Divorce and Ch 13 cont'd....what would you do?

[AngelinaCat]

I really can add nothing to this discussion, as I have no first-hand experience with mortgage refinancing other than years ago, well before our BK situation.

I do add my heartfelt wish that you study, learn, read, and study some more, before you make any final decision. Think everything through before you start. Sometimes, a decision ill-thought out, leads to unintended consequences--and more heart-ache and harm.

{{{{HUGGSS}}}} from someone going through the grief process. Please let us know in the coming weeks, how things go.

Please make no decisions until WELL after the first of the year....

[brtb]

I'm also starting to get concerned about finding a place to rent if I need to. This is all so stressful. Meanwhile, our current bankruptcy payments are coming out of my paycheck and I'm paying all the household bills. My soon-to-be ex is employed (makes more money than I do) and he's off doing who knows what with his girlfriend, but still comes and goes from the house as he pleases and not contributing a dime to anything.

[jmac]

I got seperated a month after i filed for a ch13, would of done a divorce but treid being a nice guy and keping my sick ex with medical insurance. I didnt want the divorce but in her drug filled mind she did at that time(regreted later)but that is another story. So i filed and put my part of the home up for surrender in the 13. So her it is 3 years later, she has lived there payment free for a year then moved out, her kid for a year payment free and now her friends living there for free, B OF A has no intentions of forclosing on it while Im in a 13 so she will get to live there another 2 years for free and i will probably get a major tax screwing after being in a ch13 for 60 months. I have tried to get her to short sale it but she just cant get past the greed of using it until the end, even though she will get screwed on taxes on it also. I learned quite a few life lessons on this long journey, hopefully it will all work out. If i could do it all over again i would of done the divorce and made her sale the home, instead of worrying about her insurance and a place to live.

[LadyInTheRed]

Jmac, why will you get screwed on taxes?

[Slingerland]

I was researching HARP, but the way I understood it was that your current loan has to be an FHA loan in order to refinance. Please correct me if I'm wrong.

Sorry about the delay, been working way too much...

To be eligible for a HARP 2.0 refi, the first requirement is that the loan be owned by Freddie Mac or Fannie Mae, and bought by them before 5/31/2009. FHA and GNMA loans, plus those still in bank portfolios, are not eligible, but FHA has a similar program.

[jmac]

I was thinking that in 2 more years when i finish my BK that B of A will forclose on home and probably 1099 for the short fall probably 200k and since im in a 28% tax bracket i would be owing a huge tax amount. Tell me Im wrong and i will love you forever ;)

[brtb]

Sorry about the delay, been working way too much...

To be eligible for a HARP 2.0 refi, the first requirement is that the loan be owned by Freddie Mac or Fannie Mae, and bought by them before 5/31/2009. FHA and GNMA loans, plus those still in bank portfolios, are not eligible, but FHA has a similar program.

Our loan isn't owned by Freddie Mac or Fannie Mae. Does that mean FHA refinance is absolutely not an option for me?

[brtb]

Divorce and Ch. 13.....Situation update

Here's an update. My soon-to-be ex is still living in the basement, but continues to see his girlfriend. He is not contributing to any household bills or the Bk payment. I also think he's lost his job. Basically, he's got it made. I've been seriously thinking about just taking my things, my two dogs, finding a rental, and leaving him in the house.

However, the mortgages are current. What will happen if I decide to jump ship and he doesn't pay the mortgages? Does that make my situation worse? Should I just be patient and hang in there for a little while longer to see if he signs the property settlement agreement?

This last month and a half feels like forever.

Thanks!

[Blossoms]

Here's an update. My soon-to-be ex is still living in the basement, but continues to see his girlfriend. He is not contributing to any household bills or the Bk payment. I also think he's lost his job. Basically, he's got it made. I've been seriously thinking about just taking my things, my two dogs, finding a rental, and leaving him in the house.

Please just don't end up like one of my husband's coworkers - guy has been divorced for some years now, but still shares a house with his ex wife. The coworker pays the mortgage, bills, does maintenance on her car, etc., while she has a grand old time dating her married boyfriend, and living bill free (she has a good paying job, and can afford to support herself - kids are grown and moved out).

And my husband says the coworker really likes another (also divorced) coworker (she likes him too) but won't ask her out, because he feels like he would be cheating on his ex wife!

Talk about a messed up situation!

[dmc-2008]

Do not let him have the house! Who cares if he lives in the basement like a mole? Be emotional about everything except the house! Don't lose your only asset! It's money! Keep calm and stay strong! You got this!

[brtb]

Do not let him have the house! Who cares if he lives in the basement like a mole? Be emotional about everything except the house! Don't lose your only asset! It's money! Keep calm and stay strong! You got this!

I know you're right, but it's tough. Still waiting on my atty to draft the PSA. Only time will tell.... If he signs with no objections then I'm set, hopefully, if I can find someone to refinance my loan. In the meantime I'm not going to anticipate what might happen, I just need to remember to take things one day at a time.

It's just that I feel like he's never going to stop using me. Most spouses who cheat would have a plan and move out already, but what incentive does he have to move out? He has a place to lay his head when she has her kids. He knows I won't stop paying the bills, because that not the kind of person I am. He's still controlling me. It's just frustrating...

[LadyInTheRed]

I was thinking that in 2 more years when i finish my BK that B of A will forclose on home and probably 1099 for the short fall probably 200k and since im in a 28% tax bracket i would be owing a huge tax amount. Tell me Im wrong and i will love you forever ;)

You are wrong. You may receive a 1099, but if the debt is discharged in BK, there is no taxable income if there is a deficiency at foreclosure. If you get a 1099 there is a form you would file with your income tax return to state that the debt was discharged.

[jmac]

You are wrong. You may receive a 1099, but if the debt is discharged in BK, there is no taxable income if there is a deficiency at foreclosure. If you get a 1099 there is a form you would file with your income tax return to state that the debt was discharged.

How do i know if the debt is discharged in BK? I know i surrendered my half of the home in BK but Im still liable on home loan. Im kinda slow so explain it to me again lol.

[jmac]

Ladyinred what do you think?

[LadyInTheRed]

jmac, if your plan surrendered the property, the mortgage should be discharged with your other debt. Ask your attorney to make sure that it will in fact be discharged. My initial response to you assumed the debt will be discharged.

If the mortgage is not discharged in your BK, there are other ways that the forgiven debt resulting from a deficiency may not be taxable income.

California is an anti-deficiency state for residential property with 4 units or less. Assuming the loan is a purchase money loan (e.g., you used it to pay for the home, not for something else like paying off credit card debt), you are not personally liable for a deficiency after foreclosure. Since the lender can't go after you for a deficiency, the "forgiven debt" probably is not considered income. The IRS recently clarified that is the case for short sales (if there is no personal liability, then then there is no income). I would think the same reasoning applies for foreclosure.

If Congress extends the Mortgage Forgiveness and Debt Relief Act past 2013, any forgiveness of debt on a personal residence within the extension period would not be taxable income.

Finally, if all else fails and you can prove that you are insolvent at the time of the foreclosure sale, you can exempt the forgiven debt from income.