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I’m Totally Broke and Drowning…Help! – Linda

I am 47 years old and single mother to two teenaged children. I have a decent job and make good money for the area where I live. I bought a home in 2008, put $30,000.00 down on it (nearly my entire life savings). My house payments, insurance and taxes are equal to 2 weeks of my pay. SO one entire check barely pays my house payment.

I have $16,500 in credit card debts. Long story short, I got behind on my mortgage. I was trying to pay alittle everybody i owed (stupidly) and now my house is in foreclosure. I have been turned down for loan modification programs. (my debt to income ratio is too high??)

My question, do I file chapter 13 bankruptcy and try to keep my house? Or do I try to get a consolidation loan and pay off the credit card bills and catch up my mortgage and then try to sell my home for something more affordable? AT this point my formerly excellent credit is way less than excellent but probably not trashed as it will be if I file Bankruptcy and/or foreclosure.

Should I let my house go and lose my equity? Its too much house for my income obviously.

I am sick, scared and hopeless. I dont have family to borrow from. I worked two jobs for months until my health began to suffer. I sold my new car and bought a 10 year old one with 90,000 miles on it. I have pawned my jewelry, and anything else of value. I make slightly too much to quailfy for food stamps or other assistance.

Linda

It’s time to put debt behind you and start dreaming about your life after debt. – Click to Tweet

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Mike

    I can’t give you specific advice, but you speak of reasons you’re in debt all being related to “problems” and falling behind on your mortgage, but then talk about pawning jewelry and trading your new car in for a used one. I think the problem is that you spend too much for what you make. You even mention living in a home that eats half of your monthly net income.

    No matter what Steve or anyone suggests here, even if you get out of this with your head held high, you’re going to be right back in this position if you do not get a grasp on your spending habits. I know you might think you don’t spend too much, but by your own story, you do. Start listing what you spend your money on, EVERYTHING, including those coffees every morning (I dunno if you stop for coffee, I used to stop every morning and afternoon for a soda at the conv. store, so using it for example) and start eliminating EVERYTHING from your spending list that is not an absolute necessity. This includes cable, expensive cell phone plans, etc. Life is great without cable, trust me. The things you can’t eliminate look at reducing, even to the point of not buying packaged junk food… that $5 here and there for crap like pop-tarts and the like is expensive. Sell everything you don’t absolutely use and need *right now*. Garage sales are nice, ebay is nice.. pawning sucks because you’re essentially selling it to them at a super bargain for them.

    As to your question, my vote is bankruptcy and keep the house. The fascination in the U.S. with credit scores is part of our problem, because credit scores are only necessary usually when you get credit, which you do not need (not a stab at you, I don’t think many of us need it at all). You already have a house, and you can use the next couple years that your credit is “dinged” to fix your finances, save money, and possibly sell the house and get into something that consumes about 1/4th your income or less.

    Good luck to you!

  • Mike

    I can’t give you specific advice, but you speak of reasons you’re in debt all being related to “problems” and falling behind on your mortgage, but then talk about pawning jewelry and trading your new car in for a used one. I think the problem is that you spend too much for what you make. You even mention living in a home that eats half of your monthly net income.

    No matter what Steve or anyone suggests here, even if you get out of this with your head held high, you’re going to be right back in this position if you do not get a grasp on your spending habits. I know you might think you don’t spend too much, but by your own story, you do. Start listing what you spend your money on, EVERYTHING, including those coffees every morning (I dunno if you stop for coffee, I used to stop every morning and afternoon for a soda at the conv. store, so using it for example) and start eliminating EVERYTHING from your spending list that is not an absolute necessity. This includes cable, expensive cell phone plans, etc. Life is great without cable, trust me. The things you can’t eliminate look at reducing, even to the point of not buying packaged junk food… that $5 here and there for crap like pop-tarts and the like is expensive. Sell everything you don’t absolutely use and need *right now*. Garage sales are nice, ebay is nice.. pawning sucks because you’re essentially selling it to them at a super bargain for them.

    As to your question, my vote is bankruptcy and keep the house. The fascination in the U.S. with credit scores is part of our problem, because credit scores are only necessary usually when you get credit, which you do not need (not a stab at you, I don’t think many of us need it at all). You already have a house, and you can use the next couple years that your credit is “dinged” to fix your finances, save money, and possibly sell the house and get into something that consumes about 1/4th your income or less.

    Good luck to you!

  • Andy Faria

    Linda, that sounds like good news to me. “your modification is being prepared” is what you want to hear. You will want to make sure that you’re calling at least every other day now. Always ask them to look at the notes and see if any Fedex or UPS packages have been sent to you recently, if they say yes, get the tracking number and find out where it is. I’ve seen instances where UPS/Fedex leaves it on the neighbors back door or it gets lost.

    When you receive the modification documents read them very carefully before signing and returning. Sometimes they require a notarized signature, other times they don’t. Many times they will include a Fedex or UPS return label to send it back, make sure you use that. If you would like me to look anything over for you I would be happy, you have my number, feel free to call anytime.

    Keep us posted and if you get thrown any curveballs or don’t understand something please let us know right away so we can help.

    Andy

  • Steve Rhode

    Good news!

    Keep updating us in the comments section. We want to know how this goes for you.

    Steve

  • Linda

    I spoke with you Steve, and Andy, two weeks ago regarding facing foreclosure on my home. You both gave me great advice, which almost daily I go back and re-read, just to make sure that Im absorbing all that I can from it! I know I can never repay you and Andy for your kindess shown to me, but if i could, I would. May all your ventures be blessed and prosper!

