Statute of Limitations Saves Lonnie's Family Home

Lonnie came to see me in 2022 because he was about to lose his clearance. An outfit called Dyck-O'Neal was hitting his credit report and Lonnie's security officer needed that cleared up.

Dyck-O'Neal buys up foreclosed mortgages and tries to collect on them. Back in 2017, CitiFinancial foreclosed on Lonnie’s Woodbridge house. Lonnie didn't bother to file bankruptcy then. He sorta knew he still owed after the house was foreclosed, but nobody was bothering him about it.

Now, in 2022, Dyck-O'Neal was hitting his credit report, and sending him letters, and threatening court papers. Dyck-O'Neal wanted $173,000. And they wanted it now!

I like to recommend Chapter 7 bankruptcy to clear debts--but Lonnie had to pay his debts. His parents left him a share of the paid-for family home. In a Chapter 7 bankruptcy, that house, where his sister was living, would get sold.

Lonnie caught a break. He had waited too long, but so had Dyck-O'Neal. They left him alone for just over five years after CitiFinancial accelerated the debt (starting the foreclosure process). After five years, under the Virginia statute of limitations, CitiFinancial was too late.

We put Lonnie in a Chapter 13 payment plan. And the bankruptcy judge agreed with us—Dyck-O’Neal was too late. They get nothing. Lonnie is paying his other debts through his Chapter 13. Debts that he had been paying anyway.