Job Loss, underwater mortgage, SCHOOL, and 401K

[AngelinaCat]

I'd not touch that 401K in any shape form or fashion.

We are still paying down the tax penalty on our 401k liquidation, and a foolish land transaction. We are three years post-discharge.

[keepsmiling]

Another middle aged sista here.... I totally get it. I am in MA occasionally and would love to share a cuppa sometime.

Agree with the others, stop paying your underwater mortgage yesterday. You don't need to file immediately.

Leave your 401k alone!!!! DON'T GO THERE! As kawh said yesterday, so wisely:"Getting used to bad or mediocre credit is not nearly as frightening as the spectre of (myself) living under a bridge passing the Riunite."

Sorry to hear about how underwater your condo is- and a little surprised actually. That's a huge hit. Ouch.

[cin]

Thanks for merging this Angelina.

I am starting to think that since I DO have "some" cash now, and my cc is only 6,200, maybe I should just go with the foreclosure. If I can manage to work it out enough to go to school in September 2013, I can't be in bankruptcy .. they would wonder how I got the money for school. And even if I took money from my 401K for school, I'm sure it wouldn't look good to a trustee. I

[I] am starting to think should just stop paying the mortgage in September and ride it out for as long as I can. I hope I can still stay in this forum ... you folks are awesome. I have felt so afraid and alone, but you have all been so welcoming. Thank you so much.

My mortgage is with Sovereign bank, I've been here 5.5 years, I still owe 175K, and the condo next door (we have a shared wall, and are identical) was on the market for 105K ... I could NEVER make up that 70 K just to end up at zero .....

Emotionally I can't imagine packing up and leaving my "home", but logically it's stupid to stay. I can't wait until my logic kicks in enough so I stop crying .... And LASTLY, f***k XXX (XXX is the place I worked for the last 30 years).

[keepmine]

Thanks for merging this Angelina. I am starting to think that since I DO have "some" cash now, and my cc is only 6,200, maybe I should just go with the foreclosure. If I can manage to work it out enough to go to school in September 2013, I can't be in bankruptcy .. they would wonder how I got the money for school. And even if I took money from my 401K for school, I'm sure it wouldn't look good to a trustee.

Where are you getting this stuff? Why can't you be in bk while in school? People save money for tution, take out student loans, get help from family,etc. Being a student isn't a disqualifer for bk.

[cin]

I actually went out today and hung out at a pool/bar with a friend.

OMG did I NEED to take a break from freaking out about everything. Anyways I met a woman who has a fred who stopped paying his mortgage here in Massachusetts TWO years ago, and is STILL there. He is in a condo, similar to myself ..

I wonder if they just don't care so much about condos? I hope so ... I will continue to pay the condo fee because I will be able to afford it once I stop with the mortgage, and most of the other people living here are all just barely making it ... Of course if I couldn't manage it, I'll stop ... I already feel some relief.

The bankruptcy thing made school an impossibility -- and it's the ONLY hope I have right now for a future income .. a future without age and gender discrimination (licensed practical nurse) -- the friend I was with today IS an LPN ... it's pegged to grow at 20% ... and I think I would feel like my life had some MEANING, instead of getting on the damn train each day and going into Boston every day and feeling like I am a salmon swimming upstream ...

Anyone with experience in foreclosure, especially in Massachusetts, would be awesome. I mostly wonder how long I might be able to stay here. I know there are no definites, .. but any info is most welcome.

I feel some relief with the realization that bankruptcy is of the table, because I don't want anyone looking into my finances unless I don't have ANY finances left.

Thanks for the ear, you all are great.

[cin]

Keepmine, I need 15K for school. I was under the impression that if I had 15K in the bank and filed for bankruptcy, that money is GONE ... the trustee would take it. And if I was in bankruptcy and somehow paid cash for school, that would be fraud. I have a lot to learn, and that's why I'm here ....

[keepsmiling]

There are ways to drag out foreclosure. The banks don't really want your underwater condo, at least, not right now.

As to the cash in the bank.... well could be they'd take it. It depends on how your district works exemptions. Looks like you can use Federal, and since you have no equity in the house, you might be able to stack the other exemptions. A very experienced NJ lawyer told me we'd be able to do the same in a similar situation. Why not schedule a free, no commitment consult with an attorney or two? Take your time, keep reading here, and by the time your appointment arrives you'll know what to ask.

A lot depends on if your state will allow the mortgage company to come after you for the deficiency or not.

[LadyInTheRed]

And if I was in bankruptcy and somehow paid cash for school, that would be fraud. I have a lot to learn, and that's why I'm here ....

It would be fraud if you charged the the 15k on a credit card with no intent to pay. I am unaware of anything that would make it fraud to pay for school with cash before filing BK.