    And, as promised I wanted to update you with whats going on with me, as you may remember Dec 14 (which is tomorrow as I write this…)was the foreclosure sale date on my house. I spoke with the Mortg co this morning and they have confirmed that the date has been postponed until next month…YEA! and also they said and I quote ” your modification is being PREPARED”…. wow, i hope that means I got approved !?!

    So, my house is still for sale, no offers yet but it is Christmas and who buys a home at this time of year?

    Looks like I will at least be able to enjoy a little christmas peace and joy with my children after all.

    Thanks for helping me get to this point…and by that I mean you have helped me survive when I doubted that I could.

    Linda

  • Linda

    I spoke with you Steve, and Andy, two weeks ago regarding facing foreclosure on my home. You both gave me great advice, which almost daily I go back and re-read, just to make sure that Im absorbing all that I can from it! I know I can never repay you and Andy for your kindess shown to me, but if i could, I would. May all your ventures be blessed and prosper!

    And, as promised I wanted to update you with whats going on with me, as you may remember Dec 14 (which is tomorrow as I write this…)was the foreclosure sale date on my house. I spoke with the Mortg co this morning and they have confirmed that the date has been postponed until next month…YEA! and also they said and I quote ” your modification is being PREPARED”…. wow, i hope that means I got approved !?!

    So, my house is still for sale, no offers yet but it is Christmas and who buys a home at this time of year?

    Looks like I will at least be able to enjoy a little christmas peace and joy with my children after all.

    Thanks for helping me get to this point…and by that I mean you have helped me survive when I doubted that I could.

    Linda

    • http://GetOutOfDebt.org Steve Rhode

      Good news!

      Keep updating us in the comments section. We want to know how this goes for you.

      Steve

    • http://northeast-properties.com Andy Faria

      Linda, that sounds like good news to me. “your modification is being prepared” is what you want to hear. You will want to make sure that you’re calling at least every other day now. Always ask them to look at the notes and see if any Fedex or UPS packages have been sent to you recently, if they say yes, get the tracking number and find out where it is. I’ve seen instances where UPS/Fedex leaves it on the neighbors back door or it gets lost.

      When you receive the modification documents read them very carefully before signing and returning. Sometimes they require a notarized signature, other times they don’t. Many times they will include a Fedex or UPS return label to send it back, make sure you use that. If you would like me to look anything over for you I would be happy, you have my number, feel free to call anytime.

      Keep us posted and if you get thrown any curveballs or don’t understand something please let us know right away so we can help.

      Andy

  • Steve Rhode

    This comment made my day. I think you’d find some answers and insights in one of my books, which you can download for free here. Download “The Path to Happiness and Wealth” and it will guide you to answers on how to develop the best attitude to move forward.

  • Lindagreenfield

    Ya’ll are all angels, I’m serious. Thanks again for your help. The for-sale sign is in my yard, and I’m getting my kids prepared for ‘what-ever’ happens! I will post any new changes and am still open to any and all suggestions. If someone is reading this and doubting whether this site is legit and the people are ‘real’ all i can say, is please dont struggle alone. These guys care and will give you A+ advice at a time when you need it the most.
    ANd in the meantime..a middle-aged woman on central alabama is repeating under her breath “you aint your fucking debt”!
    L.

  • Steve Rhode

    Tracy,

    Thanks for chiming in, you input and advice is always welcome.

    Steve

  • Tracy East

    The advice you have been given is outstanding! Best of luck in the coming days as you work out all the details. I will be very interested to hear how it plays out.

  • http://www.cesidebtsolutions.org Tracy East

    The advice you have been given is outstanding! Best of luck in the coming days as you work out all the details. I will be very interested to hear how it plays out.

    • http://GetOutOfDebt.org Steve Rhode

      Tracy,

      Thanks for chiming in, you input and advice is always welcome.

      Steve

      • Lindagreenfield

        Ya’ll are all angels, I’m serious. Thanks again for your help. The for-sale sign is in my yard, and I’m getting my kids prepared for ‘what-ever’ happens! I will post any new changes and am still open to any and all suggestions. If someone is reading this and doubting whether this site is legit and the people are ‘real’ all i can say, is please dont struggle alone. These guys care and will give you A+ advice at a time when you need it the most.
        ANd in the meantime..a middle-aged woman on central alabama is repeating under her breath “you aint your fucking debt”!
        L.

      • http://GetOutOfDebt.org Steve Rhode

        This comment made my day. I think you’d find some answers and insights in one of my books, which you can download for free here. Download “The Path to Happiness and Wealth” and it will guide you to answers on how to develop the best attitude to move forward.

  • Andy Faria

    Linda, I enjoyed our talk today, you’re a great person and I have a lot of faith that you’ll get through this.

    Here is my take and the steps I would take:

    1. Loan Modification. Linda is stuck in loan mod limbo at the moment but Wells told her today that the sale date has been postponed until Jan 18, that’s a good sign. I’m confident that she should wait out the modification review because it offers the best and cheapest option to get her loan out of foreclosure and possibly get her payments down.

    She was denied a HAMP modification, but its understandable why, her HAMP DTI is 31%-32%, that gets denied for HAMP every time, no need to look further. Wells will review every loan for HAMP first, even if it’s obvious it will never qualify, then they deny it and immediately begin a review for an ‘in-house’ modification. Linda is right now in review for an ‘inhouse mod’ and I feel confident that the income/expenses she submitted will qualify her for something.

