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Cavanaugh3 · Joined: 22 Nov 2007 Posts: 1 1.55 Dollars($)

Hi,
I know this has come up here a million times in the past. I have posted several months about our situation. We have high bills but with both of us working extra and doing extra budgeting we have been able to make it work.

Now I am sick. I have a tumor on my pituitary gland, and several of my hormones are affected. I don't know how much if any I will be able to work for awhile. I saw a doctor yesterday and it looks like it will be a long haul, not a quick fix.

Now, besides not working or working much less, we will have to add in the medical bills. Our income won't change enough to qualify for state aid, but between the travel for the specialists (we had to travel 4 hours yesterday, in december we have to travel 6 hours for the tumor center), the extra medical bills (many of these specialists aren't in our network and we pay the 30%), extra babysitting for the kids, etc. we have more bills.

We have been looking seriously at selling the house. I find that very stressfull because I am so tired and sick I don't know how I could ever get it ready for sale and keep it 'show ready' with 5 kids and 3 dogs!

but if we did list it, the housing market is very slow around here, here are the numbers, the good scenario and the bad scenario:

Good:
We owe 332,000, house appraised in June at 330K, (yeah, I know stupid tax, this was pre-dave), our monthly payments plus taxes are about 3000. We also have a prepayment penalty which will be 9K. So IF we sold it for 330K and IF we did fsbo, we would still be about 25K short with penalties and closing costs, etc. We don't have that money anywhere, we don't even have room on credit cards, where would it come from? And if we added it into another mortgage, then maybe it wouldn't be worth it?

Bad:

the other houses in my neighborhood with identical lay-outs are being listed between 305-317 (and even they aren't selling right now), so lets assume it sells for 305, that adds on another 15K, for a total of 40K!!! Now what would we do.

We have been calling around and looking at places for rent, but the rent is very high around here too and no one wants to rent to us with the dogs (which we would get rid of if it absolutely came down to it) and 5 kids (need 4 bedrooms with different sexes). The cheapest place we found is $1800 that will consider us, so that would save us $1200 month if we didn't have to add all that extra debt onto it.

Here's the questions:
-we talked with the bank about a short sale. but they tell us if we are current, they don't do that, you have to be 3-6 months behind? That would totally destroy our credit. We could buy another cheap house with our VA for less than the cost to rent, so maybe we wouldn't have to worry about credit for 7 years, but still, we have worked very hard and are afraid we will end up with no place to live.
-what kind of damage does a short sale do? how ugly is that for your credit? it seems dishonest to not make our payments for 3-6 months just to be able to do a short sale?
-what's the difference between a foreclosure? what difference does that have on your credit? Is it worse than going months without paying then doing a short sale? or does neither one matter/

-what about a deed in lieu of foreclosure? My mortgage company said they don't do that, but I wonder how that is different in terms of credit and finances. If we just hand over the deed and walk away, do they have to accept it? do we have to be behind? will that also destroy our credit?

thanks! it's hard for me to even care or think about this since I feel so horrible every day, but I know the time is coming when we will have to make some decisions. We would really like to hold onto the house for 18 months,when the penalty is up and we think we could sell and break even. We thought we'd both work extra, but that isn't going to happen, my husband is having to reduce his hours to help out with the kids and driving me around.

thanks!

jenkin7 · Posted: Fri Nov 23, 2007 12:07 am Post subject:

Hello Cavanaugh,

I understand your situation.

As far as I know, if you can prove your hardship, you may qualify for a short sale. A short sale lowers down your credit points by about 100 points and stays in your report for as long as 18 months to 4 years.
If you are deliberately missing out payments to qualify for a short sale, that is incorrect.

In case of a short sale you are making an attempt to pay back the debt by selling your home on your own but in a foreclosure the lender takes away your ownership rights if you are in a default. Short sale comparatively has less negative impact on your credit than foreclosure as the latter lowers the credit score by about 150 - 200 points and stays in your report for as long as 7 years.

In case of a short sale or a foreclosure, your lender might seek a deficiency judgement where you are liable to pay the outstanding debt. But he cannot do so in case of a deed in lieu. A deed in lieu also has less damaging effects on your credit than foreclosure.

It will be better if you talk clearly to your lender about your present situation and try to work out a mortgage modification or some alternative repayment option. You may, at the same time, list your house with the real estate agents and try to sell it at a reasonable price.

jonofrio · Posted: Fri Nov 23, 2007 12:10 pm Post subject:

I would take the time to consult with your lender and explain to them your hardship. In this enviroment the last thing a lender wants is another foreclosure. They will probably be willing to somehow work with you. I would have all of your docuemntation about your sickness ready to go to prove to them this. Maybe they can do a mortgage modification to try to help you out.

Also consider contacting a non-profit credit agency to get some advice. If you need a contact I can help you, just email me at "jonofrio@whatisyourrate.com" and I have a credit counselor who can at least point you in the right direction.

[Email address deactivated as per forum rules. Thanks.]

Guest

I have one more year left of my 3 in Chapter 13 bankruptcy. I was recently approved for a small credit card at a car repair shop that will be good to help rebuild my credit. I help take care of my disabled mother and make payments of two of her credit cards. I would like to get a small personal loan to pay them off so it would be also working towards rebuilding my credit since I make the payments any way. Do you know of any institutions that would work with me? I could use my car as collateral.

gmakerley · Posted: Wed Oct 07, 2009 11:16 am Post subject:

audrey, that you are currently in bankruptcy is something that lenders will look askance at, in my opinion. for personal loans, there are definitely banks that offer them, but i believe a better option is a credit union. there you'll find that rates may be more favorable and their attitude towards you may be more favorable also, despite the bankruptcy. another option is, of course, finance companies (citifinancial, household, etc.). they are more expensive but there may be some flexibility on their part also.

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