chapter 7 and heloc need help badly!

[CCsAreEvil]

1st is with chase and 2nd is with citibank

That's funny. Mine's the reverse.

Well, with the economy the way it is, I think there are a lot of people in this same situation. I've stated it before but in my case: $255k 1st, $110k 2nd. Today, zillow claims $270 for value. Who knows what it would actually sell for.

Also, a quick google claims that no one knows exactly how much it would cost banks to foreclose on a property, but if the 2nd forces, they need to pay off the 1st note in full. The 2nd gets whatever's leftover. Some claim it costs a bank to fork out around $30k up to $50k to process a foreclosure. I've seen others state it can be as little as just $2k. Who knows?

Since we stopped paying on the 2nd, each month we pay on the 1st, it does keep lowering the principal by $400. So, at some point the 2nd will pull the trigger. But I do not see that maybe for a couple of years. And, if they do pull the trigger, we'll just pack up and move out. That's why it's called a ride-thru.

[dumbquestion]

justbroke and bobmango

i think you are right. i am looking at it as my home rather than an investment. sometimes it is hard to seperate from that. i think that if chapter 13 is not an option it looks like i will be giving up the house. i guess i better start figuring out how long forclosure takes.

[dumbquestion]

what is median income? together we only make about 55k per year

[momofthree]

Or you could convert to a chapter 13 and strip the lien. Are you under median income? If so, that would put you in a 3-year-plan. May not be too bad if it means your $175k 2nd mortgage goes away forever.

[BobMango]

I agree with JustBroke. No way this makes sense to hang on to that house given the current valuation and mortgages. We're not through with the recession so figure on further value loss on the property.

Even if you can get the 2nd to agree to 10% to settle, I'm thinking it will take you more than 3 years to pay that off. If you walk away and rent a new place for less than you are paying now, save up as much as you can over the next 3 years and buy a place then. Believe me, you'll be able to buy much more house in 3 years than you can get today.

[dumbquestion]

1st is with chase and 2nd is with citibank

[justbroke]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

Never work out, assume, reaffirm or otherwise refinance $175K of "debt" that your home doesn't even secure. You are thinking about this the wrong way. Do you know how long it will take you to pay the $175K back? Assuming you're just over the median income, that could take... well... 30 years. And, most 2nd mortgages are balloons and usually don't actually amortize correctly.

Sit back. Rethink.

There is no way I'm going to tell you to pay $450K for a home worth $275K. Neither is any attorney in his right mind. The only other plan, I feel, is an "evaluation" of doing a Chapter 13 to strip the second and "not" pay it.

You are somehow personalizing the "value" of the home and you need to start thinking of it as a box that you owe almost twice as much as it is worth. The purpose of bankruptcy is a fresh start. Not to be buried under debt, as soon as you're discharged.

[albacore44]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

yes, Like a few of us here. might i inquire as to who your 2nd is with ??

[dumbquestion]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

[albacore44]

so basicly my lawyer shafted me. if the lien stays then i still can not keep the house unless the 2nd is paid off or settled. my 2nd is 175k 1st is 275k house is only worth 275k. there is nothing to stop the 2nd from foreclosing. i can make the payment on the 1st but not the 2nd. i am only making 1/2 as much money as i was at this time last year.

I wouldent go that far. i guarntee you he did not tell you that you could void the Lein on your 2nd in a Ch-7. What he probably told you was you would discharge your responsibility to pay your loans unless you re-affirm. this is a good thing as it allows you to walk away at any time

[dumbquestion]

so basicly my lawyer shafted me. if the lien stays then i still can not keep the house unless the 2nd is paid off or settled. my 2nd is 175k 1st is 275k house is only worth 275k. there is nothing to stop the 2nd from foreclosing. i can make the payment on the 1st but not the 2nd. i am only making 1/2 as much money as i was at this time last year.

[albacore44]

I'm currently in Ch-7, 341 on 3/8. I plan to stop paying my 2nd after the 341. That is what I would suggest in your case, but save the money and try to settle for 5-10% in a year or so to get a lein release. Right now there is a lot of confusion in the mortgage industry with the 2nds, you will be operating in uncharted waters, but there is always a chance a government program will come along when round 2 of this recession takes hold

[justbroke]

thanks for the info... what is a lien strip?

That's how you lawfully get rid of the 2nd lien in a Bankruptcy. It's also known as a Motion to Determine Secured Status and Avoid Lien.

[dumbquestion]

thanks for the info... what is a lien strip?

[justbroke]

Trust me... don't go into a Chapter 13 just to do a lien strip. It has to be worth it. You need to evaluate how much underwater you'd still be if you stripped the 2nd. if it's still more than 10%, then you should just stick with the Chapter 7... ride-through the first... and consider it paying rent for the next few years.

You really need to sit down and work all the numbers.... is what I'm saying. You need to find the best financial path... forward.