    The downside here is that based on Linda’s current and projected income, unless the modification lowers her payments from $889/mo to between $600-$700, she will continue to struggle and will eventually end up in the same spot. There is no guarantee that this modification will get her payments that low, but my advice is to accept whatever modification they offer, even if she realizes that she won’t be able to keep it current forever. Accepting any modification agreement they offer should bring the loan current stopping the foreclosure process(allowing for step 1a to play out).

    My advice here is to continue to call Wells every other day and make sure they don’t need any docs updated (pay stubs, bank statements, etc). Always confirm that the sale date is still set for 1/18 and continue to monitor the sale date that the FC attny has and continue to request that Wells notify them if it doesn’t match. Linda, keep your eyes peeled for fedex or ups packages, that’s normally how the important paperwork arrives.

    1a List the property for sale right away. The fact remains that unless the mortgage payment comes down to $600-$700 Linda won’t be able to afford the home based on current and projected income. The bright spot here is that this home has equity, she owes $122k and her real estate agent has advised her that $155k is a good ‘fire sale’ asking price.

    Let’s assume she get’s an offer for the full $155k. She estimates she owes $122k on the home, add in there $6000 for the attny fees and delinquency and also add in the $7750 for real estate commission, and you have about $136k for a total estimated payoff(give or take a bit for normal closing costs). That leaves about $19k-$20k left over for Linda, she would get about two-thirds of her initial down payment of $30k back.

    That $19-$20k would be a very important step in moving on and could go towards securing new housing, dealing with the credit cards, or as a security blanket until she decides what to do. Listing the house right away at a good price, while the mod is still in review, will only create more options for Linda should the modification come back as something she can’t really afford beyond a few months. The more options the better.

    2. Bankruptcy. Linda has already consulted with a bankruptcy attorney in her area and has already made preparations to go this route if it’s deemed to be necessary, very smart move. If for some reason Wells outright denies the modification and a sale date is right around the corner than filing BK should prevent the sale of the property, and buy more time to find a buyer. A modification provides her a better solution to fix the foreclosure right now (plus it’s cheaper) and that’s why I believe she should continue to wait on that review, but BK is always there as her safety net to protect the equity and buy time.

    3. Credit Cards. Linda has $16,500 in credit card debt. She is already behind on minimum payments on almost all of it from what I understand. My advice with this is to wait and see how the mortgage/home situation pans out before making any moves, payments, or fast decisions on the credit card debt. It shouldn’t take longer than a month to get answers on the mod and unless she gets a legal notice from one of the creditors, another month shouldn’t change much.

    How to address the credit card debt will rely a lot on how the mortgage/home situation plays out. Only after figuring out how much it will cost to provide the most basic neccessity, a roof over her head, can she figure out how much she can put towards her outstanding unsecured debts.

    If the mod comes back with a payment she can afford and she is going to keep the home, I would probably recommend bankruptcy after the mod is complete. With her income she may very well qualify for a Chapter 7 at that point and be able to wipe out the full $16k and the mortgage can remain modified and won’t be affected. I figure the minimum payments on $16k would be about $450-$500/mo and that on top of any realistic modified payment every month would be quite a stretch.

    If Linda chooses to sell the house, walks away with some cash, and finds a new affordable place to live, than the options change a bit in dealing with the unsecured debt. Settling the debt now becomes an option at this point, as long as she doesn’t have to spend every last dime and can hold on to some of it as savings.

    Bankruptcy could be more of a challenge should she sell the home, only because her expenses will have been reduced and will now have a chunk of cash on hand, trustees dream of this kind of situation.

    Overall, I think Linda is taking all the correct steps and only time will tell how it plays out but with a good plan she should walk away from this without too much damage.

    Linda, if you ever run into any trouble or don’t understand anything that Wells Fargo is telling you, you have my number, don’t hesitate to call or come back here and I’ll help in any way I can.

    Good luck and keep us posted, I’ll be pulling for you.

  • Steve Rhode

    Linda,

    Awesome.

    Andy was very generous to offer his expertise for free. I’m glad you connected.

    You would not be able to hold onto your equity through a bankruptcy.

    Considering you’ll have some cash in hand and the residual debt it might be prudent to settle the debt using SOME of the cash. This would leave you some to start over with, you will have avoided bankruptcy, and of course this all hinges on a fast sale.

    I feel much better about the $158K price than the $165K. I’ve just seen too many homes lost at the last minute because an agent priced it high to maximize their commission.

    Since you only have $1,000 cash on hand now it might make excellent sense to stop paying the credit cards this month so you have some cash to use for the necessities. If the home sells and you go for the settlement route then the fact you are already behind on your cards will accelerate the settlement process.

    If the home does not sell then both the mortgage and credit card debt can be addressed with a bankruptcy.

    I would suggest that just as you got a great benefit out of talking to Andy today about the mortgage, you will get a similar benefit on getting assistance implementing a debt settlement solution by working with Damon Day.

    Sleep well tonight, you are in good hands.

  • Lindagreenfield

    Steve, Andy and I had a good conversation about what direction I should take. He was a WORLD of help as you have been. FInding this website has been a lifesaver, thanks again for your willingness to help and offer your assitance. I do have one thought, if I am able to sell my house would it be prudent to hang onto the equity i get out of the sale and go ahead and file chapter 13 on the credit card debts? At that point I am wondering what id’ have to lose.
    I listed my house for sale with the realtor today, we’re asking $158,000.00 which is more than I paid for the home and enough to save my equity. She seems to think the house will sell fairly quickly.
    Still scared but feeling better since I have a ‘plan’.
    Thanks again,

  • Steve Rhode

    Not sure what you and Andy came up with but if you decide to hand the house back, discharge all of your debt with bankruptcy, then you will be able to rebuild your credit again and have a better future.

