new to forum... need some help please

[SoScrewed]

Ok guys & gals as the title states I am new to the forum. I've been reading posts here for about a month and this seems like a great place to learn and gain valuable knowledge from experienced people. Ok, without making this too long here goes:

Details of my situation:

In 2005 my wife and I decided to move from Florida to Georgia (BIG MISTAKE) even though my salary was going to be lower here because we thought we could make a killing on a spectacular "McMansion" we found at a great price in a country club. We bought the house knowing that we could get by for a few years and if we needed to we could sell it and get out with some cold hard cash!
As it turns out, we have now been trying to sell this house for nearly 1 year and not one person has come to see the house. Our realtor has even told us that we might not even be able to get what we paid for it. I've lowered the price drastically and still no luck!

We had a 17K savings account that we figured we could use to carry the house while on the market. Needless to say it is now gone! We also decided to take out a HELOC about 8 months ago to help us pay off credit cards that were killing us at the time. Additionally, we also incurred an extra 7K in personal loans trying to carry the mortgage out longer thinking that the house was going to sell soon and we would pay it off right away. Now it's gotten to the point where we can't even break even. We'll have to pay 30K or more at the closing table to sell the house which we do not have.

So here are my questions:

1. Can I do a "deed in lieu of foreclosure"
2. I've been told that I will not be able to get a job in insurance if I file bankruptcy. Can this be true?
3. Would it be better for me just to let the house foreclose and pay off all my other debt?
4. What are the future implications of filing bankruptcy vs. letting the house foreclose and just paying off all my debt on my own? We are not late on any car payments or credit card payments. We just recently stopped paying for the house and are 2 months behind.

Money situation:
our salary: 75K/yr
our monthly expenses: $6,600/mo
Net monthly salary: $4,800/mo <--you can see why our savings is gone!
Mortgage payment + HELOC = $2,800
My interest in just letting the house foreclose is due to question #2 above. I am currently going to school for an advanced degree in Math, thus incurring more debt. If I cannot get a job afterwards then I must find another way besides bankruptcy....

Thank you so much for reading all this crap! Any help would be EXTREMELY APRECIATED.

p.s. I already spoke with a lawyer, he wants 4500+ to file my case! WTF? He does seem to know his stuff though...

[Walnut]

Can you do a short sale? We did that and sold short $50,000 in 2005. Also, find a cheaper attorney. That is STEEP!

[SinkingFast]

Generally, you can't do a DIL or a Short Sale with more than 1 mortgage on the house. Rarely does a primary Lender allow the 2nd to get paid anything, let alone in full. So the 2nd won't sign off on the Deed to transfer a clean title.

Also,........... Many States have laws where the owner is not responsible for a deficiency balance on the primary mortgage. That's not the case with a 2nd. Once the underlying security interest, the house, is gone, the 2nd becomes a totally unsecured debt that the owner is responsible for.

You don't say if you have kids or not. So unless you and your wife have 4 kids, you are gonna be over the Median filers. While that attny's fee sounds steep, it may not really be so outrageous.

Many times, with BK, you get what you pay for. If that attny can get you thru a Ch 7, it may well be worth every penny spent. BUT, I would suggest you Consult with several more attnys before you decide which one to hire.

Job discrimination based on your having filed BK is illegal. Doesn't stop employers from giving another reason for not hiring you. Your current precarious financial condition could be as big a road block as filing BK in respect to getting another job.

Should you file??? We can't answer that one for you.

We can give you information and offer suggestions to help you make an informed choice. But the choice is yours.

[oldbaddebts]

If you are considering letting the house go to foreclosure, I would consider first just paying the primary mortgage and let the HELOC fall. Definetly pay the mortgage before credit cards. Credit cards can annoy and pester you, the mortgage can take your home.

Yes, the HELOC can foreclose, but they would have to pay the first to get it, and they aren't going to knowingly pay more for a property than it's worth, they would only loose more. So, paying the first (who would foreclose if behind enough) would get you some time.

Then I would lower the price some more, maybe offer a "Selling Agent Bonus" of 1-2k to give an incentive to get the place looked at. Get some offers, and take them to both mortgage companies and work something out.

If the offer is more than the first and less than the second, you may be able to short sale the second, if it is less than the primary, you may be able to negotiate turning the second into an unsecured loan, being that it already is cause they can't foreclose and get their $ and/or negotiate it down.

You didn't mention how much cc debt or other debt, but it appears this house is way out of control. Like others, I won't guide to or away from bk, that is your decision. BK is worse than foreclosure, but your credit may be bad anyways.

The numbers you discuss, it looks like the house is the majority of your problem, if you can get it caught up, or use a forebearance or such to buy some time while you dedicate every waking moment to selling and clearing the mortgages, you might get most of the relief you need without filing.

In any case, good luck to you, and we are all here to bounce ideas around and help where we can.

