2nd and Collections after a BK 7

[chad9162]

Those are all reasons used to "talk someone into it", but I don't think those facts really address the goals of most people when it comes to their house.

The Best courst of action for people who are significantly upside down in their house is to walk, file BK to take care of deficiency, a buy in 2 years.

While I agree that walking away would be the best course of action you'd still miss out on the tax write offs and savings. Here in California, a lot of people can "afford" their 2nd's but when you're so upside down then what's the point. The definition of "affordability" could be defined as one's willingness to sacrifice, but who's willing to sacrifice to just burn the money.

Walking away would still put you into a non appreciating asset (being a renter) and you'd still have to wait 2 years or more to buy again. Incomes in California are high due to high cost of living so most would benefit from tax write offs.

I agree with you that if you bought a house for $100K and only make $40K then there'd be no savings. People need to figure out what's best for them and realize it's just a house not a "home."

[albacore44]

call it different, but my attitude is this. when our parents bought years ago , there intention was to pay off the house some day, and live in it till you die, pass it on to your kids to do with it what they will. modern banking changed all that. in the big picture, we all are renters.......why ?? we never plan on paying off the house. they are too expensive these days, and we need the tax advantages of writing off the interest. so, since i'm a renter, i want to rent in the best neighborhood for my family, and when they are raised and gone someday my wife and i will move on, and if i make a few bucks after paying off the bank (owner) great, if i have a little bit of equity take the money and move on. what more does man need in life but a place to sleep, a toilet, a good tv to watch the game, and some good beer.

[frankies_mom]

Just an update:
We are going back to original BK attorney early next week to discuss our options with this 2nd mortgage. Anyone have any experience/advice on maybe negotiating with this JDB? I have read many posts about those settling 2nd mortgages for 10-20% or so. Would I be crazy to think we could do this too? Here is a breakdown of our house financials.
1st mortgage = 155,000
2nd mortagage = 42,000
According to a CMA we had done and recent sales within last 6 months, similar homes for our size are being sold between 149,000-159,000. So really, our 2nd would get nothing if we sold (short sale) or walked away.

[frankies_mom]

One quick follow-up - should I call them before we meet with our attorney and try to settle for 10% or just wait until we talk to the attorney? I don't want to do anything counter-productive.

[chad9162]

Well if you sell, your 2nd could stop the sale even in a short sale. All lien holders have to agree to release their liens. You're negotiating power is the fact that you can walk away with no personal liability.

Your attorney, like mine, will charge you to negotiate. You could try the negotiation yourself, what do you have to lose right. A JDB bought the lien at a significant discount so no its not crazy to think you could get 10%-20% on the dollar.

You just need to be firm and remind them they get nothing if you walkaway. Right now time is on your side. So just wait if they become difficult. My attorney said I cold settle myself and then pay him to look at the written agreements for lien removal.

[bulletproof77]

and that is exactly what I did...once you take a look at the cold, hard facts/numbers and strip the emotion out of it, it was the only course of action that made sense. Getting over feeling like a "loser" for walking away, but circumstances beyond my control made walking away rather mandatory. 7 months and CW/BofA still is doing nothing about taking the house back. Soon to be ex-wife living for free in it...

[spidge]

Its a business decision for us to and it seems the lenders only think thier business decisions are important. We should be ensuring our future just as the lenders are working to ensure thiers with making the best business decisions based on the numbers available.
I will not feel guilty or have any reservations over this.