  • Lindagreenfield

    Steve you asked ” if you didn’t have the mortgage situation or other debts hanging over your head, would you be able to find a place to live and get by on your current income?’

    Yes I have been looking at other places, and there are acceptable options in my price range. I feel certain finding another home/ apt/ etc wouldnt be too hard to do. I am wondering what my credit will look when the smoke is cleared from all of this? Only time will tell I guess.
    And Andy thanks for taking the time to talk to me on the phone today and for all of your help. When this is all over I may have enough experience to get a second job as a financial counselor myself!
    Thanks again and will keep you posted,
    Linda

  • Steve Rhode

    A generous offer. Thank you Andy. I hope Linda calls you.

  • Andy Faria

    I wish I knew the exact financials that were submitted for the mod review and why it was denied originally. She could be so close to getting a mod that puts the entire mortgage issue to bed, but I just don’t have enough info. I’m intrigued.

    Linda, I make calls with people every day to Wells Fargo to help them understand whats going on with their mod review. I’m ‘slowish’ today and if you would like you can give me a call and I’ll do my best to help you in any way I can. 866-794-1869, just ask for me.

    There would be no fee whatsoever and I promise I won’t attempt to sell you ANYTHING, I’m just intrigued. All I ask in return is that if you learn something, than you come back here and pay-it-forward by sharing your experience so others can learn from it.

  • Steve Rhode

    LOL, I’m glad “you are not your fucking debt” struck a cord with you.

    OK, since this is a “real” banker then borrowing enough cash to bring your loan current may be of assistance but depending on the fire sale price, repaying it might eat into what proceeds you would get from the house and still leave you in debt on the cards.

    The issue I’m stuck on is if the better move is to let the house go, stop paying your other debt and follow everything up with a bankruptcy to discharge all your obligations.

    While you would like to recapture something out of your equity the more important issue is being able to live within your income moving forward.

    The issue that complicates all of this is the fact you are already four months behind and time is not on our side.

    So let me ask, if you didn’t have the mortgage situation or other debts hanging over your head, would you be able to find a place to live and get by on your current income?

    I’m hoping Andy chimes in as well.

    Steve

  • Andy Faria

    Linda,

    The only progress that can be made directly with the FC attny is paying the FULL amount of delinquency plus their attny fees. They can’t accept anything less than that, offer a modification, or cut any deals whatsoever. They can be frustrating to deal with and will normally be very pushy in a collections type of way.

    Wells Fargo is the only one that can make any changes. When you contact the FC attny, the only real question you will have is ,”has Wells notified you that the sale date has been postponed?” If not, then the next call should be to Wells to inform them that the FC attny still has an active sale date for 12/14 and they need to be notified of the postponement.

  • Andy Faria

    FC attny fees are always a bit different, a lot depends on how long the loan has been in active FC, the more steps they have taken the more it will likely cost. Each state has different FC timelines so it will also vary from state to state.

    As an example I can use MA. We see that once a loan is referred to the attorney, fees usually jump right away to about $1k and they can grow upwards of $4-5k as it progresses through FC.

    Many times while a lender has the loan in review for mod and the loan is already in active foreclosure they may place things on hold and not take certain steps such as the BPO or title search, saving a bit on FC fees.

  • Lindagreenfield

    Thank You both for taking the time to reply to me. Suffice it to say, I’m in uncharted territory and basically learning more than I ever wanted to know about this type of situation!
    The banker is a long time family friend, its a small town bank where I live (alabama) and he is willing to ‘try’ to help me. (As is the real estate broker) They both know my situation is timely and they both know that prior to this bad bad time, my credit was perfect and I am not one to dafault on my debts…in normal situations….sigh.
    I have managed to beg, borrow and steal (not literally) $1000.00 in cash right now but dont know if I should sit on this money, pay it to Wells, pay it on other bills or what?
    The FC attorney has said that right now, to stop the FC would take $6700 so that would mean their fees are app $2500..fwiw.

    Thanks again for your help, I am so thankful to have found this sight. Just the tag “you are not your fucking debt” has helped more than I can say…in fact its become my new mantra!
    Thanks again and I’ll update when I can.

  • Steve Rhode

    Andy,

    Ah yes, I forgot to include the attorney fees for the foreclosure. What are you seeing as standard now for those these days?

    Steve

  • Andy Faria

    Linda,

    If Wells has told you that the sale date is postponed, that’s a good thing. It can be very easy to get Wells to postpone or cancel a sale date if the loan is in review for mod,but they will usually wait until 7-14 days before the scheduled date before they officially postpone it. It’s not uncommon that the foreclosure attorney isn’t on the same page as Wells. I wouldn’t stress it too much, but you do want to remain in contact almost daily or every other day with both Wells and the FC attorney at this point.

    Being only 4 months behind and already having a sale date is not common, even in fast moving states like MI,RI,GA,TX or MO. You may be surprised and receive modification papers in the next week or two. We have been seeing that a lot lately right before a sale date, even for people that are totally unqualified and some haven’t even applied for the mod, it just magically appears by Fed Ex, keep your eyes peeled.

    To facilitate the mod review you have in place now, you want to make sure that you update all your paystubs and bank statements with them right away , if you haven’t already done so in the past few weeks.

    Also, Steve is right, you should get the home listed as soon as possible and price it aggressively. Keep in mind though, the payoff on your first mortgage will now include the FC attorney’s fees, so you will need to account for those as well. Listing the home doesn’t obligate you to sell it, but it will create more options for you, and options are better than having your hand forced.

