Selling house/not getting what we owe???

[MrsPete]

For how much could you rent the house? Would it be worthwhile to rent the house, while you move in with relatives? Of course, this is a huge risk: one bad renter could wreck the house, causing you more problems.

Do you live near a college? Could you rent rooms to students (while you continue to live there)? You would need to install locks on your bedroom doors and make a couple other changes, but it's workable -- it's something that previous generations did frequently. When I was a small child living with my grandparents, we often had renters in her big 7-bedroom house. This is not an ideal situation, but you're in over your head -- you're going to have to leave your comfort zone to get out of this situation.

Several other people have suggested second jobs, ebay, garage sales -- you're probably going to need several things to get you up to where you need to be.

I suspect we're going to see a great deal of this situation in the near future: re-financing has become so commonplace, and this is often the result. We're familiar with the concept of being "upside down" on a car payment -- this is essentially the same thing.

 

[enufallredy]

If you sold your house, how would you have the credit to buy another? Don't sell you house, but quit with the heloc's and refinancing. Make sure you make your payments , though. I am going to just make a list of things to do:

1. Someone gets a second job.
2. Get $500 in a savings account for an emergency. And I mean a true emergency. (Sales are not an emergency )
3. Look at the vehicle situation, and downgrade them. Get rid of the vehicle payments. You can do it.
4. Entertainment is cut down severely, if not cut out completely. I know you are on the WDW board, so you are looking at a vacation. Vacation is out. You are in much too serious a situation to be thinking about going to WDW, or anywhere else for that matter.
5. Cut down severely (okay, not completely out ) the eating out. But I'm talking like twice a month, and everyone orders water to drink. It's free.
6. I usually recommend paying off the highest interest debt off first. But I will have to backtrack on this one. You need to pay off the smallest amount of debt first, then the next, then the next ,and so on. Each time, rolling over the payments from one to the next.
7. Probably most important, you guys have to make an honest assessment of how you spend your money. Tighten the spending, pay cash and quit using the credit card.

If you want another house, you are going to have to really clean things up. And I'm afraid it may take more than 2-3 years to qualify for another mortgage loan with a decent interest rate. Sure, you may find someone to loan you money in a few years, but at an astronomical interest rate.

This is a formula I would give anyone in your severe situation. You can do this. My family is now debt free, except for our house payment, and even that will be paid off in two years.

You have a long row to hoe, but you can do this. Stay tough and stay focused. Good luck.

 

[Cheshire Figment]

Don't know if any other posters suggested this, but you may be able to get your mortgage company to agree to a "short sell." In other words, they agree to let you sell for less than what you owe on the mortgage and then they forgive the rest.

But, believe it or not, any amount they forgive is taxable income under the Internal Revenue Code and they will have to give you a Form 1099-C reporting this amount.

 

[T. Lynn]

Believe it or not, there are many people in this same situation. They pay to get out of their house. To get another one, they do 100% financing.

If you were to buy another house, definately get something with lower payments than what you currently have.

 

[funnygarcia]

Sadly my brother is in a similar dire situation.
His soon to be ex-wife racked up a huge debt. My DB considered bankruptcy at the time but his wife argued that with her pay (surgical RN) they would be able to pay down the debt. They refinanced the house, at the time they only had $10,000 left in payments on the house (a fixer upper that they have been hacking away at fixing for 15 years). They now owe slightly less than the house is worth plus his wife incurred more credit debt (all unknown to him).

She left the home, citing communication problems. She agreed to pay house payment (had another job) .. she didn't pay it. She said she had paid the property tax, nope. Meanwhile, she incurred more debts while seperated.
And quit her job. Judge said DB has to pay half of it. Now they are legally sperated .. he doesn't have to pay for her new expenses.

Now DB is stuck with this huge debt. Finding more hidden debt each week.
He doesn't make enough money for the house payment and daily living expenses while supporting his 3 children. Each month he chooses.. pay the mortagage, or pay the property tax. Pay childcare, or pay car payment (she took the newer car).

If he could sell he would in a heartbeat. At this point he can't do a thing until the divorce is finalized (and any $ he might get out of selling anything right now.. 1/2 would go to the wife..).

What can he do??

