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Military.com Forums Finance Money Matters and Finance Bankruptcy vs. foreclosure of spouse house|
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New Member |
My husband is applying for OCS and I am very concerned about a situation I find myself in and how it may affect his future career. The short version of the story is-through naivete and predatory lending practices-I ended up on a home mortgage that I cannot pay for. Several lawyers have advised me to file bankruptcy to avoid losing the house, but others have advised me to let the house go to foreclosure because I am trying to sell it anyway. Both foreclosure and bankruptcy are hugely damaging to credit I know. My main concern, however, is I want to know if my financial issues will hurt my husband's chances of being accepted to OCS and/or potential future assignments. He is not on the mortgage loans, but he is listed on the title. When the notices come to the house, they are always addressed to me and the mortgage companies involved will not talk to him-only me. The house also does not show up on his credit reports. Does anyone have any knowledge about how this might affect him career-wise?
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Lead Moderator Finance Forums  |
I would just let it go into foreclosure. That will only effect one tradeline on your credit report, not all of them as a bankruptcy would. Since his name is not on the loan then it will never show up on his credit report.
Paul See my profile for contact information |
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New Member |
Hello again!
I'm relieved to hear that it won't show up on his credit report, but what do I do when I know (given the market in our area) that if I let it go to foreclosure then the mortgage companies will come after me for the difference between the loan amount and the amount bid at the auction(in this case probably 100-200K)? There's NO WAY I can afford to pay that and I'm afraid that I'll just end up declaring bankruptcy anyway. Thoughts? |
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Basic Training |
JST
In a slow or declining housing market, lenders don't want the house back, so often they will work with buyers, and may be willing to convert your loan to interest only or even reduce your monthly payment into 'reverse interest' or capitalized interest loans, which, like an unsubsidized Stafford student loan, will simply take the amount of interest underpayments and add them to your principal. Of course, for this to work for you, you'll need a future of grwoing income so that you'll eventually be able to make the full P&I payment. But it sounds like it may serve your interests better than a straight foreclosure. You'll need to contact your lender to see if this is even an option. And yes you are correct, a foreclosure may have the lender coming after you for the net difference between what the lender got after the house is auctioned and the loan balance. I've read where some lenders allow homeowners to do a home 'short sale', where the lender will take whatever you can sell the house for and forgive the remaining balance of the loan. But this can be equally undesirable, as the IRS will then consider whatever this shortfall is to be ordinary income that will be taxable to you. FG |
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Basic Training |
And one other point I forgot to mention. You might want to check with a bankruptcy attorney about a Chapter 13. Under this form of bankruptcy, your debts are not erased. Instead, they are reorganized at a rate you can afford. You must have a steady income to do this, but if you can, the creditor is generally required to take the payment that is determined. This is often used with credit card debt, and I'm not sure about mortgage debt.
BTW, a note to the moderator. My above post was signed as IRA_Gal. Not sure who that is, but it sure ain't me. Financialguy |
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Lead Moderator Finance Forums |
Financial Guy- Try loging all the way out and then log back in to the site.
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New Member |
Thanks for the advice. I've got an appointment with a bankruptcy attorney this week. The lender is not willing to do a short sale because I have an 80/20 mortgage-hence two mortagage companies make short sale near unto impossible. It's a REALLY complicated situation. Most of the professionals I have talked to (outside mortgage people, lawyers, real estate agents, etc.) are stunned at how the mortgage was done in the first place. My primary concern is my husband's ability to get the MOS he wants (within the realm of the needs of the Army of course). I can deal with the financial as needed.
