BK to elminate 1st and 2nd mortgage?

[sweat puddle]

Re-posted from Foreclosure thread:

First, let me say that this website has provided me with some hope and support--just knowing that I'm not the only one going through these problems.

Here's my situation:

I'm single and own a condo. I am moving to CA for a new job in February. I need to leave my current job (before then), which I would do anyways due to a highly stressful and toxic atmosphere--been there for 12 yrs and have been on anti-depressants and anti-anxiety medication from the situation of working with a nutcase dictator boss.

I owe 167,000 on the 1st mortgage. The condo is only worth about 170K, and it's been on the market for 2 months at 175K. I live in New England where the housing market has really cooled off.
I owe 32,500 on a 125% 2nd mortgage which I had to take out (at 12%) due to a medical procedure (repair of scars on face from accident).

I've contacted the 2nd mortgage company, saying that I don't want to go into foreclosure and I'm willing to work with them on an alternative. They mailed me some papers, which I filled out and faxed back to them last week (my income, expenses, bills, credit cards, etc). they haven't gotten back to me yet, so I'm kind of just hanging, fearing the worst.

Let's say worse comes to worse (or is it worst?) and I simply "walk away" from the condo. Just get in the car and drive to CA in February. Will I be in trouble? I know my credit will get trashed--but will I face legal trouble as well?

Someone in another forum mentioned filing for chap 7--the only issue is that I make over the Massachusetts median: I make 58K and I believe the median is about 48K. I am in the "red" by about 300-400 a month, so maybe that could push me into a 7?

Anyone been in this type of situation that can provide some advice??--I'm in over my head and full of worry.

Thanks in advance!
Sweat puddle

[SinkingFast]

If you're walking on the house, you cannot annualize forward those mortgage payments on your Means Test for BK filing purposes.

When you move, you use the Median Income of the State you move to, but you have to use the Exemptions of the State you're moving from. We're going thru the same thing ourselves.

The Median for a family of 1 in CA is $43107/yr. It looks like your current salary would be in excess of the Median there as well unless you have more people in your family or other dependents you claim.

Also, having 2 mortgages makes working with the Lender(s) more difficult. With one mortgage, the Lender is more likely to work with you on a Short Sale or a Deed In Lieu of Foreclosure. Since you have 2 mortgages, it could be tricky getting both to agree to take less in order for you to sell your house.

And that's sorta where you were headed with the paperwork you filled out for the Lender of your 2nd. Kinda like when you applied for the mortgage in the first place, only in reverse. They are trying to guage your income vs your expenses to see if you can afford to pay the payments. If not, will you qualify for some sort of program with them. Forebearance for a while to give you an opportunity to sell. Short Sale where they will take a reduced amount to help you sell the house.

Remember,.......... Your lender is a debt collector. Any information you give them, they can turn it right around and use it against you. The same types of info you give them to prove you cannot afford the payments is the same info you gave them to prove you could pay the payments when you took the loan. If you've only had the loan a short while, the lender can claim you obtained the loan under fraudulent pretenses. Not trying to scare you that something will happen. Just this is the type of thing they can do.

You really need to chat with 2-3 BK attnys and get opinions on what your options are. Maybe call and schedule some Consults. Generally Consults are free and you'll learn a lot.

Also, when you talk to your Creditors, be very careful what you do tell them. They are debt collectors looking for any tidbit of info to nail you.


I saw that you had this same thread in a couple of different Sections. I took the liberty of deleting your other thread. You're more likely to get the most responses with your question posted in one place. This is the more suitable Section for this type of question.