A Miracle

[mand15]

I have posted a few times in the past few months and found this forum to be so valuable.

My Ch 7 was filed last Friday and I can't believe the way it all worked out. My issue is I'm a loan officer for a top bank in the area and my income dropped drastically in 2007-2008. i couldn't afford to continue living in my home. I tried everything and made tons of huge mistakes along the way....withdrew retirement $ (which prevented me from filing last summer), paid bills with credit cards, etc. i am single with only myself to depend upon.

I was ready to file in Jan 09 when I finally got an offer on my home. it involved a short sale. A lot of advice was I was nuts to do a ssale if i was filing a bk. But in my job situation, I didn't want word to get out that i had a foreclosure as it could affect my future with the bank and my referrals. plus i didn't want people to know my personal business. So I did the very stressful thing of attempting to do a short sale. Problem was my income started really going up in February. So on top of the short sale stress, i had to worry about getting it approved by the end of march to be able to file my bk end of april. otherwise i wouldn't qualify due to the means test. a long shot i know. but by some miracle it happened and i closed apr 8th and files apr 24th.

i found out a lot of scary things about the short sale prior to attempting it. you may have to pay taxes on the difference and they can come after you after the ssale goes thru unless the credit signs a release. i had 2 mortgages so this was even stickier. luckily i will not have to pay taxes due to the fact i was insolvent at time of the short sale. immediatly after the ssale i got a letter from the second mtg co coming after me for the $48K deficit. Luckily that can be included with the bk. in the meantime my business has really taken off again (who knows how long that will last) and i am renting an apt from a family friend who also happens to be in the mtg business. my rent is dirt cheap so i can actually start saving again.

so i'm cautiously optimistic. i still sometimes worry something is going to happen to screw it all up. i'm a pretty religious person and do believe I had some help along the way to get this all resolved. I'm certainly not proud of myself that this was how my life turned out at this point. But I'm also done with beating myself up and crying about it. I know a lot of us have been here and it's bittersweet. I loved my home and it was something i was always so proud of.....bought a new home by myself with no outside help after my divorce, was financially stable and responsible for 15 years and then this happened.

the only concern i have now is that i have a car loan thru the credit union that is cross collaterolized (sp) with 2 unsec loans and i have to decide within the next week if i should keep the car and pay the other 2 loans off or let it all go.

my credit is completely shot now, but the debt monkey is off my back and i can finally breathe again.

so to all you going thru the daily drama of being underwater with debt, it can work out. hang in there!

[StartingOver08]

Try negotiating with the CU to just keep the car and drop the cross collateralization. I was able to get my CU to do that and I was cross collateralized with a 2nd mtg ($62k) and a credit card ($23k). They initially tried to add a $4k balance to the car to reaffirm, but was able to get the CU to drop the cross collateralization all together and drop the $4k additional balance.

Congratulations on getting the rest of your situation cleared - sounds like you did a great job.

[SobStory]

Hi Mand15 - I know several mortgage professionals who have done short sales. I'm in real estate. I would love to do a short sale on my home but also have a 2nd lien holder who will totally get screwed. Just starting to look into this.
Like you, I want to keep this quiet because it affects my ability to do business in this town.
Congrats on your outcome. Thanks for posting your story. It gives me hope.

[mand15]

SobStory~

I also had a second mtg who ended up accepting $3K on a $50K balance. I didn't realize at first that the second mtg holder takes the big hit when you have 2 mtg's. i was also 3 mos behind and protected under act 91. the second mtg co came after me less than a week after the closing for the deficit, so the timing in my case was crucial. the short sale was very stressful, mainly due to the timing and my increased wages. i honestly didn't think i had a chance to make this work and would have had to go the bk route and including the house in the bk. my attorney told me the trustee would have probably had an issue if i wanted to keep the house since it was valued over $250K.

just be careful that you won't have to pay taxes on the shortage...if you're insolvent i think that always gives you the exception, but i'm not positive as i'm not an accountant. and try to get them to sign a waiver not to come after you for the shortage.

good luck to you.

