I was also concerned about my second mortgage as they can come after you for the balance owed. Most people will try to convince you they won't...But they can and will for years to come. I was able to settle my second at 15% of the balance. This was an awesome deal as most will settle 20-50%. Sounds to me that 17k is a good deal you can make a counter (which I did) and they can stick with the 17k or accept/compromise on lower amount...Maybe try 10-12k. Worst scenario you accept the 17k move on and know they can't come back after you for the difference.
CAUTION - Make sure when you settle with mortgage company or CC companies you get a letter stating they will not pursue additional collection and the amount they are accepting is considered paid in full. Some will try to scam you and in small print note they can come after you for deficiency later. Also, I live in WA and a law was passed this year that you don't have to claim 1st or second mortgage write offs as income so no taxes. I believe this is federal and covers all states but double check. Best of luck sounds like you are on the road to financial freedome!
My lawyer is going to cost me $2000. That is including the mandatory classes you need to take before filing and all the other junk related to filing. I think that is pretty good. Better than 100k or even the 17k the collectors are asking for. She is great and I feel comfortable with her. I don't need to look for anyone else or anyone more affordable.
Thank you all very, very much. You have been a great help to me and I'm sure others that have kept reading this thread. Nancy, I hope you are still reading this and you have made your own decision in this matter. 2009 is going to be a better year for me. I'm glad I am taking care of this now. Please keep this thread going. I will still check it and help out any way I can.
Thanks again, Sean and others.
Good luck, everyone!
The credit counselors from the cccsoc seem reputable but unsure really until I can talk to them. I still have an appointment with them on the 28th....we'll see what happens....
Talk to you all tomorrow....I hope Nancy is reading all of this...
Yes, I told him I had a problem with him wiping me out with taking every dollar of my credit cards. Because as we all know, 17k on credit cards will turn into triple that amount with monthly payments. He claims since its available, its spendable and fighting that I don't have that kind of money is....I forgot what he said....but basically false.
The collector was non-threatening (of course, I know this because its the law) but he was trying to corner me into making a decision by this weekend and that 17k was probably all they can accept. Is it true he still negotiates this offer with the banks or is he really just telling his boss what he offered? And honestly, he over estimated my available credit and it probably really amounts to less than 10k. I explained that I can't get any help from any friends or family and I obviously can't get a co-signer on a loan. I would just be fine if it was 10k or even maybe 15k. His explanation is that he has never seen a bank (esp Wells Fargo) go less than 20% of what I owe. He says that my offer of 10k is not reasonable....then he goes back to my available credit. BUT, he still asks me what I can give right now.
Don't worry. I know to speak to professionals, but I like to gather info from here and other resources before I see one. Because, these days, everyone wants money. Whether it is a bk attorney or the collectors.
My concern is....is negotiating even worth it or is bankruptcy a better option....if credit card debt (which isn't alot) and this 100k debt is all I have....won't it all be wiped off in I file for bankruptcy? Than I'm just looking at 10 years of bankruptcy on my report.....correct?
I would really like to wait after I do my taxes to see what I really owe this gov't. But, I'm sure the collectors don't want to wait that long.
I called CCCSOC (Consumer Credit Counseling of Orange County). They can help you with your financial problems and such. I won't explain it all here. But you can look it up at cccsoc.com
I did tons of research thru HUD and this great resource on you debt and collectors that are calling you. Go to the link below...
I'm not sure I did the right thing by calling the collectors myself but I just was calling them to tell them I had an appointment with a counselor (Jan 28) to fix this situation. Unfortunately, he told me they do not work with Credit Counselors, but when you settle your large debt with the collectors, cccsoc will help you with your final debt.
Remember, my 2nd loan that the collectors are trying to get from me is a little over 100k. Of course, this guy was able to keep me on the phone and try to settle with me. I ended up being on the phone with him for about 40 minutes. We went back and forth about everything. This is what he ended up offering...(this is after my initial 3k offer...haha...I tried!).
These collectors have your actual available credit information. He was telling me that I have at least 17k in available credit and if it was ok with the bank, they could possibly settle for that, no tax consequences. Of course, that is totally wiping me out but a bit better than 100k. Am I jumping the gun here? Is it wrong for me to believe that is a good settlement?
Well, of course I didn't settle even though the guy was trying to convince me the banks will most likely not go lower. They tell you to seek help from others or to even take out a loan for what you settle, which I think is ridiculous since they won't give me a loan in the first place. But of course, the solution is a co-signer. Who the heck wants to co-sign a loan with a person who is 100k in debt already?
