Pending Doom

[hycheese]

My company is downsizing and I will be without a job in January 2008, I currently reside and own a home in Wisconsin which I owe about $96K.
The loan officer at WellsFargo said comps for my house over the last year are around $110K, looking at the market I would seriously doubt I'd get that especially in the dead of winter and as quick as I would need to sell it.

My 2005 car is paid for and currently blue books for $6300, I have about $3K in CC debts and a company 401k worth $32K and about $5000 in cash savings.

Now here is my delima:
I also own a home in Kentucky which I would like to move to in January after my termination, I bought it about 2 years ago in a foreclosure (ironic) for $24K, it is in bad shape and needs lots of work - I was planning on fixing it up for retirement and doubt that it would assess for anything more than that.

The question:
I will try my best at selling, even a short sale before a foreclosure, however I will not use my savings to pay the mortgage either ($900mo.), I will need that for moving costs and finding a job once relocated. I will seek an attorneys advice later but am wondering what is the worst that can happen while living in Kentucky with a foreclosure in Wisconsin?

My additional concern would be that just starting a new job with a garnishment could lead to being fired, and what could they do to the $32K (401k) if I roll it over into an approved account?

any thoughts would be appreciated

[lrprn]

Welcome to BK Forum, hycheese. Glad you found us!

You didn't say how much gross income you make currently and how much you'll make in Kentucky. Also you didn't say if you were married or if you have children. Are you hoping to file Ch 7 or Ch 13? When are you thinking about filing? Answers to these questions will help us help you sort things out better.

My company is downsizing and I will be without a job in January 2008, I currently reside and own a home in Wisconsin which I owe about $96K.

When you move to Kentucky, unless you avoid filing for two years, you can file in Kentucky, but you will have to use Wisconsin exemptions or the Federal exemptions - whichever fits your situation better. [/quote]

In Wisconsin, the bankruptcy exemptions allow up to $40,000 equity in your primary home - http://www.bankruptcyaction.com/wiexemptions.htm. Federal exemptions protect $20,200 - http://www.bankruptcyaction.com/fedexemptions.htm . Since you say the Kentucky home is worth less than this, then Wisconsin exemptions will protect your Kentucky home whether you file Ch 7 or 13. Using the Federal exemptions could be dicey for your protecting your home.

My 2005 car is paid for and currently blue books for $6300, ...

The Wisconsin exemptions for a car protects $2,775 in equity; the Federal exemptions protect $3,225. I'm sure a paid-off 2005 car is worth much more than either of these. You are going to have trouble protecting your car if you file Ch 7 or 13. If you are married and the car title is in both your names, then you can double the WI exemption - but probably this is still not nearly enough to protect this car.

I have about $3K in CC debts and a company 401k worth $32K and about $5000 in cash savings.

$3K is not enough to file bankruptcy over, but the amount you would owe on the house whether you short-sale it or it's foreclosed may be reason enough to file. Your 401K is protected in full if you file. Wisconsin allows filers to use a $9650 'wild card' to protect anything not protected by the other exemptions, so you could use this to protect your cash. Federal allows only $925 to be protected. Right now it looks like the WI exemptions would be more kind to you in your situation.

,,,what is the worst that can happen while living in Kentucky with a foreclosure in Wisconsin?

As long as you keep your homeowners insurance intact until the house is foreclosed, nothing. The foreclosure will continue on whether you are there are not.

[quote[My additional concern would be that just starting a new job with a garnishment could lead to being fired, ...[/quote] No way to know....depends on your new employer.

and what could they do to the $32K (401k) if I roll it over into an approved account?

I assume by 'they' you mean your trustee if you would file bankruptcy. No matter where you file, retirement funds are protected AS LONG as they remain in the retirement account. Turn it into cash or another asset and you've opened the door to possibly losing it to your trustee if you can't protect the amount with an exemption.

Your best bet is to set up 3-4 free consultations with several bankruptcy attorneys in your area in WI. Explain just what you've told here and find out if filing bankruptcy is in your best interests in the long run.

Hang in there. Keep asking questions - we'll help you sort things out as best we can.

[SinkingFast]

Generally speaking, a new employer won't hold a Foreclosure against you when you've been terminated from another job.

Not surprisingly, it's very common these days. People loose their jobs. Have to relocate for new employment and can't sell their previous house.

The one thing you have to worry about is,............. Wisconsin Foreclosure Law does allow for the mortgage lender to seek a deficiency balance judgment against you.

http://stopforeclosure.com/Wisconsin...losure_Law.htm

So be prepared for that contingency.

[CindyLou]

My idea would be that the cash will probably be long gone after the move (which he stated in the earlier post) and the wild card could be used to protect the rest of the car not protected in the car exemption. I think you will be fine with the car once you apply the car exemption and the wildcard. And then you can use the homestead on the the house in kentucy. You will actually be better off using the Wisconson exemptions. Just remember. you can't file until you have lived in Kentucy for 91 days ("The majority of 180 days") So it will be important to establish some type of concrete residency such as a driver license, car insurance, bank account, etc as soon as you can to start that clock ticking. Good luck, welcome to the forum, and keep us posted!!!

[hycheese]

Thanks to everyone who replied it was all very good information. I have also read the BK manual written by the attorney from Kentucky.

