DON’T STOP PAYING JUST YET

Dear Dave,

I’m a junior in college, and I live in a rental house. There’s no formal lease, and my landlord never asked for a deposit of any kind. Recently, I started receiving notices from Chase Mortgage saying my landlord is $7,500 behind in his mortgage. I’m worried about what will happen if they foreclose on him. Should I move out, stop paying rent or what? He’s told me not to worry, because he’s just behind on the payments and not in default.

—Chris

Dear Chris,

Well, the last part is not quite true. When you’re behind on payments you are, by definition, in default.

Still, I think you should stay right where you are for now, and keep paying your rent on time like normal. Keep the lines of communication open with your landlord, too. I’d also contact Chase, and tell them about your situation in this house. Ask them to keep you informed about what’s happening with the property, so that you’ll have time to formulate a plan and find a new place to live if the house goes into foreclosure.

Chances are they’ll give you at least 30 days to move out if a foreclosure occurs. You probably won’t have to pay anything to the bank afterward, so you may get to sit there rent-free even longer while they sort out everything. Considering you don’t have money wrapped up in a deposit or a lease hanging over your head, there’s really not a lot of risk for you here. Your landlord is still providing the home, and the truth is that foreclosures — if it comes to that — generally take a while to complete in Florida.

You might keep an eye out for other properties in the weeks ahead, but other than that, as a renter, you’re in pretty good shape under the circumstances.

—Dave

Things You Should Know

THE FORCLOSURE IS AGAINST THE PROPERTY, NOT AGAINST YOU.

The foreclosure sounds as if the doors are going to be closed. No. It just means that the bank (or whomever is owed money) is going to take title (ownership) away from your landlord, but you have a PREXISTING RIGHT to live there. You have to pay rent, but you have to be provided a place to live.

CAN THE BANK OR NEW OWNER KICK ME OUT?

Under a new Federal Law, the new owner, whether it is the bank or whether someone buys the property at a foreclosure, has to give you 90-days notice if they want to give you the boot. If they give you the boot, they have to give you the deposit back unless you have damaged the property.

SOURCE: avvo.com/legal-guides/ugc/should-i-pay-rent-if-my-landlord-is-in-foreclosure-and-what-do-i-do at daveramsey.com.

4 Ways To Boost Your Credit Score Right Away

1. Check your credit report.

2. Setup payment reminders.

3. Pay down your dept slowly.

4. Pay your bills on time.

FEDERAL LAW.

A collection agency doesn’t have the right to pull your credit report without a legally valid reason. The Fair Credit Reporting Act protects the sensitive financial information your credit history contains. The FCRA gives collectors only the right to review your credit history if they do so in connection with a debt you owe. The right to access your credit reports is known as “permissible purpose.” If you do not owe a debt to the collection agency, it does not have permissible purpose and cannot legally pull your credit reports.

WHY DEBT COLLECTORS CHECK YOUR CREDIT.

A collection agency may pull your credit history for a variety of reasons. If, for example, a debt collector does not have your current address to contact you about the debt, he may look to your credit report for that information. A collection agency might also review your credit history in order to determine whether you have assets or are employed. This information helps the company decide whether it’s worthwhile to file a lawsuit against you for payment.