I told the guy to give me the weekend to decide.
First, of all....my question is....does anyone know the tax consequences on a foreclosure? Tax season is coming up and I'm not sure if I can settle for 17k or lower if I am going to get charged for taxes on a foreclosure. Also, my association went unpaid and racked up over 3k. They never came after me, but was wondering if they will later. And last, what about my property taxes? I didn't pay my last two which probably is about 8k I didn't pay out. Sorry to dump my finances on everyone but just curious if anyone knows the answer to all of this. The 17k sounded more of a relief until I though about all the other stuff I may owe.
Please let me know if I any of you think I am doing the right thing or if I just screwed myself....I ended up having a break down on the phone with the collector!!!
I am taking the advice from everyone here at this site.
Sean has been a very big help. I understand completely that I still need to speak with a professional attorney etc. who is trained and knowledgeable about this stuff. It is comforting to know that this info is coming from personal experience.
I am going to call several people regarding my situation. For example, counselors, friends, attorneys, other agents, even someone like Suze Orman!! I am taking notes and comparing them.
I won't settle until I feel I have collected enough info and can trust whomever I choose to help me with my situation, whether it be a mortgage attorney who can help me settle or bankruptcy.
Nancy, Sean is right. There is always a solution to any problem. This one may result in bankruptcy for me and you, depending on what you decide, but I feel comfort in knowing if I choose that route, I won't feel as overwhelmed with my debt.
This is what I am doing for 2009. I am not going to fight, sue, or make it any harder for me. I just want it to be over. I could care less about my credit score. There is nothing you can do. I am in the process of buying a new car (my lease is up on the car I have now) and I am worried but know that they are giving cars to people who are in financial crisis or even bankruptcy. We all know how the auto industry is at the moment....
Also, although I absolutely appreciate the advice, please refrain from telling Nancy and I or others what we "should have done" or this....."Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now". It's too late for this information. I get enough of this stuff from my Mother.
We obviously know this already. Our morale and esteem is low as it is. Please ask or read through the thread so you understand why this route did not work out for myself or maybe even Nancy.
Thanks again, especially, Sean. Good luck Nancy. Please keep us updated on your progress as I will too. Try to have a Happy New Year!
The whole story is this:
I put my house up for short sale. I got an offer almost right away. I accepted of course. We were waiting to here from the banks, as I know it takes forever, and eventually I was told the banks just let it go to foreclosure. I find it hard to believe the banks would do that but I hear it happens. So, I never intended to "walk away" from my home. I wanted to negotiate thru a short sale. The house said it was up for auction but i have been told the title is in the banks name. I was told the 2nd was going to get the shaft and that was it. I didn't know they would be able to come after me. I'm pretty scared and am wondering what happens now. So I get it now that I am responsible. So, there is no other way out of this debt unless I file bankruptcy or speak with an attorney? Why does the 2nd loan work like that? Is there no more negotiating when it is given to collections? The debt in over $100,000.
To go after the lender for predatory lending sounds like a pricey ordeal. If you have any to spare for ALL of us going thru the same situation or if it happens to be less than what I am paying in bankruptcy fees or it is all put to an end within 6 months....please, by all means, let me know.
Question getting old refers to the number of times this comes up on this site. No offense TPlease.
The bankruptcy attorney is something that better served you prior to foreclosure. But do ask her to have the loans evaluated for affordability and excess. If the loan is predatory and the amount of financing exceeds what you would qualify for - that is the toxic piece of the puzzle.
How can a lender commit a crime and then come after you for repayment? You also lost an asset valued less than what you owe. Thatâ€™s assuming basis in the property is above the price determined at trustees sale. That amount is a charge against capital gains. Whereâ€™s the tax issue friend? Ask your attorney and reply back please, so readers can have confidence for information provided to you to date.
Thanks so much and good luck!
Web Reference: http://www.borrowerhotline.com
Thank-you and I wish you the best, Dunes (Keep us informed on how it goes) Thumbs up!
Your basis in the home is higher than the trustees sale price. That means you owe more than the house sold for. ..correct?
you have a capital loss issue versus a gain - Do you want to really get mad. 1) second is likley proven to be a predatory (illegal) loan -thats what we do - establish standing for you and your attorney in court. so it cannot enforce. 2) if there was a TS sale below your combined purchase nd carry - - - and they did not cure the f irst - 3) is there an issue with proceeds of loan and ordinary income. yes but has "nodda godda ding " to do with your second charged off to a LOSS.
Be careful to know who the credit counselors work for. They can be fantastic, but their bread is often buttered by creditors, so keep in mind that some are really there to help creditors minimize losses in a "consumer friendly" way.
