Client consulted with John Pinzelik regarding possible bankruptcy protection. Her credit rating and income to debt ratio were in good shape, however. Mr. Pinzelik learned, though, Client was being sued by Apollo Financial Group, LLC on a home equity loan that she and her former spouse took out years before on their homestead in Texas. Apollo Financial Group is a Delaware LLC with headquarters on Wall Street that buys delinquent loans for pennies on the dollar with the hopes of making money for its investors. Despite the fact that the house had been sold at a foreclosure sale and client had permanently moved to Oregon by the time she was sued, the company was seeking to collect a deficiency of over $83,000, plus interest and attorney fees from Client.
Client’s original loan contract specified it was governed by Texas law, which held that the lender could not seek a deficiency against the borrowers unless it could be shown that the loan had been obtained fraudulently. There was absolutely no evidence to even suggest that the client had been fraudulent in any way. John attempted to educate and persuade the company that it was improperly seeking a deficiency. Apollo, however, insisted on moving forward with its lawsuit. Mr. Pinzelik filed a motion for summary judgment, contending that based on the loan documents and Texas law, the company was not entitled to the deficiency judgment it sought. The court agreed, dismissed the lawsuit against Client, and awarded her over $14,000 in attorney fees she incurred in being forced to defend herself in a lawsuit that should never have been filed in the first place.