new/help with weird situation

[blncd1]

I cannot find any help with our situation. we are currently seeing a bk attorney but want to put it by you guys who are "neutral"!
Ready? Here it is:
1st is 575,000 (approx. who knows with added fees)
2nd heloc 241,000
so total about 876,000.
3rd heloc 51,000
41,000 unsecured debt.
House is worth 900,000. so here is where it's sticky. it's seems it's in the interest of the banks to foreclose because they can get there 1,2, and 3 and drive us out the door.
according to this attorney, who we have not committed to yet, but will see what they can do, they can strip the 2 and 3 and we can pay the first only. from everything i have read you cannot do this. so it will be interesting to see what he says when we talk details.
Dilema 2. kids private school.....we will NOT give this up, it's not prep college by any stretch of the imagination, it's a solid, educational school that is not expensive compared to other private schools in the area and so much safer than public school.
It just doesn't seem that chapter 13 is in our best interest.
our story is longer, i.e. loan mod hell for 2 years, default, rescinded, bank promising loan mod only if we give them a chunk of cash and make forbearance payments....you know the story.....ha, ha, ha they screwed us royally, took our money and have given us a loan "mod" of 6 months then back to original terms....so here we are.....
short sale is a rip off, we get nothing and less time than foreclosure. the lawyer is suggesting sitting, and declaring bk 13 right before foreclosure....i am terrified.....if we have to pay all 3 house loans it's basically the same as now, minus the approx 800 a month in cc payments. 800 savings??? is it worth it?
is foreclosure the only answer to bank money, but lose the house. we wanted desperately to keep the house, but realize it's out of our hands now.
any advice? thanks, tired, and worn out.

[momofthree]

Why would you need a short sale if your home is worth $900k and you owe $867k? You should be able to sell the house and start over again.

[blncd1]

Why would you need a short sale if your home is worth $900k and you owe $867k? You should be able to sell the house and start over again.

with realtor fees and other fees it goes way past that amount, we would need over 956,000 and we won't get that.
plus with the bank taking ALL of our savings promising a loan mod we are flat broke with no savings. so we need time to save cash. we want the house but it just does not seem like it can work.

[DebtEnder]

I don't see how the 2nd and 3rd could be stripped as it sounds like they could be at least partial secured by the value of the house.

You might get away with the 3rd once you roll in sell fees and whatnot. But that 241k, assuming your house is worth even close what you think it is still secured somewhat and would not be stripped. At least I would think they would fight it if you tried if not outright denied.

With that big a house note is chapter 7 and the means test a possible option? State you intend to keep the house and just let it go afterwards.

[justbroke]

I do not see a lien strip working in this situation. The 2nd and 3rd liens (or any other subordinate or junior/inferior liens) would need to not have even $1 in security from the value of the home. This appears to not be the case here.

I'd go back to the attorney and politely ask how he can strip the junior/inferior liens when they are wholly secured or partially secured. I think you could get the 3rd lien stripped, but the balance on the first mortgage (not including any "potential" sales costs) would need to be more than the value of the home to strip all the junior/inferior liens.

[DeadManCrawling]

I would get a few more appraisals.

Nothing is certain in this market, and the numbers are more art than science.

[Flamingo]

You mention you want to desperately keep the house but yet it seems you don't want to make other cuts in your lifestyle to try to keep it. In your situation it's what you can actually afford and it appears you cannot afford your house at this time. Many find it hard to give up a lifestyle when they can no longer actually afford to keep it up and facing that is difficult. We all go through denial. Right now it appears you are not under water with the house and the market is slowly turning around and prices are rising in many areas. As suggested above, get another appraisal or two and if you have not yet retained this attorney, get another consultation, Best of luck to you.

[blncd1]

thanks all! yes denial is rough. we had a realtor come by already so the appraisal must be close. we know we cannot afford it anymore, our fault. but i think we are so angry at the banks for continuously lying, taking our money, etc. and the pure fact they took all of our savings then gave us nothing leaving us with no rental income.....so we need a strategic exit at this point....house is gone i am sure.
chapter 7? hum, maybe? yes house gone, maybe clear debt and have savings? not sure i will ask the att. i'll read more about 7 on the forums. it's not fun.

[debtinohio]

I'm assuming there is pretty high income here to support private school and a 900K house? This could end up as a 100% unsecured payback to a CH13 while surrenduring the home.

If you could convince a trustee of all your expenses and keep the home on the means test a 7 might be possible. But this assumes keeping all leins.

1 of 2 things need to happen, give up the private school or give up the house. Sounds like you care less about the house. Is a 900K house really in that bad of a school district? I realize that sometimes high-end properties are in poor districts due to them being close to inner-city, so perhaps.

[blncd1]

I'm assuming there is pretty high income here to support private school and a 900K house? This could end up as a 100% unsecured payback to a CH13 while surrenduring the home.

If you could convince a trustee of all your expenses and keep the home on the means test a 7 might be possible. But this assumes keeping all leins.