If I were in your situation... I'd hire an attorney that can assess the situation, explain the impact of a bankruptcy and file a BK if need be. Then I'd advise the collection agency I've retained legal counsel and further correspondence should be directed to him/her.
You're sitting on $100K debt with collectors trying to get as much as they can, most likely no regard to your future. While message boards are helpful, it's not a situation you want to go through alone. Hire counsel.
The tax consequences of forgiven debt are more complicated, and I'm less familiar. There are a number of exceptions, including there possibly being no tax liability if you were insolvent at the time of foreclosure. Find a good accountant to review your specific situation - no generic answer on the internet is going to be sufficient IMHO.
I'd still recommend getting a BK attorney - and giving him instructions to try to settle it before filing. Offer the BK attorney an extra $500 if he can get you a good settlement. The debt collector will have a tough time arguing with your attorney when he says there isn't the money there and that he has a BK ready to go if they don't accept your offer. Debt collectors definitely know that something is better than nothing.
The part of the "Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now" was written, so possible friends, relatives or readers might benefit from this information... So many people have no idea what short sale is and are walking away from their homes without knowing about their options.
Buying new cars on credit is part of the big problem Americans face now, so in my humble opinion, don't even consider it... Simplify your life, don't keep on borrowing more money... I strongly recommend Suze Orman's books! Have a few in my own library, and read all of them.
Happy New Year!
Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now.
To my best knowledge, Debt Relief Act applies to the taxes you would owe on the loan amount you owed to both lenders, not to the actual debt.
Take one step at a time, simplify your life as much as you can, try not to get into anymore debt, and slowly work on re-building your credit. You're not alone in your situation. Good luck and Merry Christmas!
You can end ALL collection calls immediately by declaring bankruptcy. You can likely find a bankruptcy attorney for as little as $500. Friend's of mine just went through the process with a fantastic attorney for $1500. Find an attorney who works on a fixed fee, will give you a free initial consultation and takes the time to listen to you. Someone who makes you feel comfortable. If they are condescending or rushed, find someone else. And to your earlier question - you will not still be liable for the second after bankruptcy.
While I understand "Administrator's" desire to see the banks held accountable, his suggestion to sue the lender will likely be a very hard and expensive road.
I've been at this quite a few years now, and went through foreclosure myself almost 20 years ago. Though I'm not an attorney I'm familiar with most of the laws, and have been consulted by attorneys and CA lawmakers for my foreclosure expertise. You can read more about me, and from me, at ForeclosureRadar.com and ForeclosureTruth.com.
I hope this helps you rest easy tonight, and enjoy Christmas day tomorrow. Best wishes to you.
1) Perhaps, but the laws are pretty clear and courts don't make laws. And in any case your "originated as combo" claim, even if correct doesn't apply to this person's question.
2) Perhaps, but only with regards to tax consequences - doesn't change what you owe or not.
3) Under state law lenders can open the bidding for whatever they want. RESPA, TILA, and HUD do not have any say over state foreclosure laws. Nor do the tax consequences for those lenders, fair or not, change a thing for you.
You have the tax liability vs. the loan liability issues so confused I really don't know where to start. Sounds like you are still struggling with the loss of your own home and a 2nd that is in collections against you. I honestly hope you do find an alternative way out of your predicament - until then I think the four options I listed below are the only reasonable alternatives.
Outstanding .attempt to fall into the mortgage lies of the American Public. So away we go.....
1) The courts have yet to rule on the merit for enforcing a second that is the "Toxic" piece of a subordinate combo lien. If both were originated at settlement as a combo obligation. - GOOD LUCK HOLMES
2) you must establish your "Basis" or calculate
Example - the assts contribution value. Buy a stock for $100.00 and sell it for 50.00 . You lose 50.00 . This Loss is going to offset any capital gain or 1099....why are we talking about this?
3) The Trustee sets the sale price at below the outstanding principal balance - - -at sale ! Wazzz up ! Fraud! ! ! (a power of sale in Cali is the lenders right to R-e-c-o-v-e-r-y and not for establishing a reduction to offset write downs. Fraud! But this how you trigger a write down of the asset under FASB and GAAP Lender and will now carry the REO at the new â€œbook valueâ€ and now REO (acts to trigger) at a new and reduced entry . This is instead of taking the write down on assets later. (Give RESPA TILA and HUD the finger here cause the SEC has a bite and HUD . . . no teeth!_
So the borrower is homeless and on the street and waiting for a 1099. . .if it comes at all. Throw it back Use the trustee sale to establish a Reversion price (forced or otherwise) YOU USE THE DIFFERENCE TO ALLOW THE CAPITAL LOSS TO OFFSET THE CAPITAL GAIN WHICH IS SCHEDULE "D" VERSUS VS ORDINARY INCOME.
