Alternatives to foreclosure

Factual Questions
1

I am a mess, financially. Have been laid off 3 times in less than 2 years and currently not working. My husband is a teacher and makes a good salary but we do not live together. He lives in one condo and I live in the other. He pays both mortgages and I pay all the other bills for this condo, including home owners’ association dues and Indian land lease (yes, my condo complex is located on what is considered Indian land and every month I write them a check). It has gotten to the point where I cannot pay my bills. I guess my question is, do I try to work it out with the credit card companies or should we do something to get rid of the second condo? I ready about this process called “in lieu of debt”. Here’s the brief explanation - “One way to avoid foreclosure to is to arrange a deed in lieu of foreclosure. In this transaction, the homeowner offers to give the lender the deed in exchange for cancellation of the debt.” Of course you have to get a real estate attorney to do this but I was just curious if anyone has gone through this process.

Also, does anyone know what happens if I stop paying the homeowners’ association dues? I would be more than happy if they repossessed the condo. I have a place to live and would just have to move my things out. I know it would look bad on my credit score but at this point I am less concerned with that and more concerned about eating one yogurt and a can of soup everyday because I can’t afford real food.

Not looking for legal advice, just curious about other people’s experiences. Husband does not want to declare bankruptcy so that’s out, unless I divorce him and then I would have no medical benefits (and I am unable to get personal insurance due to many pre-existing conditions). Both condos are in both of our names so it may look like we are living the good life but basically it just means that we are upside down on 2 properties and sinking fast.

What a mess. Thanks for reading such a long post, and here’s hoping some of you can share your stories with me.

2

If you’re sinking, as financial advice, the plan would be to sell one condo. Even if it’s for a loss - it’ll be for less of a loss than if it’s foreclosed.

You can then use the money from the bills on that condo to pay down the difference you’d owe on the mortgage.

There is no magic debt relief and bankruptcy would likely not allow you to keep two residential properties.

3

I feel for you, very much so.

First of all you have to look at where you are going and where you want to arrive at.

Is it bankruptcy? If so plan for this.

Credit card companies are not going to do anything to help you out in terms of missing a month’s payment, or lowering an interest rate or anything UNTILL you’re way behind.

I can see from their point they have no reason to.

For instance, I had been with Bank Of America for almost 10 years. I never missed a payment, they were always sending me offers on other things. I was paying 1.9% on a loan of $3,000. OK Fifth/Third Bank (which I had already but didn’t really use) sent me a message saying "Transfer your balance for free get a year at 0%). I thought great.

Now I had two credit cards with BoA with ridiculous credit limits, each over $25,000. So I was expecting BoA to cut them down no big deal.

So I transferred the $3,000 from BoA to Fifth Third, as soon as the money cleared BoA cancelled my accounts.

See my point, if your creditors know you’re even hinting at trouble they’ll cancel you now. They are under a lot of pressure to.

A credit card company only cares about them, not you. Credit card companies are last on the list, so they know to apply pressure and not let up. If they can add interest and you wind up in Chapter 13, they’ll get 10¢ on the dollar including the late fees and such they tack on.

What you need to do is a what if.

If you fail to pay this bill what happens. If you fail to pay even one credit card after 30 days if you don’t pay it again, it’ll go right on to your credit report and that means it’ll likely trigger every other card to cut your credit limit or raise your rates.

If you miss more than 2 payments your credit is going to go South very fast.

You really need to figure out what you want to do with your assets. If it’s a re-organization you need a lawyer definately. If your house is foreclosed or if your car is repossessed there is little difference on your credit. Check to see how this “lieu of foreclosure” will appear on your credit. If it is only one step above a foreclosure, don’t bother. Bad is bad so whatever way leaves you with more money take

You want to say, OK two months from now my credit will be bad. How do I avoid paying more money into a sinking ship?

First always make sure you pay your rent on your main place. Your situation instantly gets a thousand times worse if you have no where to live.

Credit cards and other unsecured debt go to the end of the line. And don’t let them scare you, all they can do is sue you. Usually a credit card company will call you for three to six months before, writing off the bad debt and sending you to collections. Generally credit card companies won’t sue you, but it has happened. I knew someone Discover (not the collection agency) sued for $500. I still can’t figure that one out.

After the debt gets written off to a collection agency, they will probably sue you and get a judgement. Then they can try to attach your property, job or bank account.

First thing, while your credit is good, open a new bank account, (Smallest amount possible) not anywhere near your home. Creditors will often just send out a huge number of attachment notices to every bank in a 5 mile radius of your home, hoping to hit it lucky.

If you’re in Texas get rid of that bank account NOW. Texas is a state where they don’t attach wages, but they make it very easy to attach the bank account. Which is the reverse of most states.

Anything else you need do it now. Like do cell phones need credit checks? I don’t know but if they do get one now, the cheapest kind.

The bottom line is your credit is going to be shot. You need to figure out what is the minimum you want to retain and then figure out who gets paid and how much to pay them so your not throwing your money to a creditor who you’ll never finish paying out anywhere.

4

Here’s a resource that may be very helpful: HUD Approved Housing Counseling Agencies (this is a California search, anyone else can back up a step and search their state). One of those agencies should be able to answer a host of your questions and might suggest some you haven’t thought of. HUD listing ostensibly means you can have a modicum of trust in the referred agency–that they’re not a scam in sheep’s clothing.

5

Can you rent out the condo and live with your husband?