Here's my story...I bought a home with my ex (fiance at the time) about 5 years ago in Michigan. The original mortgage was for $85,000 with no money down. My ex was listed first on the home and I was the co-signer. The bank told us that in order to purchase the home, I needed to be the co-signer. We were also advised by the bank to get a USDA Rural Development Loan, as it was easy for first time home buyers in areas like ours.
We broke up a few years later and I stayed in the house with my two children. He was not willing to put the house up for sale or try to negotiate with the bank. And since I was just technically the co-signer, the back was not willing to work with me. I couldn't afford the mortgage on my own. The mortgage company offered to give me $2500 to move out, so I did. The bank sold the home for $35,000. I've since paid off my car, credit cards and other debts while trying to move forward in my life.
Recently I received a letter from USDA Rural Development, stating that they paid off the bank the difference between the mortgage owed and the selling price, and I will now owe the USDA $60,000! The letter states that I have 60 days to declare bankruptcy, start making payments, or they'll transfer the debt to the IRS or a collections agency. I have not had any other contact with them.
I have spoken to two lawyers. The first lawyer said that I should file Chapter 7 Bankruptcy and that my case shouldn't be a problem. Since I am currently unemployed and a single mother of two, I have a high debt to income ratio. The second lawyer said that he wouldn't file a Chapter 7 for me. He said that he wasn't sure if the loan was a dismiss-able debt since it is owed to the government. The attorney stated that he would first file Chapter 13, and then if it was decided to be a dismiss-able debt, he'd file Chapter 7.
I am 26 years old and have no means of paying $60,000 for a home that I don't even have. Please advise!
We broke up a few years later and I stayed in the house with my two children. He was not willing to put the house up for sale or try to negotiate with the bank. And since I was just technically the co-signer, the back was not willing to work with me. I couldn't afford the mortgage on my own. The mortgage company offered to give me $2500 to move out, so I did. The bank sold the home for $35,000. I've since paid off my car, credit cards and other debts while trying to move forward in my life.
Recently I received a letter from USDA Rural Development, stating that they paid off the bank the difference between the mortgage owed and the selling price, and I will now owe the USDA $60,000! The letter states that I have 60 days to declare bankruptcy, start making payments, or they'll transfer the debt to the IRS or a collections agency. I have not had any other contact with them.
I have spoken to two lawyers. The first lawyer said that I should file Chapter 7 Bankruptcy and that my case shouldn't be a problem. Since I am currently unemployed and a single mother of two, I have a high debt to income ratio. The second lawyer said that he wouldn't file a Chapter 7 for me. He said that he wasn't sure if the loan was a dismiss-able debt since it is owed to the government. The attorney stated that he would first file Chapter 13, and then if it was decided to be a dismiss-able debt, he'd file Chapter 7.
I am 26 years old and have no means of paying $60,000 for a home that I don't even have. Please advise!