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Posted: Sun May 04, 2008 5:20 pm Post subject: Not sure what to do

I'm trying to figure out the best thing to do for our situation. We are in bad shape financially now. We got 2 months behind on our house payments, and are currently in a repayment plan. I only agreed to the repayment plan out of desperation, in hopes that I could get money out of my 401K to get us caught up. However, it looks like that might not be an option now. My mortgage payments are normally $1200, but they are going to be $1700 until August, as per the repayment plan. Also, our credit cards are maxed and are at high intrest rates. We are also behind on almost all payments (including "regular" bills). We also have a loan out for $7,000 that I got due to maternity leave. Those payments are $240/month and are currently current, because they come out automatically. Our bank account got extremely bad last week, as it was approx. negative ~$2100. It's now back on the positive side, but there is only about $75 in the account now, and we don't get paid for another 2 weeks. I'm hoping to get the tax stimulus payment ASAP so we can surrive for a little while, and make some payments on bills.

I'm not really sure what the best thing would be to help us get out of this situation. We currently owe more on our home that we could sell it for. Plus, it's a condo, and those are not selling right now. Our neighbor has had hers on the market for over 1 1/2 years, with no luck. Also, our loan is a VA loan.

I wouldn't mind giving up the condo. My thought would be to rent something that costs less, so we can build our credit back up. Or will our credit be so ruined that it wouldn't matter anyway?

Any suggestions would be greatly appreciated.

Posted: Sun May 04, 2008 5:21 pm Post subject:

I forgot to mention that we are also about 6 months behind on our condo fees and haven't paid the yearly subdivision fee that was due Jan 1st. There hasn't been a lien put on our condo yet.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Guest,

Welcome to the forum.

If you cannot make payments even after going for the repayment plan then again you should inform the lender that you are having problem to make the payments. See you cannot do Deed in lieu on your own. The lender needs to accept it. So talk with the lender and see if he can accept it.

Feel free to ask if you have any further questions.

Best of luck,
Larry

jenkin7 · Posted: Mon May 05, 2008 12:15 am Post subject:

Hello Guest.

Now as you are having problem and cannot sell the property, DIL is a good option to choose. Though it will affect you credit report to some extent but you can avoid the deficiency judgment and the Tax on the forgiven debt. So consult with the Bank and go for it.

nhlbluesgirl · Joined: 05 May 2008 Posts: 2 2.01 Dollars($)

Thanks everyone! I am the OP.

I have a few more questions. My husband and I went over our monthly bills (based on the original mortgage payments) and realized that we don't have enough money at the end of the month. We have enough to cover our bills and make minimum payments on our credit cards, but very little left after that. It's definitely not enough to survive on. Plus, if we had anything that wasn't a regular expense come up, we couldn't pay it. This also isn't budgeting in the yearly expenses, such as subdivision fee, personal property tax, etc. Some of you mentioned Chapter 7 bankruptcy, but I'm not sure that would help. Since it's only on unsecured debt (which I assume is only credit cards), it would save us much. The minimum payments on our credit cards is approx. $200ish/month.

Is Deed in Lieu of forclosure the same as voluntary foreclosure? I'm debating on if it would be better to do a short sale or voluntary foreclosure. Does a bank have to approve a voluntary foreclosure? Does it hurt your credit as much as a regular foreclosure?

I think that if we rent somewhere for cheaper monthly, it would help us rebuild our credit. It would be a slow process, but this would definitely be a learning experience!

If the lender doesn't approve a short sale or voluntary foreclosure, than I have no idea what to do!

nhlbluesgirl · Joined: 05 May 2008 Posts: 2 2.01 Dollars($)

I've also read somewhere that with a VA loan, the VA will pay the lender the difference of the short sale price to what we owe. If so, will it still go on our credit?

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi nhlbluesgirl,

If you can short sell then it is surely better and the lender will also recommend that but if you cannot sell the property then only you can request the lender to accept the deed in lieu.

"Does a bank have to approve a voluntary foreclosure?"
Yes I have said it before that if the lender does not accept the deed in lieu then you cannot do it on your own. And I think "voluntary foreclosure" is also called deed in lieu. This also affects your credit same as foreclosure but you need not to pay the deficiency judgment in case of DIL.

BTW I have not heard anywhere that VA will pay off the lender the deference after short sale.

Best of luck,
Larry

JuanHdez · Posted: Wed May 21, 2008 10:53 am Post subject:

You have some great questions.

I would recommend that you speak with both a Real Estate and Bankrupcy attorney immediatly. You mentioned that you have a VA loan and VA insures the loan however the govt. might just go after you for the deficiency. You are in pretty bad shape from the looks of it and a BK might just help you out. I believe you should consult the advise of some attorneys and consider the pro's and con's of the different options. ASK A LOT OF QUESTIONS until you understand the consequesces of the actions to be taken.

Best o' Luck

J

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Not sure what to do