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Old 07-25-2008, 08:17 PM
 
5 posts, read 13,921 times
Reputation: 11

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Im aware that this is not the typical forum for this discussion - but I read posts often w/o commenting and there seems to be a lot of knowledge out there on this board. So maybe you can help?

I am considering declaring bankruptcy. Not that long ago we were a 2 income family doing pretty well. We bought a house 5 yrs ago, so we paid little compared to what prices rose too. Kids were in private school and we have 2 cars, vacations. Nothing extravagent but we were doing well.

Then I was laid off 18 mos ago. I got another job, 4 mos later, at a pay cut but it's work. I'm old school and don't like hand outs. Well, 2 months ago I was laid off from there. I have not been able to find ANYTHING in the past 2 months. I've sent out over 1200 resumes and I have a strong background but nothing.

In this time my wife became ill and was on disability and FMLA. But that ran out. She went back FT just to keep us above water, but she was too sick and cut her hours to PT, that is until her company closed 6 months ago. Now she just got a FT job in a less demanding field. I am working 2 PT jobs but both we're making about 50% of what our income had been 2 yrs ago... with inflation and gas increases....

Most of the $ we have in savings is gone, the kids are now in public school and it was very hard on them (don't roll your eyes, it's all they knew for a long time and they were so happy, it was like leaving a family.). We sold one car, we've sold most of our valuables. We're behind on most of our bills and our mortgage. Neither of us are losers and have never taken any handouts. We would have never thought that this would happen to us but it has.

That is our abreviated backstory. We are considering declaring bankruptcy. I was wondering if anyone knows anything about it in NJ. Will it protect our home on any level? That is our main consern at this time because we don't want to have to change the kids schools again. Any advise will be welcomed.
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Old 07-25-2008, 08:25 PM
EB2
 
Location: Florida
1,925 posts, read 6,349,121 times
Reputation: 1067
Taking handouts won't make you a loser...

in fact, sometimes you just have to choke on your pride a little more than "declaring bankruptcy" - why not try finding financial assistance if you can.
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Old 07-25-2008, 08:47 PM
 
5,340 posts, read 13,932,960 times
Reputation: 1189
Man, that's a bad situation. I have a neighbor who declared bankruptcy several years ago and was able to save their home, however, the bankruptcy laws have changed since then. Otherwise I'd be happy to pick his brain for you.

I really think you should talk to an attorney if your situation is that dire.
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Old 07-26-2008, 05:15 AM
 
Location: Stewartsville, NJ
7,577 posts, read 22,575,334 times
Reputation: 1260
Hey OP
Thank you for sharing your story. So many people who are as comfortable as you were don't realize that this can happen to them as well. I would do whatever you have to do, including filing for assistance before you opt. to declare bankruptsy. That will stick with you for years to come. I would sit down with an attorney or a financial adviser first... see if they can put you on a budget..they will talk to your credit card companies and see if they can get you on a no interest payment plan. Most credit card companies would prefer this to you filing for bankruptsy. You really need advice from a professional. And you also need to file for assistance...you can't be too proud when you have children involved. I hope everything works out for you...hand in there and don't give up!
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Old 07-26-2008, 05:52 AM
 
9,124 posts, read 36,325,985 times
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There's no homestead declaration in NJ, so if you file for bankruptcy and include the mortgage, they're going to take your house and put you on the street. You can exclude some debts from the bankruptcy filing, so it's possible to keep the house if you're able to work something out with the mortgage company, which you probably can- trust me, they don't want your house right now- they've got plenty of others to deal with.

As an alternative, would it be possible to sell the house and turn even a small profit? If so, perhaps you could use the profits to pay off some other debt, carry you for a while, etc., and you could rent an apartment.
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Old 07-26-2008, 09:25 AM
 
5 posts, read 13,921 times
Reputation: 11
Thanks for the info guys. You know, we've exhausted a lot of options already. We bought our house for $280,000. It was worth about $450 at the peak of the market, but now it is valued at about $360. That doesn't mean it would sell for $360 if we have to sell fast but that's a ball park estimate. We took out a home equity loan a while back to try and get by - assuming I'd be getting a job much sooner - but that is yet to be. So right now, with the 1st and 2nd mortgage, we owe about $265. So it we sell for say $340, take about $20k out for realtor commission... so you are at $320... take out lawyer fees (what the heck are they now, I'm assuming at least $10k, but maybe more?) so say $300 to play it safe. Well, that would leave us something.

The other issue is our credit is in the crapper now because of all this. So finding an apartment would be tough - you think?

What an exceptional mess. Like I said we did all the right things, worked hard and saved and here we are. We don't really have other options. We were the ones in our family that made it. Our family members never even owned homes. None of them can help us out.

I am going to have to speak to a lawyer, irony is you need $ for that too. Hopefully a little faith and humor will get us through.
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Old 07-26-2008, 10:02 AM
 
Location: Stewartsville, NJ
7,577 posts, read 22,575,334 times
Reputation: 1260
Quote:
Originally Posted by needhelpinnj View Post
Thanks for the info guys. You know, we've exhausted a lot of options already. We bought our house for $280,000. It was worth about $450 at the peak of the market, but now it is valued at about $360. That doesn't mean it would sell for $360 if we have to sell fast but that's a ball park estimate. We took out a home equity loan a while back to try and get by - assuming I'd be getting a job much sooner - but that is yet to be. So right now, with the 1st and 2nd mortgage, we owe about $265. So it we sell for say $340, take about $20k out for realtor commission... so you are at $320... take out lawyer fees (what the heck are they now, I'm assuming at least $10k, but maybe more?) so say $300 to play it safe. Well, that would leave us something.

