Re: Chapter 7 already discharged - mortgage not reaffirmed - foreclosur
e/credit score question
07-20-2012 08:41 PM
I live in Michigan. I had 2 houses, one in Suburbs and a vacation home "up north". I lost my job in 8/08, divorced in 2/09, stopped paying all my bills 6/09 and went on a "irresponsible binge" for 18 months (boy did I have some fun). WFHM put me on trial period after trial period. Then due to divorce, lost the paper work and I did the trial again. I dragged my feet and delayed as long as I could.
I didnt make a mortgage payment on either house for 18 months, took the money and played golf and had beers. I was reemployed in 6/2010 and started to become responsible again. In 12/10 I asked my ex-wife to come back home. WFHM send us a Home Modification letter on primary house in 1/2011. We both signed it. A week later we filed BK7 individually. WFHM sold the second house in foreclosue 4/2011, no one was at the auction so it went back to them. Michigan law requires a one year redemption period.
Our attorney advised us NOT to re-affirm either mortgage, which we didnt. However, since we were technically "current" on the new modified mortgage, they could not take the primary house from us. We continued to make our payments through the BK process. I then started the process of getting a much better job but attorney advised me NOT to take the new job (paying almost double the salary) until AFTER discharge, which my employer agreed.
So at discharge, we whiped out $75k in CC debt and second mortgages. All I was left with was a $3k state tax lein and $20k in student loans which are totally rehabilitated now. My ex was co-borrower on all my debt as well. We let the second house go through the process as we owed $95k and its worth $50k. They took possession in 4/2012. We could not justify paying almost twice the price for a cabin.
BK7 was the best thing that happened to us. We had to "get over" the moral obligations issue. It took me about 3.5 seconds but the ex-wife needed a beer. Both mortgages show IIB with balance of 0. Attorney told us that a forclosure while in BK will be reported as only IIB. So we used the second house as our vacation home up to the final day. And get this, they paid me $3k on the "cash for keys" program. I could not believe it.
The only problem is that the primary house does not report positive payments. I was a co-signer on my daughter's student loan so that reported through the process. So we both applied and received Cap 1 CC $750 CL, 3 months after discharge. I applied and received a HSBC CC $1500 CL 6 months after discharge. I applied and received a new car loan, (interest rate of 6.9%) 9 months after discharge. I recently applied for a Barclays and was approved at $2000 CL. It is only 1 year after discharge. All CC get PIF.
I spoke to a Mortgage lender about another vacation house. He said I need 2 years after filing date and a mid score of 700 for approval. So I am going to build a log home twice the size of my previous cabin for about $60k @4% instead of a 25 year old cabin $95K @ 6%. So the only negative was the foreclosure notice in the newspaper which is embarrasing.
My attorney told me that we can walk away from the primary house anytime we want over the next 30 years with no "foreclosue" or additional negs on my CR. He said that after the BK comes off the CR, I should keep a copy of discharge paperwork to prove I dont owe the debt.
Overall, my experience with BK7, foreclosure, losing a job, getting a much better one, playing golf everyday, going on extended vacations, all worked out. I just pulled my FICO today and I am at 667. I have 6 months to get to 700.
MyFICO '08 JUN2014: EQ=700, TU-688
MyFICO JAN2014: EQ=704, TU=720, EX=708
MyFICO MAY13: EQ=701, TU=708, EX=705 (Lender Pull).
MyFICO JAN13: EQ=701; TU = 677) 2 years after filing BK7, 18 months after discharge in JUN11
MyFICO (SEP12: EQ=677; TU=670) 16 months after discharge BK7.
MyFICO (JUL12: EQ=671) 13 months after BK7.
Wallet: NFCU Rewards: $25K; Cap1 QuickSilver: $2250; Barclays Apple Rewards: $2000; Cap1 Rewards: $1500.