wonder what this would do to my chance of getting a new mortgage in 1 -2 years

[Anonymous]

I posted this on the bk forum but wanted your alls opinion regarding the chance of me getting a home loan in 1-2 years

Here is my story.  My husband and I had a van repossesed in 2004.  Well we received a civil summons 1 week ago stating that we had 20 days or this would be filed with the court-A judgement.  Well I immediately started trying to refi my house and intended to pay them off with the cash out.  But found out today that due to the real estate market that my house that should be worth 105-110000, will not appraise for that because all houses within FHA's 3 mile radius has sold for 80-90000.  I am soooo discouraged.  I really wanted to pay this creditor (even though it was going to cost me close to 7,000.00 in closing cost and fees - I was trying to do the right thing).  We currently live in a house that is not working for us and will need to buy a new on in 1 - 2 years.  I have for the past 2 months been trying to work on my fico scores.  I have not had any late payments in the past 17 months.  I have worked really hard to increase my scores because I knew we were going to need a new home soon.  Now it looks that I might be forced into bankruptcy, to get this creditor off my back.  Which will destroy my scores and  any hope of moving out of this house.  I will want to keep my house of course- and my car (even though it has a 13% interest rate-  I also have a used car paid in full I could drive my husband says keep it).  I have 3 credit cards 1 with care credit balance 4,200 (limit 5000.00) and 2 small cards with bal of  around 300.00 (limits $400.00).  What should I do?  What should I include.  As long as I am going to file, should I not include everything except my house?  What can I do  to get out of this with the least amount of damage. The house and car and cards (all with perfect credit history) are only in my name, the van was in both of our names- but could my husband file BK and the creditor stop  collecting or would they just continue trying to get me? Another option should I call the creditor and try to settle for an amount I think we can pay off in 6 months (about 1/2 of what is owed)  When could I expect to be able to finance a new home?  Currently my scores are TU603- Ex 595- and EQ 613.     

[Anonymous]

Personally I think filing a BK right now would be bad.  You want to buy a house in the near future.  I forsee alot of changes in the mortgage market beyond what has already happened and would not want to put any bets on how long after a foreclosure or BK I would have to wait. I beilieve with FHA you would be looking at 2 year minimum as there doesn't seem to be the extenuating circumstances that may allow a 1 year waiting period.  Even then, by the time you file and everything gets done you would be looking at 30 months - 3 years before being able to buy most likely.   Also, seeing how you feel like you are in a position to buy a house in the coming future,  you should be able to work out a way to pay off this creditor in a decent amount of time.  Call them and work out a settlement offer that is reasonable for both parties.  Be willing to accept the.  Even if it goes to a judgement, pay it off ASAP and keep the rest of your credit clean and in 12 months you are in great shape.  Also, after it is paid off, get it removed if at all possible.

I just don't see filing a BK as a way to make it easier for you to get a house and while I see some leniency for people affected by the subprime mess and stuff, I see the opposite effect for people who had hard times or problems that fall outside of that category.  Also, filing a BKseems to be a last resort, I'm about to loose my house and my belongings situation.  If you are in your mind thinking of buying a house in the near future, filing a BK to avoid this debt is taking advantage of the BK laws in a questionable way as you don;t need BK to keep a roof over your head or food on the table.  To each their own by all means, it just seems to be somewhat questionable as well as counterproductive.

Also, they may not let you keep both cars.  I have heard that during a BK you may only keep 1 for personal transportation.  this may be case by case, I am not sure.

Also, why not sell the use car for cash, pay off the debt as much as you can, and then either save up to buy another or have husband finance the other. 

[Anonymous]

First off, I'm pretty sure that you can apply for a mortgage the day after you've discharged your BK (we ARE talking Ch. 13, right?). I'm 99% sure that I've read that here somewhere ... if not, I'm sorry to confuse the issue.

Second of all, on the issue of keeping both cars, the courts won't force you to give them both up -- or one up. The decision to let you reaffirm them (what it's called in BK when you want to "keep" one of your debts in good standing) will be up to the car loan-holders, AKA whatever bank or finance institution you have the loans through.

If you own them outright, you shouldn't be forced to sell them.

A Chapter 13, is, AFAIK, really, just a court-handled debt repayment program. You'll STILL pay all your bills, they'll just be "spread out" payment-wise -- if you have a, say, $3000 CC bill, rather than have the typical minimum monthly payment, you'll have a schedule of payments to pay it off over three years (or longer if you have "cause" ).

You'll also have to complete a "credit counseling program" with the courts before being allowed to file, AFAIK. They'll want to make sure, considering the lasting negative on your CRs (10 years, I believe), that you've actually exhausted your other options.

Bottom line is that a BK won't be devastating to you in terms of buying a home (you WILL have to wait until it's discharged -- meaning, paid off in full -- usually about three years), or keeping your current one (once you've filed BK, they can't foreclose on you UNLESS it goes to court for the foreclosure FIRST) or keeping your cars.

It WILL be devastating to your credit, though. Far, far, far more than a judgment will be. And there are lenders and creditors that discriminate against BKs.

Have you already answered the summons?? What did you say??? In this situation, as much as I hate saying it, I think I'd get a lawyer to either fight this on a technicality (if there IS one) or to negotiate a settlement in payments. Whatever one can do to make the payments as easy as possible, and to keep their hands out of your wallet or paychecks. Also, if you get a lawyer to represent you, it might be easier for you to have the atty file for a vacation of the suit after it's been paid off.

Message Edited by Wonderin on 08-24-2008 05:03 PM

[Anonymous]

PM me, please. With whatever info you can give me on the pending case.