1 of 2 things need to happen, give up the private school or give up the house. Sounds like you care less about the house. Is a 900K house really in that bad of a school district? I realize that sometimes high-end properties are in poor districts due to them being close to inner-city, so perhaps.

Yes, income is fine. you are right, school versus house, that's easy. yes, it is very nice neighborhood near the water and downtown, so highly desirable for working people and those wanting a view. However, with bused in kids from near the border most of the local kids go private. sad we are 3 blocks from the high school and 2 blocks from the elementary school.
it's the state's lack of educational funding and low parental involvement in the public school system....here, that makes us go private....and i am NOT talking about the snobby private, we have those schools too, i am talking catholic school with wonderful educational opportunities and high parental involvement.
The liens are what i think will kill us in 7. we have faxed the info to the bk office. after reading some posts i really don't want to go down the bk road, it scares the heck out of me. i would love to be on a budget, and pay debt but what happens when you have an emergency.....groveling to a trustee sounds so humiliating at our age.....yes we got our selves here, but maybe the humiliation of foreclosure to wipe the debt away and losing a house/neighborhood we will never afford again (because we bought in a down swing in 2002) would be better than worrying about an emergency and going to court over it.
i guess it is "which humiliation would you like with that order lady"!!!! i need humor at this point
if i could warn anyone about the evils of pushing your credit limit and the lying and evil ways of banks i would.
lesson learned..... in the school of hard knocks.

[debtinohio]

Yes, income is fine. you are right, school versus house, that's easy. yes, it is very nice neighborhood near the water and downtown, so highly desirable for working people and those wanting a view. However, with bused in kids from near the border most of the local kids go private. sad we are 3 blocks from the high school and 2 blocks from the elementary school.
it's the state's lack of educational funding and low parental involvement in the public school system....here, that makes us go private....and i am NOT talking about the snobby private, we have those schools too, i am talking catholic school with wonderful educational opportunities and high parental involvement.
The liens are what i think will kill us in 7. we have faxed the info to the bk office. after reading some posts i really don't want to go down the bk road, it scares the heck out of me. i would love to be on a budget, and pay debt but what happens when you have an emergency.....groveling to a trustee sounds so humiliating at our age.....yes we got our selves here, but maybe the humiliation of foreclosure to wipe the debt away and losing a house/neighborhood we will never afford again (because we bought in a down swing in 2002) would be better than worrying about an emergency and going to court over it.
i guess it is "which humiliation would you like with that order lady"!!!! i need humor at this point
if i could warn anyone about the evils of pushing your credit limit and the lying and evil ways of banks i would.
lesson learned..... in the school of hard knocks.

We're all in this same spot, it's difficult, it's humiliating, I hate it. With that said, it's how it is but at least with BK 7 or 13 there's an end point and you can start over again.

Our income was $150K/year and we were pushed into a 13, our house was appraised at $278K for the trustee and we owe $272K on a 1st only which is good considering it was a 100% financing loan in late 2007. With all expenses I attempted to qualify for a 7, but all attorneys I talked to were resistant to filing a 7 so I gave up and took the 13 plan for 12% payback, keeping the house. Good thing is 240K unsecured debt, car, RV, etc will all be done in 5 years. The car and RV were longer than 5 years left to pay anyway, lol, but their payments were raised in the plan to pay them off in the 5 years.

Talk to a few attorneys, present your case honestly to them and see what they say.

[blncd1]

DebtinOhio,
If there is any "you are lucky" phrase here, it is for your unsecured debt. our problem is the secured debt of the 1, 2 and 3rd. yes, the unsecured 40,000'ish is really ugly, but it's the secured that keeps us trapped in debt. selling outright, can't do, short sale gets you no time and a tax bill, but foreclosure buys you time and a tax bill. if we had savings the short sale would be the option, but the banks took that.
bk 13 at the end of a foreclosure will remedy everything. is it worth it to lose your freedom for 40,000? i guess we all question the "freedom" word in our situations. I am just glad i found people to talk to without judgment or a hand in our pocket book, this forum is a true blessing.

[NoMoreCards]

If you lose the house to foreclosure, that is not the end of it without filing BK. They can (and usually will) come after you for the shortfall of the remaining balance of the loans after selling the place.

So if you owe 930K, they sell it at auction for 800K, they can and will still come at you for the remaining 130K

At least that is my understanding. I suspect you already know this, but I wanted to make sure you keep this in mind while you are figuring out what is best for you.

[blncd1]

If you lose the house to foreclosure, that is not the end of it without filing BK. They can (and usually will) come after you for the shortfall of the remaining balance of the loans after selling the place.

So if you owe 930K, they sell it at auction for 800K, they can and will still come at you for the remaining 130K

At least that is my understanding. I suspect you already know this, but I wanted to make sure you keep this in mind while you are figuring out what is best for you.

Oh yes, i understand. if they get 800 our 1st is 575, 2nd 241, 3rd 50 so it covers the first, second and some 3rd. do you think they will come after 10,000 or so? worse case yes, but then we are bankrupt after foreclosure and that solves that problem because it became unsecured for the remainder?
trust me it's in the banks best interest to foreclose.