    Good Luck

  • Steve Rhode

    OK, well if you are willing to sell the house, rather than lose it then with such short time you’d need to price it for a “fire sale” and while the realtor says they could sell it for $165,000 the real question is what would the price have to be to sell the house within the next couple of weeks? It will be less than $165,000.

    I find it hard to believe banker that said they would give you a loan. It is unlikely a legitimate bank would give you a second mortgage with your debt to income ratio considering the house is in the final stages of foreclosure and so far behind.

    If the house was priced to sell quickly it might be for around $156,000. In that case you’d recover approximately enough after fees and commissions to nearly pay off your credit card debt.

    Filing a Chapter 13 bankruptcy to “keep” the house does not make sense since in a Chapter 13 bankruptcy you would need to make at least the regular mortgage payment plus catch up on the amount you are behind. I’m not confident you could do that based on what you’ve said.

    But, it is important you click here to talk to a local bankruptcy attorney and get the facts upon which to make the best informed decision you can.

    Talk to a local bankruptcy attorney today, talk to the real estate agent about what a “fire sale” price would be to sell the house in the next couple of weeks and come back and update me.

  • Lindagreenfield

    I paid $30,000 cash down payment on the home in 2008. Purchase price was $156,000. I spoke with a realtor/broker yesterday who sold me the home and she said she could list the home today for $165,000. Since I am 4 months behind on payments, I assume my equity now is $26,000. (approximately).Wells Fargo seems to be in a BIG hurry to foreclose on me. The sale date is dec 14 and while they are reviewing me for a modification they ‘say’ the date has been postponed but the attorney for them says the sale date is till Dec 14. Im trying not to panic. I spoke with a banker yesterday who said he could give me a second mortgage and give me time to sell my house.

    The realtor is also of the mindset that because the home is only 2 years old and in a desirable neighborhood and with an accomodating price point, she could sell it fairly quickly.

  • Steve Rhode

    How much equity do you have? Can you give me the amount of your mortgage(s) and the true estimated value of the house as of today, please.

  • Lindagreenfield

    I’d like to say yes, but realistically no.

  • Steve Rhode

    Just as a point of clarification. LendingClub.com is a peer-to-peer lending network that does make unsecured debt consolidation loans available at less than bank rates, for between three to five years, and requires no collateral.

    A peer-to-peer network is one where people lend to others through LendingClub.com which facilitates all the details and funds. For example, one person that places a request for a loan may actually have that loan funded in pieces by 100+ investors.

    This approach spreads the risk for the investor and cuts the bank out of the loop thus leading to lower interest rates.

    I just had a reader of the GetOutOfDebt.org site get an unsecured debt consolidation loan at less than 5.5%. You can read about that here.

  • Tracy East

    I’m glad you are working with a Counselor on the housing issues. It does sound like the house payments are just too much for your budget to handle. I’m surprised that your lender is being so aggressive with foreclosure proceedings in this economic climate! Perhaps they would consider a short-sale in lieu of a foreclosure?

    As far as a debt consolidation loan – I agree. Unless you can qualify at a much lower interest rate than you are currently paying it doesn’t make sense. And frankly, lenders are reluctant to lend without collateral these days. A debt managment plan could be helpful to you – a credit counseling agency could negotiate to get your interest rates lowered and fees waived so you can pay off the debts faster. It’s not a loan, but you do repay the full amount you owe.

    Hope that helps some – best of luck!

  • Steve Rhode

    Can you afford to stay in your house if the loan is not modified?

  • Lindagreenfield

    I’ve spoken with a Counslor from the HOPE program. We are trying to get the mortgage modified but so far no luck and no news..except my home has already been listed in the newspaper…sigh
    I thought about a debt consolidation loan to catch up my house payments, pay off some of the other debts (mainly credit cards but a few medical bills etc) and then try to sell my home to keep from losing my equity. But it seems insane to ‘borrow’ to pay a debt..which is essentially creating a debt to pay a debt and the vicious cycle continues. But maybe that would buy me some time to sell house, and keep my equity with which i could pay off the debt cons. loan and then be back to the beginning. without a BR or FC on my credit. So..any suggestions about that?

  • Tracy East

    Linda,

    I have two suggestions for you.

    1. Have you sought the help of a HUD Certified Counselor regarding your home foreclosure? Often times these folks can work out things that an individual alone can’t. Check the HUD website for one in your area. Usually there is no up-front fee to the consumer for their services.
    2. Seek the help of a qualified professional before you make the decision to consider bankruptcy. A licensed non-profit credit counseling agency can give you a free financial assesment and let you know what the outlook is for your situation. It’s possible that bankruptcy is your best alternative, but it certainly should not be your first course of action.

    There are a lot of qualified credit counseling agencies out there – just make sure you are dealing with one that is non-profit and uses licensed counselors who are qualified to serve in your state.

    I work for CESI Debt Solutions and I know that our counselors would give you an excellent financial assesment!

    Best of luck with your situation!

  • http://www.cesidebtsolutions.org Tracy East

    Linda,

    I have two suggestions for you.

    1. Have you sought the help of a HUD Certified Counselor regarding your home foreclosure? Often times these folks can work out things that an individual alone can’t. Check the HUD website for one in your area. Usually there is no up-front fee to the consumer for their services.
    2. Seek the help of a qualified professional before you make the decision to consider bankruptcy. A licensed non-profit credit counseling agency can give you a free financial assesment and let you know what the outlook is for your situation. It’s possible that bankruptcy is your best alternative, but it certainly should not be your first course of action.

    There are a lot of qualified credit counseling agencies out there – just make sure you are dealing with one that is non-profit and uses licensed counselors who are qualified to serve in your state.

