Please, I need some help.

[Goodgrief]

I will try to keep this short(famous last words)

Setup: House worth 90k ish Owe 105k ish. I Live in Ohio.
Lost my job year ago and been hanging on barely. I have moved in with a relative and left my city as it was ranked 365th out of 365 to find a job(forbes magazine). I am currently 1 1/2 month late on my mortgage and already have gotten a certified letter. I actually paid them 3/4 of the payment. I was planning to file Bk until I got 15k inheritence which will only bide me time and won't cure my ills. It will however let my family eat and live for about 6 months until I secure employment. I now have to wait at least 1 year to file ch7. I am trying to sell my house but it doesn't look promising. I might have to let it go if I can't sell it. I talked to fidelity about doing a short sell but they said that I would have to list it for 3 months with a realator which would put it into the hole even more.

Goals:Truthfully I could care less about the house. I just don't want them to get a hold of our small nest egg.


Questions:
1.) Is my bank account safe? Can my mortgage company(fidelity) take the money out of my account(no auto w/draw, but I do pay on line)? if so do they have to get a judgement first?
2.)If my house goes into foreclosure How does fidelity know If i have money in the bank. The money will be partly cash and partly bonds from relatives IRA.
3.) Until I file ch7(if I do) How long and for how much (if any) am I on the hook for with fidelity?
4.) is Ohio a recourse state and what does that do to me?

Has anybody been through this? Does anybody have any suggestions? I am just trying to bide time for me and my family. I mean its all about survival.

[DeadManCrawling]

Open a new bank account IMMEDIATELY if you are having auto withdrawals for Fidelity. WIth a bank that is unconnected to anyone you owe money to, especially Fidelity. Check this and double check this. It will preserve your nest egg and allow you to learn how they can hurt you. If you do nothing else, do this.

Deposit your money in the new account, no other.

Then read the forums,

Then you have time to breathe. . . . and learn.

The hard work is ahead, but not impossible.

[eddiep]

have you checked to see what the median income is for your state and family size? 15k is a lot of money if you have another source of income, but if you dont than you may still be able to file.

[Goodgrief]

have you checked to see what the median income is for your state and family size? 15k is a lot of money if you have another source of income, but if you dont than you may still be able to file.

We have to wait to file a year for other reasons(medical) and unfortunately we have no other income at the moment. We are just trying to get by until this economy turns around. Jobs in my area are scarce(even min wage). We have no auto deduct, but we have paid them electronically out of our accounts.

My dh asked in another forum about deficiency(sp) judgements against us by fidelity. I was wondering since we have PMI insurance will that help close the gap on what the hosue sells for and what we are on the hook, also we trying a short sale, but if that doesn't work we were considering trying to negotiate with fidelity to just give them back the keys in lieu of foreclosure or judgement. we just want out of this place. We have another place rent free in another city that we can use until 1 of us finds a job. I just don't want to wake up, check my account and see all my money gone.

[2xBK]

I just don't want to wake up, check my account and see all my money gone.

This is exactly what will happen if you leave the money in the Fidelity account.

[Goodgrief]

This is exactly what will happen if you leave the money in the Fidelity account.

no, fidelity is the mortgage holder, 5th 3rd is the checking account. I have no other accounts with fidelity, just the mortgage.

[eddiep]

First the bank will have to foreclose on your mortgage and that will take a few months. I would think that this could be a long drawn out process for the bank to finally get to the point where you are responsible for any deficiancy, and what money you have will be mostly gone by then. And any deficiancy you eventually become responsible for would be discharged once you file bk.

You never mentioned whether you have cc debt and if you are paying on that. That would be the most immediate threat to you, they are more likely to make a move on your savings account in the next 6 to 12 months.

[Goodgrief]

First the bank will have to foreclose on your mortgage and that will take a few months. I would think that this could be a long drawn out process for the bank to finally get to the point where you are responsible for any deficiancy, and what money you have will be mostly gone by then. And any deficiancy you eventually become responsible for would be discharged once you file bk.

You never mentioned whether you have cc debt and if you are paying on that. That would be the most immediate threat to you, they are more likely to make a move on your savings account in the next 6 to 12 months.

thanks for the reply,
Yes we do have CC debt(about 45k), but we are current on all our accounts(so far). We have been reading up on debt settlement with CC. Unfortunately from what I have read, to get the best settlement you need to be down 120 days. This is just one big stressful mess. I don't blame anybody but ourselves. Well, We didn't really have any say over the economy, but we could have been better prepared for it(financially). We have a small 401k and have considered using that and the cash we are getting to settle our debts. The house is of no use to us as the job market in Toledo is rated the worse in the U.S. by Forbes.

If we can get the cc debt paid down it will give us breathing room and maybe we won't have to file ch 7. I like most want to pay our debts but we need to think about our personal preservation (survival) first.

