do i have any options?

[thaironchef]

Hello everyone here...

i'm new here and have been reading these forums all day long for the past 4-5days trying to figure out what my options are. Here is my situation.


I can't afford to pay my mortgage any longer. my son who used to pay most of my mortgage is leaving and won't be able to pay for it anymore. With my income , i can't afford to pay the mortgage even if i tried. I have been borrowing money from my son and my wife to try to keep my mortgage up hoping to sell it soon, but it's just not happening. I just recently refinanced my 2nd mortage 2 months ago to invest into one of my business overseas which is just going downhill as well , and also to pay off some of the money that i've been borrowing for the past year or so to keep up with my mortgage. I can't go on much longer like this, i'm at the age of 55 and this is not healthy for me to try to carry on. My first mortgage is around 300k, my 2nd mortgage is at 195k, and the house is appraised at 500k. No equity left in the house, but not negative from what I know. I don't know what steps I can take? I would like to get an idea of what my options are so I know who to consult or go to. I am behind 2 months on my 1st mortgage right now and i'm considering to file BK Chapter 7 to attempt to get a fresh new start. I should qualify for it since my income is only in the 40-45k range and my wife is not working at all due to medical conditions. Sorry if my post is so long, but there is just so much going through my head right now that I can't even sleep.

Looking forward to any comments or suggestions from anyone. Thanks in advance.

[CATCHMEIFYOUCAN]

Bk Paves The Way

Best to consult a couple of lawyers (intial consultations are FREE), Bk does pave the way but I'm not familiar with "assets," such as mortgages.

Best wishes, Catchmeifyoucan

[spongenotbob]

Hello everyone here...

i'm new here and have been reading these forums all day long for the past 4-5days trying to figure out what my options are. Here is my situation.


I can't afford to pay my mortgage any longer. my son who used to pay most of my mortgage is leaving and won't be able to pay for it anymore. With my income , i can't afford to pay the mortgage even if i tried. I have been borrowing money from my son and my wife to try to keep my mortgage up hoping to sell it soon, but it's just not happening. I just recently refinanced my 2nd mortage 2 months ago to invest into one of my business overseas which is just going downhill as well , and also to pay off some of the money that i've been borrowing for the past year or so to keep up with my mortgage. I can't go on much longer like this, i'm at the age of 55 and this is not healthy for me to try to carry on. My first mortgage is around 300k, my 2nd mortgage is at 195k, and the house is appraised at 500k. No equity left in the house, but not negative from what I know. I don't know what steps I can take? I would like to get an idea of what my options are so I know who to consult or go to. I am behind 2 months on my 1st mortgage right now and i'm considering to file BK Chapter 7 to attempt to get a fresh new start. I should qualify for it since my income is only in the 40-45k range and my wife is not working at all due to medical conditions. Sorry if my post is so long, but there is just so much going through my head right now that I can't even sleep.

Looking forward to any comments or suggestions from anyone. Thanks in advance.

Hi Ironchef, and welcome.

From your posting I'm not sure how BK will help you. Do you have other unsecured debts that are weighing you down?

The mortgage really won't go away unless you abandon your house. Since you're not "upside down" in your house, why not just sell it and move to a cheaper place / cheaper location?

Sorry if this seems like simplistic advice... we probably need more details

Good luck,
spongenotbob

PS: As a side note, if you do go BK, I believe the part about "I just recently refinanced my 2nd mortage 2 months ago to invest into one of my business overseas" may cause problems - the trustee will absolutely want to know where that money went, what are these businesses, etc. Hope this helps.

[miss puff]

I agree. Try to sell first and see if you can even break even. Already at two months behind on the first you would have to start moving quickly otherwise they will probably put you in default and start foreclosure proceedins which could take anywhere from 6 months to 18 months. Depends on your state and their foreclosure laws. If you do decide to let it go to foreclosure, again depending on your state, you could save the money you would have been paying before you have to leave to rent something cheaper. I can't even imagine what a $500,000 house payment is.

You also might want to search "short sale" in these forums and see if your lender would let you do a short sale just to get rid of it, sell it and move on. Good luck

[SinkingFast]

Selling the house with the L/V ratio what it is won't help. Closing costs alone,....... Realtor fees, Title insurances, Deed registration, etc,....... Will put IronChef in the negative column.

A 7% Realtor's commission on the sale of that home is $35K.

What State, Iron?? Any other members of your household besides you and your wife?? And what's your household income level??

Let's start there.

Or you can start there at this website:

http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

That's the Means Test for people filing after 10/01 this year.

[SinkingFast]

You also might want to search "short sale" in these forums and see if your lender would let you do a short sale just to get rid of it, sell it and move on. Good luck

Short Sale is also an option if you've had the home on the market for a while already.

The problem is,.......... You said you recently refi'd your 2nd.