    I work for CESI Debt Solutions and I know that our counselors would give you an excellent financial assesment!

    Best of luck with your situation!

    • Lindagreenfield

      I’ve spoken with a Counslor from the HOPE program. We are trying to get the mortgage modified but so far no luck and no news..except my home has already been listed in the newspaper…sigh
      I thought about a debt consolidation loan to catch up my house payments, pay off some of the other debts (mainly credit cards but a few medical bills etc) and then try to sell my home to keep from losing my equity. But it seems insane to ‘borrow’ to pay a debt..which is essentially creating a debt to pay a debt and the vicious cycle continues. But maybe that would buy me some time to sell house, and keep my equity with which i could pay off the debt cons. loan and then be back to the beginning. without a BR or FC on my credit. So..any suggestions about that?

      • http://GetOutOfDebt.org Steve Rhode

        Can you afford to stay in your house if the loan is not modified?

      • Lindagreenfield

        I’d like to say yes, but realistically no.

      • http://GetOutOfDebt.org Steve Rhode

        How much equity do you have? Can you give me the amount of your mortgage(s) and the true estimated value of the house as of today, please.

      • http://www.cesidebtsolutions.org Tracy East

        I’m glad you are working with a Counselor on the housing issues. It does sound like the house payments are just too much for your budget to handle. I’m surprised that your lender is being so aggressive with foreclosure proceedings in this economic climate! Perhaps they would consider a short-sale in lieu of a foreclosure?

        As far as a debt consolidation loan – I agree. Unless you can qualify at a much lower interest rate than you are currently paying it doesn’t make sense. And frankly, lenders are reluctant to lend without collateral these days. A debt managment plan could be helpful to you – a credit counseling agency could negotiate to get your interest rates lowered and fees waived so you can pay off the debts faster. It’s not a loan, but you do repay the full amount you owe.

        Hope that helps some – best of luck!

      • http://GetOutOfDebt.org Steve Rhode

        Just as a point of clarification. LendingClub.com is a peer-to-peer lending network that does make unsecured debt consolidation loans available at less than bank rates, for between three to five years, and requires no collateral.

        A peer-to-peer network is one where people lend to others through LendingClub.com which facilitates all the details and funds. For example, one person that places a request for a loan may actually have that loan funded in pieces by 100+ investors.

        This approach spreads the risk for the investor and cuts the bank out of the loop thus leading to lower interest rates.

        I just had a reader of the GetOutOfDebt.org site get an unsecured debt consolidation loan at less than 5.5%. You can read about that here.

      • Lindagreenfield

        I paid $30,000 cash down payment on the home in 2008. Purchase price was $156,000. I spoke with a realtor/broker yesterday who sold me the home and she said she could list the home today for $165,000. Since I am 4 months behind on payments, I assume my equity now is $26,000. (approximately).Wells Fargo seems to be in a BIG hurry to foreclose on me. The sale date is dec 14 and while they are reviewing me for a modification they ‘say’ the date has been postponed but the attorney for them says the sale date is till Dec 14. Im trying not to panic. I spoke with a banker yesterday who said he could give me a second mortgage and give me time to sell my house.
        The realtor is also of the mindset that because the home is only 2 years old and in a desirable neighborhood and with an accomodating price point, she could sell it fairly quickly.

      • http://GetOutOfDebt.org Steve Rhode

        OK, well if you are willing to sell the house, rather than lose it then with such short time you’d need to price it for a “fire sale” and while the realtor says they could sell it for $165,000 the real question is what would the price have to be to sell the house within the next couple of weeks? It will be less than $165,000.I find it hard to believe banker that said they would give you a loan. It is unlikely a legitimate bank would give you a second mortgage with your debt to income ratio considering the house is in the final stages of foreclosure and so far behind.If the house was priced to sell quickly it might be for around $156,000. In that case you’d recover approximately enough after fees and commissions to nearly pay off your credit card debt.Filing a Chapter 13 bankruptcy to “keep” the house does not make sense since in a Chapter 13 bankruptcy you would need to make at least the regular mortgage payment plus catch up on the amount you are behind. I’m not confident you could do that based on what you’ve said.But, it is important you click here to talk to a local bankruptcy attorney and get the facts upon which to make the best informed decision you can.Talk to a local bankruptcy attorney today, talk to the real estate agent about what a “fire sale” price would be to sell the house in the next couple of weeks and come back and update me.

      • http://northeast-properties.com Andy Faria

        Linda,

        If Wells has told you that the sale date is postponed, that’s a good thing. It can be very easy to get Wells to postpone or cancel a sale date if the loan is in review for mod,but they will usually wait until 7-14 days before the scheduled date before they officially postpone it. It’s not uncommon that the foreclosure attorney isn’t on the same page as Wells. I wouldn’t stress it too much, but you do want to remain in contact almost daily or every other day with both Wells and the FC attorney at this point.

        Being only 4 months behind and already having a sale date is not common, even in fast moving states like MI,RI,GA,TX or MO. You may be surprised and receive modification papers in the next week or two. We have been seeing that a lot lately right before a sale date, even for people that are totally unqualified and some haven’t even applied for the mod, it just magically appears by Fed Ex, keep your eyes peeled.

        To facilitate the mod review you have in place now, you want to make sure that you update all your paystubs and bank statements with them right away , if you haven’t already done so in the past few weeks.

        Also, Steve is right, you should get the home listed as soon as possible and price it aggressively. Keep in mind though, the payoff on your first mortgage will now include the FC attorney’s fees, so you will need to account for those as well. Listing the home doesn’t obligate you to sell it, but it will create more options for you, and options are better than having your hand forced.