[SoScrewed]

Thanks for all the replies. To add to my post above, we don't have kids and we really just want to get rid of the house. I honestly think that if I listed this house for 100K under appraised value it would sit there for months.
Also, that lawyer seems to insist on doing a 13. Is it up to him to decide that or does the means test determine which chapter you qualify for? He did mention that now all UST are being more aggressive in contesting every single Ch 7 case that goes through means test. Is that really new? Isn't that the way it has always been? I understand that the means test looks back at the past six months to determine my disposable income by using allowable expense figures.
I don't understand what would be the benefit of doing a 13 to:
A) lose the house-we can't offord it anyway
B) pay off my 11K CC debt
C) and to put the icing on the cake, after A & B I would still ruin my credit for years!

do I have that correct? Is that basically what 13 boils down to? What is the benefit of 13?

[SoScrewed]

oldbaddebts:
good thinking. I really don't know much about mortgage/banking industry but I'll talk to my agent and see if we can work that out. I know the HELOC is directly taken out of my account. Is that going to be a problem?

[SoScrewed]

Just for more info on the neighborhood and the current market conditions here in ATL:
I bought my house for 351K in 2005. 7 months ago the builders lowered their inventory houses 90K to below the price I paid in 2005 and those houses which are comparible to mine are still siting there for sale!!!

[SinkingFast]

Under Old Law, the Means Test did not exist. According to attnys we Consulted with, they pretty much screened Filers and knew who could go Ch 7 and who would have to file Ch 13. Now the Means Test decides that issue for the Courts.

The fee the attny quoted is high even for a Ch 13. But in a Ch 13, the attny is supposed to be with you the whole 5 years. You're over the Median of $50,376/yr for a 2 person family so you'd have to with a 5 year plan.

There are Schedules Allowables expenses. Here's a link to the Means Testing information website:

http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

If you're gonna file Ch 7, you'd complete Form B22A. Ch 13, you'd complete Form B22C. There's hyperlinks at the top of this page to both forms:

http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

If you wanna get a rough idea of where you'd stand, there's an online Means Test Calculator. You answer some questions, plug in some info, and the calculator will tell you where you stand.

http://www.legalconsumer.com/means-t...ator/index.php

That calculator is quick, dirty, and fairly accurate, but you'd have to have an attny run a Means Test to verify the results.

[SoScrewed]

SinkingFast: YOU RULE!

[SinkingFast]

oldbaddebts:
good thinking. I really don't know much about mortgage/banking industry but I'll talk to my agent and see if we can work that out. I know the HELOC is directly taken out of my account. Is that going to be a problem?

Without telling your Lender what you're up to, you'll wanna change from auto deduct payments to paying by mailing in statements ASAP.

THEN,............ Don't close that bank acct. Leave it open.

Instruct the bank not to authorize any more auto debit payments to that Lender. Open a new acct, maybe even with a different bank for your regular banking business. Then let your balance in the old checking acct dwindle down to the lowest mimimum you're allowed to have to keep the acct open.

If you do wind up filing BK you do not want to close your current bank acct. When you file BK you have to declare all bank accts closed within the last year prior to filing.

[Beach Bum]

$11k in CC debt? That doesn't seem like much? With your salary you could pay that off pretty quick.
Just let the house go into foreclosure and let the bank have it. It will ding your credit, but you'll be free and clear of the burden (1st & 2nd). It's just a place to live.
Just rent someplace for a few years until this housing downturn bottoms out and by that time you'll be able to save enough to buy again, probably for alot cheaper too.
In your case it wouldn't make any sense to get yourself locked into a 3-5 year CH 13 for a mere $11K.
Look at this as an adventure, a way to try something new and live somewhere different.

[SoScrewed]

I know, I was thinking damn I have been paying this huge house note for almost two years. I could just let this place go and pay off that debt in a few months. I just don't know what looks worse on your credit long term. A bankruptcy or a forclosure?

[SoScrewed]

will my score be higher in say 3 years from now if I have a bankruptcy on there or if I just pay off all my cards and let the foreclosure stay on my credit? How long does a foreclosure stay on your credit anyway?

[lrprn]

will my score be higher in say 3 years from now if I have a bankruptcy on there or if I just pay off all my cards and let the foreclosure stay on my credit? How long does a foreclosure stay on your credit anyway?

Both bankruptcy and foreclosure can remain on your credit record for seven to 10 years. As far as the impact of both on your credit score, if your current score is high, then both hit credit scores hard. However, if you've been struggling financially for quite some time, the hit on your credit score can be small because it's already so low.

The worst combination is to have a foreclosure then a bankruptcy later, or a bankruptcy with a foreclosure later. When the two aren't close time-wise, then they are seen as separate events and you get the double whammy hit on your credit score....something to avoid if at all possible.

[lrprn]

"Never take the advice of someone who has not had your kind of trouble." - Sidney J. Harris

I think Mr. Harris is a wise man, and I also think you are just trying to make trouble here. You can believe whatever misguided and incorrect information about bankruptcy you've been fed by the creditor media machine - we know the truth because we've lived it and you haven't. Kindly please move along and share your "wisdom" with a more deserving forum (and this will be my last post to any comments you make in the future). I encourage our other members to not take the bait - it only encourages this kind of self-righteous poster to get more outrageous and inflamatory. This person is not worth one second of your time.