The other issue is our credit is in the crapper now because of all this. So finding an apartment would be tough - you think?

What an exceptional mess. Like I said we did all the right things, worked hard and saved and here we are. We don't really have other options. We were the ones in our family that made it. Our family members never even owned homes. None of them can help us out.

I am going to have to speak to a lawyer, irony is you need $ for that too. Hopefully a little faith and humor will get us through.
I would get the house on the market ASAP... Try to snag those buyers trying to get in before the school year starts. List it below value for quick sale... your realtor should be able to advise you on that. Then I would contact a debt consolidation company first..see if they can help you out before you contact an attorney. Here's one I found on-line but there are hundreds of them out there. Debt consolidation community: 115,000+ people already helped for free
You should be able to rent...you'll have money in the bank after you close - your credit rating should go back up again after you close on the house and satisfy all your debts through the home sale.
I wish you the best... this economy is hurting alot of good, decent, hard working people.
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Old 07-26-2008, 12:47 PM
 
5,340 posts, read 13,932,960 times
Reputation: 1189
Quote:
Originally Posted by wileynj View Post
I would get the house on the market ASAP... Try to snag those buyers trying to get in before the school year starts. List it below value for quick sale... your realtor should be able to advise you on that. Then I would contact a debt consolidation company first..see if they can help you out before you contact an attorney. Here's one I found on-line but there are hundreds of them out there. Debt consolidation community: 115,000+ people already helped for free
You should be able to rent...you'll have money in the bank after you close - your credit rating should go back up again after you close on the house and satisfy all your debts through the home sale.
I wish you the best... this economy is hurting alot of good, decent, hard working people.
Yeah, so much for the "mental recession." Good luck to you OP.
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Old 07-26-2008, 02:39 PM
 
5,616 posts, read 15,494,187 times
Reputation: 2823
Quote:
Originally Posted by needhelpinnj View Post
Thanks for the info guys. You know, we've exhausted a lot of options already. We bought our house for $280,000. It was worth about $450 at the peak of the market, but now it is valued at about $360. That doesn't mean it would sell for $360 if we have to sell fast but that's a ball park estimate. We took out a home equity loan a while back to try and get by - assuming I'd be getting a job much sooner - but that is yet to be. So right now, with the 1st and 2nd mortgage, we owe about $265. So it we sell for say $340, take about $20k out for realtor commission... so you are at $320... take out lawyer fees (what the heck are they now, I'm assuming at least $10k, but maybe more?) so say $300 to play it safe. Well, that would leave us something.

The other issue is our credit is in the crapper now because of all this. So finding an apartment would be tough - you think?

What an exceptional mess. Like I said we did all the right things, worked hard and saved and here we are. We don't really have other options. We were the ones in our family that made it. Our family members never even owned homes. None of them can help us out.

I am going to have to speak to a lawyer, irony is you need $ for that too. Hopefully a little faith and humor will get us through.
I actually think the home equity loan is a recourse loan, in otherwords no getting out of it!!!!
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Old 07-26-2008, 02:45 PM
 
3,269 posts, read 9,919,853 times
Reputation: 2025
Quote:
Originally Posted by needhelpinnj View Post
Thanks for the info guys. You know, we've exhausted a lot of options already. We bought our house for $280,000. It was worth about $450 at the peak of the market, but now it is valued at about $360. That doesn't mean it would sell for $360 if we have to sell fast but that's a ball park estimate. We took out a home equity loan a while back to try and get by - assuming I'd be getting a job much sooner - but that is yet to be. So right now, with the 1st and 2nd mortgage, we owe about $265. So it we sell for say $340, take about $20k out for realtor commission... so you are at $320... take out lawyer fees (what the heck are they now, I'm assuming at least $10k, but maybe more?) so say $300 to play it safe. Well, that would leave us something.

The other issue is our credit is in the crapper now because of all this. So finding an apartment would be tough - you think?

What an exceptional mess. Like I said we did all the right things, worked hard and saved and here we are. We don't really have other options. We were the ones in our family that made it. Our family members never even owned homes. None of them can help us out.

I am going to have to speak to a lawyer, irony is you need $ for that too. Hopefully a little faith and humor will get us through.
You're going to be ok! But looks like you are going to have to sell your house. If you can sell for $340k you will have about $50-$60k profit after fees etc. If you can sell by owner you can save another $20k. How much other money do you owe? If it's less than your profit from the house DON'T pay everything off and leave yourself broke. Keep 6 months living expenses in bank savings account and start by paying off the highest interest debt first. Have you called your credit card issuers and asked them to lower / freeze your interest rate? You said you sent out a lot of resumes - all in this area or to other states as well? Maybe this a chance to start over in another place. Don't worry about moving your kids again - they are pretty resilient and will be fine in the end.

I don't think you will have a problem renting an apartment with bad credit, especially if you have enough for a larger deposit. Is there anyone you can live while you build back up again? A year living rent or mortgage free can do wonders for the bottom line.
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