We used to own a home with a 1st and 2nd mortgage. Because we were unable to keep up with the mortgage payments after our in-home daycare business closed, our home was forclosed in June 2008 and was sold in auction for about the same amount as our 1st mortgage I also had to stop making payments on most of my credit cards so we’ll have enough money to spend on the most basic needs like food, utility bills, etc. Becuase of this my credit card debt went up to approximately $30,000.
Since the foreclosure auction only covered my 1st mortgage, and the 2nd mortgage ($110,000) apprears as a charge-off in my credit report, am I still liable for it? If so, would i qualify for a debt settlement if I included the $30,000 in unsecured credit card debt or would I be better off just filing for bankruptcy? I really want to try to pick up the pieces and start fixing my credit but I don’t know if that would still be feasible at this point. Your expert advice would be greatly appreciated.
Honest answer, you are better off filing bankruptcy at this point. The charge off is only an accounting function and you still owe the second mortgage.
Any other approach like debt management or debt settlement is not going to allow you to pick up the pieces and move on. Bankruptcy will give you some credit score hate but it can be mended. The big advantage of bankruptcy for you is that it will allow you to close the door on the past, grab those pieces you mentioned and move on.
Before you make up your mind, schedule a free bankruptcy consultation with a local bankruptcy attorney and get all the facts. My bet is that after you leave that appointment you will agree with me.