Short Sales involve you giving the Lender much the same types of info you gave them when you got the loan in the first place. That same information, the Lender can turn on you and claim you received the loan under fraudulent pretenses. So that's a tricky line to walk.

Short Sales also work better when you only have one Mortgage Lender to work with. In your case, you've got 2, so it can be even trickier.

[tradewiz50]

Hello everyone here...

i'm new here and have been reading these forums all day long for the past 4-5days trying to figure out what my options are. Here is my situation.


I can't afford to pay my mortgage any longer. my son who used to pay most of my mortgage is leaving and won't be able to pay for it anymore. With my income , i can't afford to pay the mortgage even if i tried. I have been borrowing money from my son and my wife to try to keep my mortgage up hoping to sell it soon, but it's just not happening. I just recently refinanced my 2nd mortage 2 months ago to invest into one of my business overseas which is just going downhill as well , and also to pay off some of the money that i've been borrowing for the past year or so to keep up with my mortgage. I can't go on much longer like this, i'm at the age of 55 and this is not healthy for me to try to carry on. My first mortgage is around 300k, my 2nd mortgage is at 195k, and the house is appraised at 500k. No equity left in the house, but not negative from what I know. I don't know what steps I can take? I would like to get an idea of what my options are so I know who to consult or go to. I am behind 2 months on my 1st mortgage right now and i'm considering to file BK Chapter 7 to attempt to get a fresh new start. I should qualify for it since my income is only in the 40-45k range and my wife is not working at all due to medical conditions. Sorry if my post is so long, but there is just so much going through my head right now that I can't even sleep.

Looking forward to any comments or suggestions from anyone. Thanks in advance.

You may want to look into liquidating some of your assets. Sell that business.

[thaironchef]

I am in california, sorry I forgot to mention that. I already have been trying to sell the house for a couple of months now to so I can pay off some of my debts that i've been using to maintain this mortgage.

If it goes into foreclosure, can I just file bankruptcy at a later date? I don't know if I can do the short sale or DIL if I just refinance my 2nd mortgage in August. How long should I have to wait before i'm in the safe zone to file without worry about being accused of fraud which it is not. I'm just afraid it my appear so. The money that was taken out for the second was used to pay back my son what he let me borrow to keep the mortgage up. My business overseas cannot be sold since I am just a shareholder and the business is not under my name. Just a private investor waiting for some big returns that is just not happening anytime soon. I tried to get out of this business and sell my shares but I couldn't, which forced me to invest deeper into it or else I lose it and walk away with nothing. Should I even let them know about my business overseas, or will it be more of a problem than anything if I do. I would like to just tell them the whole story and the truth, but I know sometimes the truth appears bad to others. Aside from that, my household income level is @ 45k if that helps. As you can see, with that kind of income, I cannot afford a 500k mortgage alone without my son. Please, any other suggestions are greatly appreciated.

As far as assets, I do not have much of anything to liquidate. I've been in the whole for over 2 years every since I got into this house and that business.

[JusticeForAll]

I can't even imagine what a $500,000 house payment is.

I can! Ours was $3855 with PITI. It's what drove us into bankruptcy.

[SinkingFast]

Yes, Iron, you can allow the house to go into Foreclosure and file BK at a later date.

CA does allow for Judicial Foreclosures but most are non-Judicial. So chances are, you have a "Right to Sale" clause in your Mortgage Instrument, but you'll have to check to see for sure.

Here's a link to a website about CA Foreclosures:

http://www.foreclosures.com/www/page...2.asp?state=CA

According to that website, you'll have between 3 and 4 months for sure. Maybe longer if your Lender is carrying a lot of REO properties on their balance sheet and wanna put your house off for a while. REO properties make Lenders look bad to potential investors.

You'll have plenty of time to make other arrangements for a place to live. You could even Consult with attnys, find one you're comfortable working with, and maybe even get your BK fees paid while you're still living in the house.

The Median Income for a family of 2 in CA is $57,237 so it sounds like you'd be fairly safe to seek filing a Ch 7.

[thaironchef]

Thank you so much SinkingFast,

I've been reading these forums for the past week all day long and I see your name everywhere. Thank god we still have people like you around willing to give a helping hand or advice. I am still concernced about my refinance just 2 months ago, most of the monies I recieved from the cash out was used to pay back my son for paying for the mortgage the past year or so and bank records will even show he has been paying for the home the past 2 years. I feel so bad having to drag him down the past 2 years of his life to just help me manage to pay a mortgage, its been so stressful for him,amd he's leaving and moving away from here as soon as I get things sorted out.

If I allow the house to foreclose, shouldn't that be enough time for that issue to dissappear with the refinance since it will be much longer than 2 months since I did it? And if I do declare for BK because I somehow recieve a deficiency judgement from the 2nd mortgage, do you think the trustee will question me about the refinance still? My reason for it is exaclty as stated, but to the court might not like what happened.