I don't know how Ch. 13 would effect mortgages either, but I'm sure the attorney will have information on that. I hate to pay someone bucks to help me through this, but after the mistakes that have been made in the past year-I'm almost afraid not to seek legal advice. Anyway, thanks for your input. I'm also open to any other thoughts/suggestions anyone might have on this topic. I can't be the only one in this situation.....Thanks again! |
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"Has Been 2" Grumpy, Sarcastic, Self-Absorbing, Obnoxious, Intolerable, Pugnacious, Outspoken, Opinionated, Contemptuous, Indifferent, Exacting, Evil, Loner, Lost.... - Missing - *Remains: Not Found... |
Perhaps it was relative by the name of Lynn C. Miller, who happens to live in WA? -USMCvet This message has been edited. Last edited by: usmcvet, |
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Lead Moderator Finance Forums |
If you are going to do the bankruptcy then do it as a Chapter 7. With what you have said here, a Chapter 13 will only make matters worse.
Paul See my profile for contact information |
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New Member |
Suggest you contact, "Deleted" on how to legally set up a Trust. Then set the house in your Trust. This way, your Trust takes the loss and not you.
Edited for content-USMCvet This message has been edited. Last edited by: usmcvet, |
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New Member |
Edited for advertising by MortgageGuru
This message has been edited. Last edited by: MortgageGuru, |
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"Has Been 2" Grumpy, Sarcastic, Self-Absorbing, Obnoxious, Intolerable, Pugnacious, Outspoken, Opinionated, Contemptuous, Indifferent, Exacting, Evil, Loner, Lost.... - Missing - *Remains: Not Found... |
[QUOTE]Originally posted by efto1:
QUOTE] Do it through e-mail ONLY!-USMCvet This message has been edited. Last edited by: MortgageGuru, |
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Lead Moderator Finance Forums |
Putting the house in a trust will not do 1 single thing for obsolving you of the liability through a bankruptcy.
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New Member |
"DELETED FOR ADVERTISING" invests in real estate and because we cannot be everywhere
we are now leveraging our time in order to do more deals. To do this we are utilizing experienced Realtors across the country who will partner with us in a Joint Venture and who will be our eyes and ears on the ground in your area. What we bring to the table is the money. What you bring are your resources. (The MLS, your telephone time, fax machine, etc.) The goal is to find motivated sellers, purchase their home and then resell them to buyers who have less than perfect credit. In many cases we can finance 100% and include closing costs. This program will make you a ton of money IF you work it. Our objective is to be in and out of the transaction as fast as possible. Once acquired, we have sold some homes in as little as 5 days using this program. Some Realtors are making in excess of $250,000 and more per year by leisurely working this program and perhaps you can be one of the next ones to do so. Our program has been proven to work in all 50 states and is VERY easy to do IF you are motivated and are a self-starter. As you know, Realtors come and go all of the time. In order to stay in the business you have to produce. Our program will help you produce. Your split will be 50% of the net profit for each transaction paid at closing and you will be paid within three to five days of the close of our sales. You are required to use this program as taught. Trust us, it works. You will have to STOP being a Realtor during some phases of the process but you will function as a Realtor in others. At no time will any fraudulent or untoward processes be tolerated or accepted. Integrity is VERY important and your reputation and license are valuable. The most important thing to remember with this program is that you are NOT selling homes. You are selling FINANCING. Anyone interested should contact Larry at This message has been edited. Last edited by: MortgageGuru, |
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"Has Been 2" Grumpy, Sarcastic, Self-Absorbing, Obnoxious, Intolerable, Pugnacious, Outspoken, Opinionated, Contemptuous, Indifferent, Exacting, Evil, Loner, Lost.... - Missing - *Remains: Not Found... |
Edited for content. This is a Financial forum, not a political one.-USMCvet |
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Member ------------------  Proud Member Derelict Veterans Group ------------------  |
Once any bank or mortgage company even mentions foreclosure, get an attorney to protect yourself. I recently thought I was working out a mitigation arrangement with my mortgage company and while we were negotiating, they were setting up for foreclosure- even had an appraiser sneaking around the property. My next notice from them was a Deputy with a foreclosure notice. Protect yourself!
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Military.com Forums Finance Money Matters and Finance Bankruptcy vs. foreclosure of spouse house