To answer some of the questions asked
Single male 48, with 19 year old who will move with me
Current income is about $62K which will end in 8 weeks or so
Western Kentucky jobs are a bit scarce and low paying maybe $10hr
I will not be pursuing a job in my field of automation electronics because I am just too burned out from the constant stress of it after 30 years.

I have decided to stop WI mortgage payments as of Nov 1, and have redirected my jobs direct deposit to an account already setup in KY which I have about one years worth of mortgage payments for the KY house on deposit there.

My actual plan though accelerated by about 5 years was to semi-retire and open a small business from the house in KY doing custom novelty printing, the area has a high tourist volume (land between the lakes) and perhaps part time job in the winter if needed.

This whole scheme requires that I have a low cost house and a low cost of living, right now including the mortgage I can get by easily on $700 a month.

I guess my question now - is it best to just relinquish my house if it doesn't sell and take my chances that the WI bank can't force me to sell my KY house when there is absolutely no equity in it. Would it be best to take a wait and see approach, it could take the better part of a year to get the business established to where it may make good money.

I was planning to talk to an attorney in KY because I will be there in a couple of months, but it was also pointed out that this would be a Wisconsin matter and should do it from here with a local attorney.

as a side note when my company started letting people go by the hundreds early in the year I took that forewarning and started to market my house with the help of the mortgage company, the broker who i bought the house through as a FSBO has been trying for the last 6 months without a bite. There is a glut of homes for sale here and 12 within 2 blocks of me.

again thanks for all the info

[hycheese]

The one thing you have to worry about is,............. Wisconsin Foreclosure Law does allow for the mortgage lender to seek a deficiency balance judgment against you.

http://stopforeclosure.com/Wisconsin...losure_Law.htm

So be prepared for that contingency.

What does this mean? will they put a lien on my other house and force a sale? or will it just sit on my record and fester until a bk will remove it?

If the deficiency is reasonable and I am back on my feet, I would try to pay it - I would just need time and not to lose my kY house.

thanks

[woeisme]

I think what he means by deficiency judgement is that they would try to force you to pay the difference between what you owe on the house and what it sold for. My guess is they would try to go after you with a wage garnishment to pay for that, as opposed to putting a lein on your KY house which you already said you had no equity in. Since you plan to be self-employed, they'd have a tough time getting a garnishment against you, so it might just be collections coming after you for payment of the deliquency, not sure what else they could do to you. But of course this is just conjecture on my part, when you talk to a lawyer they'll have a better idea about it. But I don't think you'll be in too bad of shape. Good luck on the move.

[hycheese]

Thanks for all answers and advice - time is closing in 1 week to go.
Heres a quick rhetorical question: I suppose there is no way to cash a $2400 property tax escrow check made out to two people with only one endorsement?

[demismom]

Not unless that other person is deceased and you have a death certificate to prove it.

[SinkingFast]

What does this mean? will they put a lien on my other house and force a sale? or will it just sit on my record and fester until a bk will remove it?

If there's a deficiency balance after the Foreclosure of your house in WI,........... The Lender will probably sue you to get the difference. Once the Lender gets a Judgement against you, they can do a number of things. All might be made difficult by the fact that you're moving to another State.

Once the Lender gets a Judgement there's any number of things they can do. Lien against your house in KY. Wage and/or banking institution garnishments. But,............ The Lender might have to go to Court in KY to make any Judgement rendered in WI effective. That's definitely a question to ask attnys.

A lien against your house in KY won't force you to sell. It just means, that lien would have to be satisfied in order for you to sell and convey a clean Title to a potential buyer.

If the Lender does get a Judgement against you,............. And you plan on filing BK anyway,.......... It's really no big deal.

You'd simply discharge the deficiency balance in BK. Once your BK is Discharged, you could then vacate the Judgement. It's just a couple of extra hoops to jump thru.

[CindyLou]

Thanks for all answers and advice - time is closing in 1 week to go.
Heres a quick rhetorical question: I suppose there is no way to cash a $2400 property tax escrow check made out to two people with only one endorsement?

Yes, it can be deposited into a joint account that bears the name of both people with only the signature of one of those people as long as it also says "for deposit only"

I had to do that with an insurance reimbursement check when my husband was out of town and could not endorse.

[Hillbilly]

I've been doing a lot of reading up no the subject of Deficiency Judgments, and although it is very easy to locate thousands of dire warnings about the possibility of receiving a Deficiency Judgment, these seem to almost always originate from Law firms, Lending institutions, and other such businesses having a monetary interest and incentive to use the "legal possibility" as an convenient additional scare tactic to induce either the repayment, refinancing, or the employment of their legal services, to keep this wolf at bay.
What is almost totally lacking is any report, or any outcry from the debtor public of them having been subjected to actually being sued for, or ordered to pay Deficiency Judgements.
Obviously, there are Deficiency statutes on the books of some states, as well as are the ANTI- deficiency statutes in other states.
Thus as a practical matter, the question is, just how common is it for the Lending industry to pursue Deficiency Judgments on home mortgages?
Some sources state that it is very rare, because the lenders realise that there is not much actual chance of collecting, and consider the legal pursuit these suits to be an expensive and ineffective waste of time and additional assets, "the throwing of good money after bad".
Is there any publicly available information that reveals what percentage of defaulted and foreclosed home mortgages are in actuality subjected to Deficiency recovery suits?
Maybe I am a little paranoid, but it appears as though there is almost an unspoken conspiracy of silence as to what is actually going down.