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Last month I lost my job and in the past six months my husbands income has decreased by 1/2 of what he made last year. He is in the construction industry and sales are down. We stopped making our house payments and just want to walk away. We are upside down in the house as well. We owe $450,000.00 but it would probably only sell for $350,000.00. The first and second mortgage holders keep calling me but I am avoiding their calls because I don't know what to tell them. Our plan is to live in the house for approximately 6 months without making payments until they can foreclose, then we will file bankruptcy. Should I tell the mortgage holders that we want them to know we plan for file bankruptcy and to expect no further payments or should I keep that quiet and let them think we are trying to get it together and catch up the payments?
I am sorry you are going though this. I found a website called bkform.com that is an excellent resource. Check it out as you should be able to get more information on what to do. Good luck!
Wow. What a bunch of bad luck, I do feel sorry about the job loss and income being cut.
Unfortunately you have not done the things that you should have while things were going south -- that would have been the time to talk to the lender(s) and try and work out something that might have been able to salvage your credit.
Unfortunately that time has passed.
I think you should immediately get working on understanding on a bankruptcy filing. That is generally a way to slow the foreclosure and may even result in you keeping your home.
If you really owe a $100K more than the house is worth then you really don't have an equity to worry about, but you may very well be sued for the deficiency even after the lender(s) were to foreclose and not be able to sell your house for the amount you owe.
Doing nothing is NOT AN OPTION. You MUST contact an attorney and understand what a bankruptcy can accomplish.
Talking to the lenders is almost certainly not going to be productive at this point.
BANKRUPTCY STOPS FORECLOSURE PROCESS -- foreclosures always proceed according to State laws, while a bankruptcy is Federal.
To others that MAY be in situation of the OP: NEVER STOP PAYING YOUR MORTGAGES! Always try to get your lender to work with you as your situation STARTS to deteriorate! Try to realize that even the stupidest most brain dead lender has SOME office that they do assign to try and keep paying for a house and/or arrange a short sale, these things have to happen while you are CURRENT on your mortgage and you have options. Once you stop paying you are in a whole different class of debtor as far as the lender is concerned. Your credit is falling off a cliff and they have a whole different set of behaviors to try and get something out of you before you vanish.
It is foolish to think you can ever "catch up" on payment, or to think the lender cares if you do -- once you stop paying and your credit is ruined the lender is going to move to foreclosure. Once they get the filing and judgment your options shrink dramatically.
The OP's "plan" is a recipe for doom -- they need to get an attorney ASAP. Without knowing the state they are in and the speed with which they can be evicted it is incredibly foolish to go another day without getting a competent attorney!
I can see from responses that I wasn't real clear on what my need is. I really just want to know what to tell the lender when they call. Will the foreclosure process speed up if I tell them we definitely don't plan to make a another payment. Does it matter if I talk to them or simply disconnect the phone. We already tried Loan Modification last year when we saw the way his business was slowing down and they turned us down. That process went on for 6 months. We also had the house on the market of 1 year and no bites even close to what we owed on the house. That is why we are in the situation now. We went to an attorney and discussed our options. Presently we also have almost 80,000.00 in credit card debt which has mostly been used for medical bills (my husband had 5 surgeries in past 3 years). Attorney says we still would make too much in State of Wa. to qualify for Chapter 7 but by time January, when there is almost no work, the 6 month average of wages would qualify us. We definitely don't want to file Chapter 13 as we definitely don't want to keep this house. So, my question is, is it better to just ignore the phone calls or to tell them we are "working on things" in order to stretch this out till early spring before they "kick us out"?
Have you at least tried to get the lender to forgive the amount beyond what the house will sell for?
Filing bankruptcy will not force you to keep the house.
With $80K in credit cards and being upside down by $100K on the house you have to go to bankruptcy.
If the lender will accept a deed in lieu of foreclosure and absolve you of the $100K of negative equity that is a good option.
You can't expect anything that you say on the phone to the low level collections /teleresponse people to really change anything.
The lender will file for foreclosure on their schedule and if you have no legal representation the court will have to agree with whatever schedule the lender wants and the state law allows. If that means that they can send a board-up crew out while you are a docter appointment or something that is exactly what they might do...
I would think that NO communication with the lender is worse than telling them you are trying work things out. IMO I would not tell them you are planning on filing bankruptcy as they may decide to stop communicating with you all together. Just be honest, income has been reduced and you are trying everything you can. They can make notes their system and while foreclosure may still be the end result you have bought yourself some extra time.
From my own unfortunate experience (we are in construction as well, small general contractor - no jobs, nearly a year) and as soon as I say we have/had a small construction contracting business - in California, there seems IMMEDIATE understanding of our circumstance. Of course, their primary concern is about the payment(s) due..... and they still want that info.
I've explained we are looking for jobs (with others now), etc, etc, and that I cannot predict my (even near) future budget as a result - I can only say what I can do, and am doing, at the moment; ie, I tell them we are selling some equipment so I ->HOPE<- to make a payment by ____ date.
This has drug on for several months now as we dwindled resources, making intermittent payments. Now we are offered a 6-month, 1/2 payment, government assistance type program of some sort. They have sent us papers to sign, to accept the temporary arrangement.
Speaking of MEDICAL issues - a construction friend that had a heart attack (probably impacted by financial pressures) was given 4 months of waived payments (that go to back of loan). That at least helped them, temporarily.
Speaking to CREDIT CARD folks - we do have a few small credit cards and business accounts. I decided they each get to split $___ each month, and that's what I do. They keep calling and I keep telling them and doing the same thing. Because I'm not making the minimum, they keep calling - but that's ok - best I can do, etc. I plan to settle with them some time in the future (BK or otherwise).
They call and I let the msg go to voice mail. They call me many more times than I call them back, but I try to call each one about monthly - I say I'm returning your call as a courtesy - no new income info - I'm still doing my payment plan, etc.
I did SETTLE one small phone book listing account at 50% off!! They sent me a settlement offer - the kind that makes you 'laugh' under the circumstances. (I had quit making payments to 2 phone book listings in my priority decisions.) Basics = The total account balance to end of contract with late fees was about $900, they offered to waive late fees at payoff of about $700, or a laughable payment schedule. I wrote a nice, honest letter back about our circumstances and why their offers didn't fit in any plausible category. I said the best I can do is $350 payoff at this time. THEY ACCEPTED IT and I luckily had the extra $$ to do it at the time.
Meanwhile, we've also applied through a company that negotiates and BUYS our mortgage (among a pool of loans) and then re-fi's back to us at just below current market value. Honestly, it takes a LONG TIME and is still pending, but *IF* successful will lob off over $100,000 in under-water mortgage, albeit a loan shark set-up as well; but ultimately I hope to get rid of the future tax and foreclosure liabilities, if possible. If not, then it will be walk, rent, and BK. We can only do what we can do. We've pulled the last of the rabbits out of our hat.
So, I'm saying, regarding talking to them, I suggest acting like you are interested in remaining in your property and trying, etc, while you see how things unfold and research and make your alternate plans. The bank doesn't really want the house unoccupied YET at least (with thousands of REOs not yet listed, etc, and many, many more on the horizon). So if you can stay for a while, it may be helpful to both parties (lender and borrower) at least temporarily. I think this may be the "new foreclosure".
Wish you the best under the circumstances in these very 'interesting' and BIZARRE times.
Last edited by Zelva; 08-16-2009 at 12:55 PM..
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about TALKING to lenders, creditors.....