        Good Luck

      • http://GetOutOfDebt.org Steve Rhode

        Andy,

        Ah yes, I forgot to include the attorney fees for the foreclosure. What are you seeing as standard now for those these days?

        Steve

      • Lindagreenfield

        Thank You both for taking the time to reply to me. Suffice it to say, I’m in uncharted territory and basically learning more than I ever wanted to know about this type of situation!
        The banker is a long time family friend, its a small town bank where I live (alabama) and he is willing to ‘try’ to help me. (As is the real estate broker) They both know my situation is timely and they both know that prior to this bad bad time, my credit was perfect and I am not one to dafault on my debts…in normal situations….sigh.
        I have managed to beg, borrow and steal (not literally) $1000.00 in cash right now but dont know if I should sit on this money, pay it to Wells, pay it on other bills or what?
        The FC attorney has said that right now, to stop the FC would take $6700 so that would mean their fees are app $2500..fwiw.

        Thanks again for your help, I am so thankful to have found this sight. Just the tag “you are not your fucking debt” has helped more than I can say…in fact its become my new mantra!
        Thanks again and I’ll update when I can.

      • http://GetOutOfDebt.org Steve Rhode

        LOL, I’m glad “you are not your fucking debt” struck a cord with you.

        OK, since this is a “real” banker then borrowing enough cash to bring your loan current may be of assistance but depending on the fire sale price, repaying it might eat into what proceeds you would get from the house and still leave you in debt on the cards.

        The issue I’m stuck on is if the better move is to let the house go, stop paying your other debt and follow everything up with a bankruptcy to discharge all your obligations.

        While you would like to recapture something out of your equity the more important issue is being able to live within your income moving forward.

        The issue that complicates all of this is the fact you are already four months behind and time is not on our side.

        So let me ask, if you didn’t have the mortgage situation or other debts hanging over your head, would you be able to find a place to live and get by on your current income?

        I’m hoping Andy chimes in as well.

        Steve

      • http://northeast-properties.com Andy Faria

        FC attny fees are always a bit different, a lot depends on how long the loan has been in active FC, the more steps they have taken the more it will likely cost. Each state has different FC timelines so it will also vary from state to state.

        As an example I can use MA. We see that once a loan is referred to the attorney, fees usually jump right away to about $1k and they can grow upwards of $4-5k as it progresses through FC.

        Many times while a lender has the loan in review for mod and the loan is already in active foreclosure they may place things on hold and not take certain steps such as the BPO or title search, saving a bit on FC fees.

      • http://northeast-properties.com Andy Faria

        Linda,

        The only progress that can be made directly with the FC attny is paying the FULL amount of delinquency plus their attny fees. They can’t accept anything less than that, offer a modification, or cut any deals whatsoever. They can be frustrating to deal with and will normally be very pushy in a collections type of way.

        Wells Fargo is the only one that can make any changes. When you contact the FC attny, the only real question you will have is ,”has Wells notified you that the sale date has been postponed?” If not, then the next call should be to Wells to inform them that the FC attny still has an active sale date for 12/14 and they need to be notified of the postponement.

      • http://northeast-properties.com Andy Faria

        I wish I knew the exact financials that were submitted for the mod review and why it was denied originally. She could be so close to getting a mod that puts the entire mortgage issue to bed, but I just don’t have enough info. I’m intrigued.

        Linda, I make calls with people every day to Wells Fargo to help them understand whats going on with their mod review. I’m ‘slowish’ today and if you would like you can give me a call and I’ll do my best to help you in any way I can. 866-794-1869, just ask for me.

        There would be no fee whatsoever and I promise I won’t attempt to sell you ANYTHING, I’m just intrigued. All I ask in return is that if you learn something, than you come back here and pay-it-forward by sharing your experience so others can learn from it.

      • http://GetOutOfDebt.org Steve Rhode

        A generous offer. Thank you Andy. I hope Linda calls you.

      • Lindagreenfield

        Steve you asked ” if you didn’t have the mortgage situation or other debts hanging over your head, would you be able to find a place to live and get by on your current income?’

        Yes I have been looking at other places, and there are acceptable options in my price range. I feel certain finding another home/ apt/ etc wouldnt be too hard to do. I am wondering what my credit will look when the smoke is cleared from all of this? Only time will tell I guess.
        And Andy thanks for taking the time to talk to me on the phone today and for all of your help. When this is all over I may have enough experience to get a second job as a financial counselor myself!
        Thanks again and will keep you posted,
        Linda

      • http://GetOutOfDebt.org Steve Rhode

        Not sure what you and Andy came up with but if you decide to hand the house back, discharge all of your debt with bankruptcy, then you will be able to rebuild your credit again and have a better future.

      • Lindagreenfield

        Steve, Andy and I had a good conversation about what direction I should take. He was a WORLD of help as you have been. FInding this website has been a lifesaver, thanks again for your willingness to help and offer your assitance. I do have one thought, if I am able to sell my house would it be prudent to hang onto the equity i get out of the sale and go ahead and file chapter 13 on the credit card debts? At that point I am wondering what id’ have to lose.
        I listed my house for sale with the realtor today, we’re asking $158,000.00 which is more than I paid for the home and enough to save my equity. She seems to think the house will sell fairly quickly.
        Still scared but feeling better since I have a ‘plan’.
        Thanks again,

      • http://GetOutOfDebt.org Steve Rhode

        Linda,

        Awesome.

        Andy was very generous to offer his expertise for free. I’m glad you connected.

        You would not be able to hold onto your equity through a bankruptcy.