 

[A Mickeyfan]

It's called a deed in lieu of foreclosure, it's reported as such to the credit bureaus, and it's as harmful to ones credit as an actual foreclosure.

Anne

It is no where near as harmful to your credit as an actual foreclosure! I did one & have a very good credit score! I had no choice but to give back a condo since my husband had been transfered. When we moved, we kept it thinking the values would rise. We rented it out for 8 years! All of the 8 years, we had to put money into it every month since we could not even get enough in rent compared to what we had to pay for the mtg & common charges. After 8 years of renting to the same people, they neglected to tell me that there had been a leak in the upstairs bathroom.. it damaged that bathroom, came thru my kitchen ceiling.. then puddled to the point it went thru the kitchen floor to the sub floor. I had an estimate of $50,000 damage to the unit. I still owed $73,000 on it & they were selling for $35,000!!! I wrote to the bank explaining to them what had happened. They were very good & worked with me.. by the time everything was over & done with, they had me give them $5700.00 & called it even..yes, it showed on my credti, but also showed that I paid my debt off.. I was still able to get credit cards with good interest rates & car loans with excellent interest rates.. Let's just say, if I go for one of the car loans where they say 0% interest.. must have credit score of xxxx.....I get it!! When you do a forclosure, you are just saying to the bank.. tuff ... I will not pay you. When you do a deed-in-liue, you are working with them to settle your debt... big big difference.....

 

[rocky41102]

I would start by cutting back costs if you can-maybe you've done that already. Second, sell things you don't use. Third, find a part time job to supplement income-maybe demonstrating things on the weekend at grocery stores or delivering pizza a few evenings a week or something similar.

I would not sell my house at a loss. Stay in it and use the extra income from a PT job to make up the difference. You can always list it for sale above market value-list it at what you would need to break even, possibly try to sell it by owner or something. You'll have a hard time selling it if y our neighbor's house is a lot cheaper, but you never know. It's worth a shot. In the meantime, just keep working the extra jobs to make up the money. Also, call you utility companies and either cancel them (cable and stuff like that) and/or ask them for lower rates and special promotions for current customers. Most companies will offer lower rates to keep people from leaving.

 

[OhioFamily]

Sadly my brother is in a similar dire situation.
His soon to be ex-wife racked up a huge debt. My DB considered bankruptcy at the time but his wife argued that with her pay (surgical RN) they would be able to pay down the debt. They refinanced the house, at the time they only had $10,000 left in payments on the house (a fixer upper that they have been hacking away at fixing for 15 years). They now owe slightly less than the house is worth plus his wife incurred more credit debt (all unknown to him).

She left the home, citing communication problems. She agreed to pay house payment (had another job) .. she didn't pay it. She said she had paid the property tax, nope. Meanwhile, she incurred more debts while seperated.
And quit her job. Judge said DB has to pay half of it. Now they are legally sperated .. he doesn't have to pay for her new expenses.

Now DB is stuck with this huge debt. Finding more hidden debt each week.
He doesn't make enough money for the house payment and daily living expenses while supporting his 3 children. Each month he chooses.. pay the mortagage, or pay the property tax. Pay childcare, or pay car payment (she took the newer car).

If he could sell he would in a heartbeat. At this point he can't do a thing until the divorce is finalized (and any $ he might get out of selling anything right now.. 1/2 would go to the wife..).

What can he do??

Sadly enough that is a pretty common occurance. Not knowing exactly what your DB makes and how much in debt he is the only thing I can offer is my $.02.

I don't think that bankrupcy ruins anyone's lives. I've had a few friends go through it and it helped them start anew. Your DB might want to consider this course of action. Have him speak to an attorney that can help him with his decision. Out with the old in with the new!!

Best wishes to him

 

[arminnie]

But, believe it or not, any amount they forgive is taxable income under the Internal Revenue Code and they will have to give you a Form 1099-C reporting this amount.

And I know many people that this happened to in the housing bust in the 80s. It made it even more painful. Add another $10,000 or $20,000 of income to your tax return, and you are going to owe a lot more federal and state taxes.

 

[Michie]

I agree with everything ducklite has posted.

Are you in foreclosure? Even if you are in active foreclosure depending on the type of loan, they still want to help you. But you have to stay on top of things. I help counsel people who are facing foreclosure. Most mortgage companies have the hardship letter process.