In a bind, please help

[Bassgirl]

Hi all, I am soooo confused.

I have been to this site and a few others and my head is spinning.

The facts about me:
I have a perfect credit rating 800.

But I am about to go under. I have a house in MO that had been up for sale for about 3 months. I also have a HELOC on the same house.

I paid 110,000 about 3 years ago. 20% down. I owe 86,000 on the mortgage and 17,000 HELOC. I did do some upgrades, new flooring, landscaping.

I have a lot of other debt due to a divorce. Including 400.00 alimony to my ex. And I have all the bills left from that marriage.

I bought new house in Arkansas for 77,000. put 10 % down from the HELOC from the first house. I have been here about 2 months. I had to take a pay cut that was not expected in the move. ( MY family is here and ex-spouse was getting crazy so I had to move)

I have the house in MO on the market for 115,000. I need 113,500.0o to get it sold. No one has even looked at it in 2 months, it is in a good neighborhood, as is in good condition. The rest of houses around me are going for 130,000 or more.

My questions is......what happens if I just walk away? Tell Wells Fargo that I just can't do it anymore and let the MO house go back? And the HELOC with it.
I can make the rest of the bills if I get rid of the MO house.

I am working nights and weekends for the most money possible and still can't make it. I can make June's payments, after that I am sinking fast.

I am trying to be proactive and get the best solution.

Sorry for any typos. I worked all night and I am exhausted.

Thanks
BG

[BassBoy]

Hello Bassgirl and Welcome to the forum.

According to this link.....http://www.foreclosures.com/www/page...ate=mo......so it appears you could simply walk away because there is no Deficiency Judgments in MO.

[soleprop]

i'm sorry - unrelated i think it's awesome your names are so similar

[Bassgirl]

OMG that is awesome! I hate to do it, I am going to try for one more month with OT to pay for it. I am even making a trip back up there to paint to see if that helps. I am trying everything to get it sold. Even if the auction it, they should be able to get most of their money back since I don't owe a crazy amount on it.

It is cool that our names are almost the same?

Do you play Bass or bass fish? I do both!

Another question, from what I have read it will stay on my credit record for about 7 years? Is it a big deal if I keep all my other loans current? Once I get rid of this I am paying off the Credit card I have been living off of to make expenses. Then paying down everything else. Of course I will talk to a lawyer first to make sure there are no hidden loop holes.

Thanks for the link I appreciate it.
BG

[Bassgirl]

Bassboy,
I read your link again and I have another question.

MO is no longer my primary residence. I have been on AR since Feb, 21st. The MO house is sitting empty on the market right now. The link states that it must be on the primary residence. Which it no longer is for me.
Also I keep reading here about a 1099 tax form. How is a forclosure considered taxable income? I mean they get the house that has no equity, and I get nothing when I give it back to them. So how is this income?
The only thing I can see that would be income would be the HELOC ( 17,000) that I took out to pay off a credit card and 9,000 went towards the down payment on the AR house. At the time of the 2nd loan they knew it was for a second "summer" home as they put it. They knew I was moving here in 3 yr's. It just got bumped up timeline wise.

Thanks for any input,
BG

[BassBoy]

If I recall correctly, the tax form would be for an unforgiven debt. What this means is, when the house sells at Sheriff's Sale, which is usually for far less than what was owed, there is an "unpaid balance due", and that's when the lender can sue you for the money. Considering MO does not allow a judgement, I'm going to guess and say that the unpaid balance would be a forgiveness of debt, which is like receiving a gift of money, and therefore would be taxable income.

The foreclosure will stay on your credit report for 7 years and can put a big dent in your credit rating if you ever need financing in the short-term future. If you have no plans of applying for or using credit for the next several years, then this won't be of much concern for you, however I have heard of the debtor's creditors raising the interest rates when your credit has suffered a huge hit. It is callled Universal Default. Not all creditors/lenders practice this though. It depends on what your loan/credit card agreements state about defaulting on your other obligations.

Off topic.........I played the Bass guitar when I first joined this forum, hence, my username when I registered. I am really a drummer, but wanted to try out the Bass guitar........still play the Bass guitar every once in a while, but not as much as I used to.

[Bassgirl]

Well, that kind of sucks, but I guess paying taxes on a left over amount would be better than paying for an empty house.

I have the 1st and HELOC with the same lender, I bought it for 110,000 I owe about 103,000 with the two loans combined. 86,000 1st and 17000 for the HELOC.

I thought about doing the DIL route, but it dosen't look like anyone has had much success with that. And the hit would be the same.

The only potential credit I would need would be for another car in about 2 years and I need to re roof the house I am in now. Sometime in the next two years.

I am guessing I could get the car (probably just have to pay a higher interst rate) The roof I am not sure how I would do that.

I just wish that freakin house would sell. Oh well, such is life I guess.

Thanks for the info. I appreciate it.

BG