        Considering you’ll have some cash in hand and the residual debt it might be prudent to settle the debt using SOME of the cash. This would leave you some to start over with, you will have avoided bankruptcy, and of course this all hinges on a fast sale.

        I feel much better about the $158K price than the $165K. I’ve just seen too many homes lost at the last minute because an agent priced it high to maximize their commission.

        Since you only have $1,000 cash on hand now it might make excellent sense to stop paying the credit cards this month so you have some cash to use for the necessities. If the home sells and you go for the settlement route then the fact you are already behind on your cards will accelerate the settlement process.

        If the home does not sell then both the mortgage and credit card debt can be addressed with a bankruptcy.

        I would suggest that just as you got a great benefit out of talking to Andy today about the mortgage, you will get a similar benefit on getting assistance implementing a debt settlement solution by working with Damon Day.

        Sleep well tonight, you are in good hands.

      • http://northeast-properties.com Andy Faria

        Linda, I enjoyed our talk today, you’re a great person and I have a lot of faith that you’ll get through this.

        Here is my take and the steps I would take:

        1. Loan Modification. Linda is stuck in loan mod limbo at the moment but Wells told her today that the sale date has been postponed until Jan 18, that’s a good sign. I’m confident that she should wait out the modification review because it offers the best and cheapest option to get her loan out of foreclosure and possibly get her payments down.

        She was denied a HAMP modification, but its understandable why, her HAMP DTI is 31%-32%, that gets denied for HAMP every time, no need to look further. Wells will review every loan for HAMP first, even if it’s obvious it will never qualify, then they deny it and immediately begin a review for an ‘in-house’ modification. Linda is right now in review for an ‘inhouse mod’ and I feel confident that the income/expenses she submitted will qualify her for something.

        The downside here is that based on Linda’s current and projected income, unless the modification lowers her payments from $889/mo to between $600-$700, she will continue to struggle and will eventually end up in the same spot. There is no guarantee that this modification will get her payments that low, but my advice is to accept whatever modification they offer, even if she realizes that she won’t be able to keep it current forever. Accepting any modification agreement they offer should bring the loan current stopping the foreclosure process(allowing for step 1a to play out).

        My advice here is to continue to call Wells every other day and make sure they don’t need any docs updated (pay stubs, bank statements, etc). Always confirm that the sale date is still set for 1/18 and continue to monitor the sale date that the FC attny has and continue to request that Wells notify them if it doesn’t match. Linda, keep your eyes peeled for fedex or ups packages, that’s normally how the important paperwork arrives.

        1a List the property for sale right away. The fact remains that unless the mortgage payment comes down to $600-$700 Linda won’t be able to afford the home based on current and projected income. The bright spot here is that this home has equity, she owes $122k and her real estate agent has advised her that $155k is a good ‘fire sale’ asking price.

        Let’s assume she get’s an offer for the full $155k. She estimates she owes $122k on the home, add in there $6000 for the attny fees and delinquency and also add in the $7750 for real estate commission, and you have about $136k for a total estimated payoff(give or take a bit for normal closing costs). That leaves about $19k-$20k left over for Linda, she would get about two-thirds of her initial down payment of $30k back.

        That $19-$20k would be a very important step in moving on and could go towards securing new housing, dealing with the credit cards, or as a security blanket until she decides what to do. Listing the house right away at a good price, while the mod is still in review, will only create more options for Linda should the modification come back as something she can’t really afford beyond a few months. The more options the better.

        2. Bankruptcy. Linda has already consulted with a bankruptcy attorney in her area and has already made preparations to go this route if it’s deemed to be necessary, very smart move. If for some reason Wells outright denies the modification and a sale date is right around the corner than filing BK should prevent the sale of the property, and buy more time to find a buyer. A modification provides her a better solution to fix the foreclosure right now (plus it’s cheaper) and that’s why I believe she should continue to wait on that review, but BK is always there as her safety net to protect the equity and buy time.

        3. Credit Cards. Linda has $16,500 in credit card debt. She is already behind on minimum payments on almost all of it from what I understand. My advice with this is to wait and see how the mortgage/home situation pans out before making any moves, payments, or fast decisions on the credit card debt. It shouldn’t take longer than a month to get answers on the mod and unless she gets a legal notice from one of the creditors, another month shouldn’t change much.

        How to address the credit card debt will rely a lot on how the mortgage/home situation plays out. Only after figuring out how much it will cost to provide the most basic neccessity, a roof over her head, can she figure out how much she can put towards her outstanding unsecured debts.

        If the mod comes back with a payment she can afford and she is going to keep the home, I would probably recommend bankruptcy after the mod is complete. With her income she may very well qualify for a Chapter 7 at that point and be able to wipe out the full $16k and the mortgage can remain modified and won’t be affected. I figure the minimum payments on $16k would be about $450-$500/mo and that on top of any realistic modified payment every month would be quite a stretch.

        If Linda chooses to sell the house, walks away with some cash, and finds a new affordable place to live, than the options change a bit in dealing with the unsecured debt. Settling the debt now becomes an option at this point, as long as she doesn’t have to spend every last dime and can hold on to some of it as savings.

        Bankruptcy could be more of a challenge should she sell the home, only because her expenses will have been reduced and will now have a chunk of cash on hand, trustees dream of this kind of situation.

        Overall, I think Linda is taking all the correct steps and only time will tell how it plays out but with a good plan she should walk away from this without too much damage.

        Linda, if you ever run into any trouble or don’t understand anything that Wells Fargo is telling you, you have my number, don’t hesitate to call or come back here and I’ll help in any way I can.

        Good luck and keep us posted, I’ll be pulling for you.

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