Outstanding attempt to challenge the misconceptions being CREATED by lenders who are so smart. I talk to the second's (benfeficaries) doing this none sense at least once a week and call the bluff. They don't call back!
Last Friday Duetshe Bank Vs Spicer DISMISSED 1st and 2nd â€“ We have more you know!
If you don't have the income or assets to pay it back, you likely only have 4 choices: 1) ignore it, 2) settle it, 3) declare bk and try to have it dismissed, or 4) sue them under predatory lending or other lending laws (unlikely you'll find an attorney to do it pro-bono or on retainer and the attorney bill will likely be more than the loan amount - and even if you win the judge will likely only forgive interest and fees, not principal).
I don't mean to be a kill joy - but an awful lot of folks are terribly confused when it comes to the significant liability they have on refinanced 2nd mortgages after letting a 1st foreclose.
[There is nothing there. They will try and argue the second did not participate in the foreclosure and they can seek a deficicency judgement. The Capital gain or charge off is offset to your basis in the house (is what you paid for plus closing fees and interest on the first and second.) If you owe more than the value of the house determined at sale then you can't be charged a deficiency, and California is a one action State so STOP! Their terrorizing you!]
Yes, I refinanced it once and the amount was somewhere around $5-6000 to pay off a credit card. Do I owe the IRS/banks/etc?
[Again a capital gain or LOSS is going to offset the 1099 they threaten to send you]
I see so many answers about short sales....what about foreclosures?
[the loan is owned by a wallstreet investor (likley]. Many are paid off to date from over colateralization and insurance...just keep it simple. They may have been paid off, maybe. The securities (stock) offering maybe tanked and now the lender (who is not the lender) may be trying to double dip and take your home under a foreclosure disguise. Its a mess - read the paper, watch the news talk to a hairdresser - do somthing ]
I don't have the income to pay anything or anyone back. Am I also included in Bush's plan or somehow be forgiven or 1099?
(Everyhomeowner has a $250,000 deduction on the home they live in. Your covered up to $250,000)
COMMENTS - You need an attorney to guide you. I cannot nor anyone else here can give legal or accounting advice where not licensed to do either. This is informational purposes only and cannot be held liable for its cont ent.
Each situation is different. However, we are experts who provide testimoney and who consult court room professionals for a living. Folk here maybe getting tired of me but its true. The lenders of America messed up big and thats a fact!. Just last Friday we had another borrower win in court - case dimissed.
So I left my web page http://www.borrowerhotline.com and I am at firstname.lastname@example.org
Good luck to you.
Being insolvent isn't a free pass. It can you get out of the tax consequences of forgiven debt (which are not taxable if you were insolvent at the time), but otherwise doesn't automagically do anything. That said, being insolvent should make it easier to get the $100k second dismissed in bankruptcy.
Important to note that secured loans can't be removed in bankruptcy - but your second is no longer secured by the house, their security was wiped out at foreclosure sale by the 1st. As an unsecured creditor the second can now be dismissed in a BK.
It seems like some of the comments by others are true, they can come after you for collection in some cases. Please carefully check those cases.
I think the best point you make is that it is easy to get confused by all these laws, so you should seek legal counsel, rather than mis-interpret a website such that you risk mistakenly believing you are free-and-clear.
I know these collection companies do many illegal things to get some money out of poor people in trouble. Here is another example; In California if a debt is more than 5 year old, and there is no judgement agains you, and you haven't made any payment for 5 years the collection agencies can't call or write you to collect; but they actually do to get some money out. Actually there is a whole program that Opera did on this subject. It is eye opening. People going through foreclosure, please stand for your rights!
I imagine we will start to see attorneys offering to help negotiate and settle these collections for a reasonable fee.
A good bankruptcy attorney should be able to walk you through your options, and even help with trying to settle if you decide to try that instead of bankruptcy. Just be sure to be careful about who you choose - search online for a good referral. I've seen folks compound their problems by choosing a bad attorney.
This is a very common mistake folks in foreclosure make. Letting their first mortgage go to foreclosure when they have a refinanced second. It virtually insures the homeowner will have to seek bankruptcy protection. And with the tighter bankruptcy rules these days they may not find the relief they hoped for. Better to keep your first current and let the second foreclose (thereby giving up their right to come after you personally).