and evidence of their payment. Your arrangement was more ad hoc, so the absence of paperwork — and rent payments — counted against you, especially given that he hired a lawyer and allegedly doctored documents.

You are between a rock and a hard place — bankruptcy and the statute of limitations on your debt in West Virginia and Minnesota: A judgment stays on your credit report for most debts for 10 years in West Virginia and Minnesota, so you would have to weigh up the remaining time on that judgment with your option of declaring Chapter 7 bankruptcy, which would also leave a black mark on your credit report for several years. If the judgment was in 2016, it may make sense to wait.

The timeline for bankruptcy’s impact on your your credit report varies, depending on the kind of mortgage you choose. “Many people think that after filing bankruptcy, they will never be able to be a homeowner. This is simply not true,” according to the Lifeback Law Firm PA, which has offices in Minnesota. “What is true is that you have to be patient after your bankruptcy, because it will take time.” With the help of a lawyer, you would also need to carefully check the asset-protection laws in your state.

Chapter 7 impact on mortgage applications

“The general rule is that it will take about four years [after] a bankruptcy discharge to qualify for private lending for a home,” the law firm adds. The timing for other loans varies in your home state of Minnesota: If you qualify for a Veteran Affairs or Federal Housing Administration loan, the period is two years; it’s four years for Fannie Mae FNMA or Freddie Mac FMCC mortgages, and three years for United States Department of Agriculture home loans.

Appealing to your former friend’s sister with a written letter and clear instructions on how to vacate this judgment might help move the needle, or at least encourage her to help you do so. Vacating a judgment will be expensive, given that you would have to hire a lawyer — who would  presumably, advise you on the wisdom of going ahead with such an action — and if you fail your case will be deemed “frivolous” by the court and you’ll be asked to pay the legal fees of the opposing party.

Incorrect information on the lawsuit is one of the reasons for you to file a motion to vacate the judgment. But you would need to provide evidence to prove this. “Your motion won’t work if it’s a last-ditch effort,” according to Solosuit, a software company that aims to help people resolve debt. “The court isn’t going to ignore the facts and let you off the hook. Your reason has to be legitimate. Trying to vacate judgment without a good reason could get you in more trouble.”

Lastly, be careful not to restart the clock on this debt by either acknowledging that the debt is yours or even by making a payment on it. Time goes by slowly when you are waiting for something important to happen, like expunging a debt on your credit report or, for instance, if you’re a house buyer, waiting for the 30-year mortgage rate to decline significantly from 7%. Rates could eventually fall to 5% by the time you are finally ready to make your move.

Sometimes the universe does for you what you cannot do for yourself.

 

Previous columns by Quentin Fottrell:

‘I’m very sad’: My brother refinanced our mother’s house and sold the contents. Can we claim a share of the proceeds?

‘I gave up a job that I loved passionately’: My husband secretly set up a trust that includes our home and his investments. What should I do?

My daughter’s father died in a horrible accident, but he was not on the birth certificate. How can I prove paternity to claim her inheritance?

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