[eddiep]

I know that it is tempting to take money from 401k but that is not a good idea! Don't do it!

[Ifonly]

Don't take the money from the 401K esp. if you know that bk is probably in your future. My dh and I took a hardship withdrawal of almost $30K from his 401K because we were so desperate to hang on. I was working then and we thought we could see a way out. Well, that was a waste (20/20 hindsight) and we ended up owing the IRS another $4,500 on top of the $32,000 !!! we had already paid in. Being an accountant, I knew I would get killed in the taxes but even I underestimated. We used that money to catch up the mortgage, catch up cc payments, all things that no longer matter. Oh well.

[Goodgrief]

Don't take the money from the 401K esp. if you know that bk is probably in your future. My dh and I took a hardship withdrawal of almost $30K from his 401K because we were so desperate to hang on. I was working then and we thought we could see a way out. Well, that was a waste (20/20 hindsight) and we ended up owing the IRS another $4,500 on top of the $32,000 !!! we had already paid in. Being an accountant, I knew I would get killed in the taxes but even I underestimated. We used that money to catch up the mortgage, catch up cc payments, all things that no longer matter. Oh well.

yes, I know taking 401k is last resort. BUT, if I can insure the mortgage company won't file a deficiency(sp) judgement agianst me, AND I can settle the credit cards, then My troubles are over. I know those are big IFs. but here are my thoughts below. any input would be greatly appreciated.
1.) Either way I will stop paying my CC's soon , and I have read that around the 120 day mark most cc companies are willing to settle for much less than half. So I would be able to pay them. If they won't then I will just go ahead and file ch 7.

2.)Since I have Pmi insurance, The mortgage co is at a better position to recoup their money, and I wouldn't be on the hook for as much. I have done some extensive research on "produce the note" and "cash for Keys". I am going to use these as a bargaining tool to walk away from my house and have a letter from them stating they won't pursue a deficiency judgement. \

Those two issue are my only concerns and would wipe out all my debt and let me save the BK card for another day(hopefully not ). I do realize my credit will be trashed the same or worse than a BK, but I can get that cleared up within a couple of years. Plus, I can "try" to keep one of my credit card open for emergency purposes only.

[Ifonly]

Just make certain you consider the tax consequences. Not only would you have the taxes and penalties from the 401K but you would have the taxes on the "forgiven" amounts. IMO, owing the IRS and the states is worse than owing anyone. They charge pretty excessive interest and penalties (almost worse than cc, if that's possible)

[poorold]

PMI does not absolve you of the responsibility to pay the entire amount due.

I believe the PMI company gets to go after you because the motgage companies claim gets subrogated to them.

you should make an appointment with an attorney or three and get some professional advice on your situation.

and a tax person if your intent is to negotiate settlement payments with cc companies that will result in you receiving 1099-C's.


btw, when you get 120 days late, the cc companies may settle for 30% of what you owe them.


and don't even THINK about touching your 401K.

[Goodgrief]

PMI does not absolve you of the responsibility to pay the entire amount due.I believe the PMI company gets to go after you because the motgage companies claim gets subrogated to them.
you should make an appointment with an attorney or three and get some professional advice on your situation.
and a tax person if your intent is to negotiate settlement payments with cc companies that will result in you receiving 1099-C's.
btw, when you get 120 days late, the cc companies may settle for 30% of what you owe them.and don't even THINK about touching your 401K.

401K Is the last resort if I am unable to declare bk. I was hoping for around 30% to 40% on the cc settlements. That would take them down to aroun $8k Which is managable.

Question: Has anyone successfully gotten the CC companies to forego the 1099 c? I am just wondering if its even possible.

[LuciluS]

401K Is the last resort if I am unable to declare bk. I was hoping for around 30% to 40% on the cc settlements. That would take them down to aroun $8k Which is managable.

Question: Has anyone successfully gotten the CC companies to forego the 1099 c? I am just wondering if its even possible.

HHM, A Moderator, has an Excellent post regarding 1099s'. In his post, he states it is Illegal for a company to Not Issue a 1099 and it is Illegal for the Debtor Not to report the defiency (sp?) on his/her Tax Return unless insolvency can be proven.

If I were in your shoes, I would stop paying on the Credit Cards now. I don't believe you will be able to get ALL of your CCs to settle and then you would have just thrown the money out the door.

Schedule some free consultations with Several Attorneys and meet with them with documentation showing your Income vs. Expenses (less the credit card payments). Think you will be surprised at what they will say.

We stopped paying on All but one CC (balance transfer in Aug. so made 3 pymts. per Attorney) late last Sept. at the advice of our Attorney. We've paid our Attorney in full and answered the phone, at the beginning, giving them his name and phone number. We've received about 4 collection letters & Attorney said ignore them. We will be filing 9/30/09.

Luci