[keepmine]

Stop paying those HOA fees as well. They're dischargeable in bk.
There is no law that says if you have a choice between paying creditors or college tution you must chose creditors.
You really have a lot of misconceptions about how the process works.
You don't surrender evrything you own when you file.What you keep depends on the exemptions you are allowed to use. In all states, ERISA qualified accounts are exempt. That's why we suggest not liquidating the 401K because you get to keep it through bk. As another poster suggested you may well have access to Federal exemptions that will allow you nto exempt some cash.
Don't strip your finances in the mistaken belief that you would automatically lose the cash anyway..
I'd suggest you speak with a few bk lawyers and get some questions answered. Most will give free or lowcost initial consultations.

[keepsmiling]

OP's thought is to NOT file bk but just let them foreclose.
In that case she should keep paying her small cc's and HOA's.
She could worry about bk if they come after her for deficiency.
Just sayin.

[tobee43]

well it sounds like all us OLD folks have been removed or dismissed from our jobs and we are wondering why this world is falling apart. shoot, once "they" trimmed "their" budgets by getting rid of the experienced people the country is running itself to the ground.

cin, i so understand what your going through, but listen to CAT....i used my 401 and i'm so sorry we did!!!


here's what i would do, if it were me. i would first check to see what type of foreclosure process your bank is using. MASS is uses both judicial or nonjudicial formats to for the process. IF you bank is using the judicial that's going to buy you some time at least at the VERY least 1 year before they would begin the process. leaving you that time to collect your thoughts and some money.

also, do your due diligence in the respect to applying for a loan mod...what not???? maybe you can get the payments lowered and keep the house. of maybe you can use the time to justify your position...either way, if you have decided to give up the house, i would stop paying the mortgage. NOT the HOA, because no HOA fees or fines outlive a bk, and as you so smartly paid for the next year, but i would stop the mortgage and see about the loan mod...save up the money for your potential move and or SCHOOL!!!!!

we used our 401 and i am ONE sorry person that's all i say. just trying to stay above water when i was already at the bottom of the sea. never again.

best of luck to you! sorry about your job, i know it's a grieving process after 30 years

[cin]

Toobee, you are NOT kidding about it being a grieving process. I had to go to the unemployment office three times, and each time I started the sentence with "I just lost my job after thirty years, and ..." I would break down and cry. It's been a horrible emotional two months. But the last two days I felt like I could breath a bit.
The ONLY reason I would tap into my 401K would be to get the 15K for school. I would not use it for any bills, HOA or mortgage. I think taking 30 out NOW would be worth WAY more than in 15 years if it gives me the means to support myself as a licensed practical nurse (no discrimination, can take on different types of jobs at different places, and it's a field expected to grow by 20% -- and some ******* CEO can't ax me and hire some younger person for 25K less per year) ... I think it's a good reason to do it. PLUS they waive the extra 10% penalty if it's for school (I have CREF -- I worked at medical university). It's the only way I can make this plan work. Otherwise I will be back in an office, with NO degree, competing with an 18 year old fresh out of high school. I was making 57K ... this was in Boston though, and the salaries are high. I will never see that salary again. I might have an opportunity now to NEVER set foot in Boston again, and maybe find some meaning in my life again. I've been simply surviving for the last 5-6 years. I want to feel that my life, and I guess everyone's life in general, has some meaning.
Losing the condo hurts so much - not because of the "place", but because everything I've done over the past 30 years led me to get this place on my own. And some fat white d-bag looked at some numbers and decided I am worth 25K .... (okay I have nothing against fat white guys, but you know what I mean) ....

I do have a question that will actually make sense to you all (and I want to apologize for being so scattered before) ... on the day you actually file for bk, how far back do they look into your finances? Is there a set amount of time, like a year? Oh and thanks for telling me banks use both judicial and/or nonjudicial processes -- I will find out how Sovereign Bank does it .... Thank you all so so so SO much!

[cin]

ADVICE FOR IDIOTS: I use this phrase because I once head a comedian talk about the song that starts "Don't sleep in the subway baby, don't stand in the pouring rain..." He said that should be the title of that song. It stuck with me and when someone says something spectacularly stupid, always think about that. I saw a HUD approved (free_) credit counselor, just to see if he had any useful info for me .. the first thing he said is, STOP paying fr health care. REALLY? I am 53, and actually bought a blood pressure monitor for home because I was so stressed and dizzy and knew my blood pressure was going crazy. Second, he said DON'T pay any taxes on unemployment money, once I get it. I'm thinking great -- No health care, it's mandatory in Massachusetts and you are taxed if you don't have it .... His point was, DROP EVERYTHING! Pay your mortgage. Screw taxes, screw your health .... I left his office thinking, "Don't sleep in the subway baby" .... Thanks for the advice, buddy.

[cin]

Forgive the typos, new keyboard.

[ValleYum]

Cin:

Hi and welcome!

Remember, there are penalties and taxes that will be due on your 401k withdrawal if you do choose to do this. Probably 30% in total. Make sure that if you do this to be prepared at tax time. Just a thought...