[mand15]

Try negotiating with the CU to just keep the car and drop the cross collateralization. I was able to get my CU to do that and I was cross collateralized with a 2nd mtg ($62k) and a credit card ($23k). They initially tried to add a $4k balance to the car to reaffirm, but was able to get the CU to drop the cross collateralization all together and drop the $4k additional balance.

Congratulations on getting the rest of your situation cleared - sounds like you did a great job.

thanks for the info. that's what my attorney suggested as well. i have mixed feelings on it since i've been with my cu for over 20 yrs and they told me in the fall if i filed and excluded them, i'd be able to get credit with them within a year (not sure i believe this) but if i included them, they'd never give me another loan. they never explained the cross collaterolization and it's in very fine print on the back of one of the pages i signed. i owe $8K on a car worth about $6K.

i do worry about getting credit again after all my credits been thru in the past 9 mos

[StartingOver08]

I doubt that the CU would issue credit to you after they have taken any kind of loss - this business of the CU asking you to exclude them in the BK is just wrong. They know that all the debt has to be included in the BK. My CU told me once I filed, no more credit from them because I caused a loss to them. I certainly understand their reasoning. But there are other CU's.

Your credit will recover. You will just need to find other sources.

[mand15]

I doubt that the CU would issue credit to you after they have taken any kind of loss - this business of the CU asking you to exclude them in the BK is just wrong. They know that all the debt has to be included in the BK. My CU told me once I filed, no more credit from them because I caused a loss to them. I certainly understand their reasoning. But there are other CU's.

Your credit will recover. You will just need to find other sources.

thanks for the info, it's sounding like this is my answer. my concern is if the cu can come after me for the car after i file or after the bk is disarchaged? i think my attorney said it we can get them to let me keep the car and continue making pmts and discharge the unsecured loans i should be ok. the whole thing just has me a little nervous because i don't want them showing up at my house or work to repo the car. i aslo don't want a repo after a bk. i know they won't lend me credit again, which i'm fine with. my attorney said to stop making pmts on the unsec debt.

what happens if they agree to discharge the unsec debt and i continue paying the car pmts and at some point go to trade the car in? will they come back after the unsec loans or are they not allowed to do this?

this part is confusing....

[StartingOver08]

The issue you are describing is this:
1) You have unsecured debt and a car loan with the same CU
2) The debts are currently cross collateralized
3) You want to discharge the unsecured and do a ride through on the car without signing a reaffirmation agreement releasing the cross collateralization

If you do not sign a reaffirmation agreement that SPECIFICALLY removes the cross collateralization, then the CU may not ever release their lien on the car. That would be a problem for you even if they let you keep it with a ride through. You would not be able to trade or sell your car because the CU would not turn over the title to you.

You have three choices: one, surrender the car in the BK.
Two, sign a re-negotiated reaffirmation with your terms. Make sure the cross collateralization is removed and that the CU will provide the title to you promptly upon payoff.
Three, redeem the car in a 722 redemption loan.

The CU can not repo the car with a signed reaffirmation unless you default on the terms of the new agreement.
The CU can pick up a car on which you are making current payments, but it is not likely. The problem comes down to the title. Will they release the title to you without the signed reaffirmation saying that they must do so - IMO, no.

[mand15]

I never signed a reaffirmation agreement with the cu. but they have continued sending me monthly stmts on the 2 accts that i included in the bk. since i've been paying on the car the whole time, i think it's time to just give it back and purchase something new.

a friend of mine does car financing thru a big local dealer. i had her pull my credit today and suprisingly my score is 598 and my income is up. she could qualify me for a 14.5% interest rate (better than the 20% most other places quoted me before looking at my credit) with $3K down on a $17K car thru capital one. so i'm hoping to find something in the next week or so and just give the car back to the cu and just be done with it.