Ask The Get Out of Debt Experts Disability Mortgage

The Bank Won’t Modify Our Second Mortgage After a Job Loss. – Laura

“Dear Steve,

I am on disability. My husband lost his job in July. We are living on disability and unemployment checks and have a greatly diminished income. Our bank, Wells Fargo, will not work with us on loan modification. We have a primary loan of $315K at 2.85%. Our second mortgage is for about $66K and is at 8.19%. We have asked them to lower the interest rate on the second loan so that we could still manage to pay both somehow. They say our house is now worth about $350,000 and they won’t help us. They advised us to go into “short sale” and lose our home.

Do you have any other ideas that would allow us to keep our home?

We also have about $18k in credit card debt that we are managing to pay very slowly. Should we try to work with those companies?


Dear Laura,

From what you’ve shared you might want to talk to a local bankruptcy attorney about a Chapter 13 bankruptcy that would allow you to probably strip the second mortgage and deal with the credit card debt, if you feel you can stay in the home.

You can click here to find a local bankruptcy attorney.

It might just be though that with the July job loss the home is no longer affordable and downsizing might just be in your best interest to regroup within your current income. In that case either a short sale or a foreclosure to deal with the house, potentially followed by a Chapter 7 bankruptcy might clear the decks of the debt and give you a good chance at a fresh start.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

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.

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