Hi all,
I saw somewhere that in 2007 the rules on 1099's changed and it is non-taxable if it came from your primary residence...
Not sure if that relates to anything, just thought I would throw it in...
Tom in Colo
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Chapt 7, Reaffirmation and now in a bind!!
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As mentioned above, what about rescinding the Reafirmation agreement. Is it too late? Would that help? Questions for your lawyer I suspect.
BKDude in CO
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The lawyer could oversee the short sale or DIL as well. DIL is the fastest and cleanest way out. You get out of the house and there is no deficiency to worry about. It's done. Everything is over and done.
It seems risky to me to abandon the sure thing and gamble on beating the lender on the deficiency. Suppose you lose?
short sale/dil = you walk, no deficiency.
foreclosure + fight to get out of deficiency = you pay for that fight and risk losing.
As for the 1099 you'll receive for any amount of "forgiven" debt, that applies to foreclosure as well. You may want to look into the Mortgage Forgiveness Debt Relief Act.
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Hi! Thanks for everyone's advice. I really appreciate it. I spoke to my BK attorney this afternoon. He said had I not signed the reaffirm I'd be good to go on the whole "just letting it go" but since I did sign it, they will pursue. (Obviously)
He told me not to worry about the deficiency if foreclosure is what I opt to do. He said to just make sure that as soon as they serve me w/ the papers to get in touch with him. From what he stated, he can fight the foreclosure to avoid the deficiency down the line. What that entails, I have no clue. Obviously, I pay him some good $$ and he handles the rest.
I'm going to give Chase a call tomorrow and see what the DIL involves and how badly I'll come out of it at the end. Have any of you gone through a DIL process before?
As for a short sale - I never have and never will trust a BANK. They may say they won't report it negatively but one slip up and I'll never get something like that off our reports. CB's are the worst to deal with on minor issues, I can imagine something major like this would be near impossible. I'd have to fight tooth and nail for Chase to go back and correct it. I doubt they'd so kindly fix that after I didn't fulfill my loan obligations. I hate to sound negative but I am far from trusting what a bank tells me. Banks are for profit & that goes for any way, shape or form. They don't care about real people beyond their investors.
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Hi all, Hi FlaAdvice,
If Chase has already been receptive to a short sale, that might be the best way to go. Get them to sign a release or agreement to not pursue the deficiency. They also mentioned not affecting the credit report, that means they report 'paid as agreed' or 'paid, satisfied' instead of something negative like 'charged off' 'up yours' etc.
At this point, Chase holds all the cards, best to negotiate with them, see what they are willing to do....
Tom in Colo
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I would definitely try to talk to a foreclosure lawyer in your area before deciding on anything. They also can offer you some advice, and may be able to provide you with assisting in 1) refinancing 2) working out an agreement early on for a short sale, debt in lieu, etc., or 3) preventing as little blow back as possible should you decide to walk away i.e. credit score hits and deficiency.
When i first considered financial help, i actually first talked to an attorney that specialized in the above listed notes (foreclosure, short sale, etc.). But for the fact that I opted for BK instead, he would have been willing to help me with a short sale, etc. for as little as $600 (probably about a grand once it was all over). in so doing, he would have worked with the lender on refinancing and also working on an agreement once I fell behind that settled a set amount of deficiency (say, X percent of what the estimate difference is, generally pennies on the dollar) so i never had to worry about them coming after me later (even though in our state, they only get 2-3 years to come after you for the difference). He also offered to pad in some legal wording in a settlement that said basically the creditor wouldn't report any lates, etc. if we went the deed in lieu rout on my credit report, thus limiting some of the damage.
It's worth looking into, especially since you did sign a reaffirmation agreement (an attorney may be able to find holes in the agreement you signed and challenge it in court, ya never know).
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Originally posted by FlaAdvice View PostI mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?
Cost of foreclosure+ mortgage amount owed - whatever they get at the auction = what you are going to owe. That is the bill you avoid if you get them to agree to short sale or DIL.
Your credit gets tanked either way.
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DIL, short sales, still take the credit hit, but you are eligible for a mortgage sooner than a straight Foreclosure.
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Originally posted by FlaAdvice View PostI mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?
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How exactly does a DIL work? Do I just call Chase and say "Hi, I'm broke, your won't approve my mod and now I'd like to opt for a DIL"? Which has more pros, a DIL or short sale.
Once before, Chase offered us a short sale and said they'd give us $2k to move on AND it wouldn't affect either credit reports. Is this true about not affecting the credit? I've got the BK and cannot afford a neg marking due to the short sale. I mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?
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Is there anyway you can get rid of the house without going through foreclosure - sale, short sale, DIL? (Presuming you would rather tank your husband's credit than have the lender pursue for deficiency.)
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Mortgage is at approx $216k and according to Zillow the MV is at $174k.
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