chapter 7 and heloc need help badly!

[justbroke]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

Never work out, assume, reaffirm or otherwise refinance $175K of "debt" that your home doesn't even secure. You are thinking about this the wrong way. Do you know how long it will take you to pay the $175K back? Assuming you're just over the median income, that could take... well... 30 years. And, most 2nd mortgages are balloons and usually don't actually amortize correctly.

Sit back. Rethink.

There is no way I'm going to tell you to pay $450K for a home worth $275K. Neither is any attorney in his right mind. The only other plan, I feel, is an "evaluation" of doing a Chapter 13 to strip the second and "not" pay it.

You are somehow personalizing the "value" of the home and you need to start thinking of it as a box that you owe almost twice as much as it is worth. The purpose of bankruptcy is a fresh start. Not to be buried under debt, as soon as you're discharged.

[dumbquestion]

1st is with chase and 2nd is with citibank

[BobMango]

I agree with JustBroke. No way this makes sense to hang on to that house given the current valuation and mortgages. We're not through with the recession so figure on further value loss on the property.

Even if you can get the 2nd to agree to 10% to settle, I'm thinking it will take you more than 3 years to pay that off. If you walk away and rent a new place for less than you are paying now, save up as much as you can over the next 3 years and buy a place then. Believe me, you'll be able to buy much more house in 3 years than you can get today.

[momofthree]

Or you could convert to a chapter 13 and strip the lien. Are you under median income? If so, that would put you in a 3-year-plan. May not be too bad if it means your $175k 2nd mortgage goes away forever.

[dumbquestion]

what is median income? together we only make about 55k per year

[dumbquestion]

justbroke and bobmango

i think you are right. i am looking at it as my home rather than an investment. sometimes it is hard to seperate from that. i think that if chapter 13 is not an option it looks like i will be giving up the house. i guess i better start figuring out how long forclosure takes.

[CCsAreEvil]

1st is with chase and 2nd is with citibank

That's funny. Mine's the reverse.

Well, with the economy the way it is, I think there are a lot of people in this same situation. I've stated it before but in my case: $255k 1st, $110k 2nd. Today, zillow claims $270 for value. Who knows what it would actually sell for.

Also, a quick google claims that no one knows exactly how much it would cost banks to foreclose on a property, but if the 2nd forces, they need to pay off the 1st note in full. The 2nd gets whatever's leftover. Some claim it costs a bank to fork out around $30k up to $50k to process a foreclosure. I've seen others state it can be as little as just $2k. Who knows?

Since we stopped paying on the 2nd, each month we pay on the 1st, it does keep lowering the principal by $400. So, at some point the 2nd will pull the trigger. But I do not see that maybe for a couple of years. And, if they do pull the trigger, we'll just pack up and move out. That's why it's called a ride-thru.