Good Surprise...

[Toby629]

Today FedEx stopped, I thought, "Oh great, has to be correspondence from one of our creditors." Sure enough, it was from our 2nd mortgage lender. We are 6 mos. behind in payments to them. We have not had contact with them for a couple of months, filing a chapter 7 and our lawyer said to not worry about it until after the discharge. They are offering a settlement of less than 10 cents on the dollar for the 2nd mortgage. This is just what our lawyer said they would probably settle for, but he said to deal with this later. So surprised that they sent this to us and there has been no contact between us about this. They must see the handwriting on the wall, we owe more than the house is worth. That was a good surprise for a change!

[JRScott]

Good to hear, good news is always great

[AngelinaCatHub]

Yes but don't settle with them now. You may after your discharge but if you attempt to settle, it is a preferential payment. You'll get nailed for it. Also remember the possible 1099 tax liability.

Sears card attempted this over a weekend knowing that I could not contact my lawyer. I told them I would talk to her about it, and they said the offer was only good that day and they faxed me paperwork. I looked at it and as ignorant as I was at that time, was still not in the position to pay them. Thank goodness. 'Hub

[pcn]

Toby629, who is your second with? Different than your first? Thanks!

[Toby629]

Dang, forgot about that darn tax liability! When we settle we'll have to really check that out how it will hit us. Now that we know they will settle, we will just wait until we are discharged. I'm sure they will take it then as now. That is correct, we would get nailed for a preferential payment if we settle before we have filed. We have our 2nd with Homecomings Financial, our 1st is with National City Bank.

[HHM]

Actually, there wont be a tax liability if you filed chapter 7 BK and received your discharge. The chapter 7 discharges your personal responsibility on the 2nd mortgage, so the deficiency, in a technical sense, doesn't exist.

The real question ; that is great they are willing to settle for 10%, but do you have the money to do it?

Be certain to have a firm commitment from them that they will release the lien and make sure there is nothing funky like a promissory note for the difference etc.

[Toby629]

HHM, thanks for the information. We do not have the money now to do this (we could get it from family) and anyways it is in our best interest to wait until after the chapter 7 is discharged for so many reasons. Especially as in your post the tax liability is gone after our BK is discharged, that is huge! They want us to contact them by July 24, should we contact them and tell them we are filing BK and will have to wait until discharge or not contact them and wait until the discharge as our attorney advised, then just deal with it then.