You say CA is mostly non-judicial, I sure hope so. So in my case, should I just let the house foreclose then go from there.

Thank you again so much for you advice...it's greatly appreciated. Also thanks to everyone who contributed thier time to my thread. You guys are great!!

[debtisbad]

iron chef,

You need to talk with a lawyer. Your initial consult should be free. You need to get rid of that darn house. If you cannot sleep it is not worth it. If you cannot sell it (and only you know your local market), then if you did file bk, you could throw the mortgage into the bk. That way you would not be held liable for a deficiency balance. I may be overstepping my bounds, but it appears that you need to relocate to a less expensive market. That, and I believe that housing is overpriced in most of the larger US markets. You could rent for awhile, and watch the market conditions. If they deteriorate further then you could buy. It normally takes about 2 years of good credit to overcome a bk. Some can buy sooner, but you will get a subprime rate (normally). Your situation is not the end of the world. Trust me when I say many many US households are in worse shape if that makes you feel any better. You have the ability to turn your situation around.

Please remember this is only my opinion. Others' opinion's may differ!!!!!

Debitisbad

[SinkingFast]

I am still concernced about my refinance just 2 months ago, most of the monies I recieved from the cash out was used to pay back my son for paying for the mortgage the past year or so and bank records will even show he has been paying for the home the past 2 years.

If I allow the house to foreclose, shouldn't that be enough time for that issue to dissappear with the refinance since it will be much longer than 2 months since I did it? And if I do declare for BK because I somehow recieve a deficiency judgement from the 2nd mortgage, do you think the trustee will question me about the refinance still? My reason for it is exaclty as stated, but to the court might not like what happened.

You say CA is mostly non-judicial, I sure hope so. So in my case, should I just let the house foreclose then go from there.

Thank you again so much for you advice...it's greatly appreciated. Also thanks to everyone who contributed thier time to my thread. You guys are great!!

There's a bit of a problem with your timeline. Nothing waiting won't fix. You may have to dodge Creditors. You may even get sued before the time expires, but here's what you're facing.

You took the refi 2 months ago and handed most of the money to your son. That constitutes a Preferential Payment to an insider. Friends, Family, Business Associates are Insiders.

Now say, if you quit making house payments right now and you get 4 months before the Foreclosure Sale, you're only half way home on the money paid to your son.

The look back period for Preferential Payments to Insiders is 1 year. So you'll have to buy/bide at least 6 more months after the Foreclosure before you can file BK and not have the payment to your son become an issue.

Remember time and patience are the BK Filer's best friends. It may take a bit of planning and waiting, but it can be done.

Something to think about and ask attnys about during Consults. Generally Consults are free and you'll learn a lot.

[thaironchef]

Thanks for the prompt responses everyone,

So you don't think me repaying my son is legitimate enough to stand in a BK case even though there's proof that he's been paying the mortgage for me for the past 2 years huh? Ouch, one year is a long time to dodge these creditors. Can I at least pay my normal expenses just to keep the volume of calls down a bit, such as credit cards and all? Or should I just stop making payments on everything? And if getting sued was the case, is it effective right after the BK or is there a certain amount of time before I get the letter from the court saying I am being sued? I heard in some cases, people didn't get sued until a year later for the deficiency balance. That should then give me enough time before it happens to file the BK. This is all so confusing, but i'm learning so much from everyone here. Again, thanks for the support. Any other suggestions are welcomed and greatly appreciated. Have a nice day!!

Also, just a thought, if I were to go with trying to negotiate a short sale with the bank and they accept, would that mean that the 2nd mortage will be contacted by the first mortgage in order for the acceptance. Or would I have to negotiate with both parties? Do you even think I have a chance in working out a short sale with them? I've been with my 1st mortgage ever since the purchase of my home. It's just the 2nd mortgage that is new. And if the short sale is accepted, I heard they can't come after with me with a deficiency judgment. Just trying to weigh out my options because I really don't want to drag this on any longer. Also, are there professionals I can contact to do the negotiating for me because i'm afraid I might say something wrong and kill the deal. I'd like to take any action that will give me a better chance on getting it accepted. Again, thanks!! =)

[SinkingFast]

Paying your son back with the money you got from the refi is a Preferential Payment to an Insider. If you tell the BK Court you used the money to payback a loan to your son, the Trustee will for sure go after your son to get that money back from him.

The look back period on Preferential Payments to Insiders is 1 year. Insiders are family, friends, and business associates. People you have a more intimate relationship with than just the guy you pass on the street.

In the past, people have "unloaded" cash and assets to friends and family prior to filing BK to protect the money or assets from being taken by the Court. That's why the rule is in place. So while you took the 2nd with the best of intent, the Trustee won't see it that way.