Another Question For Professor Shays

[karman]

I mentioned in a previous post that we had our first mortgage and heloc with CW which both were discharged in a chapter 7 bankruptcy back in 2006 (both never reaffirmed). We have continued to make our regular payments and have never been late. We have already made a decision to let the house go so we can relocate to another part of the country for financial reasons. Our house is under water for about forty thousand dollars. Being that we have a bankruptcy already on credit reports I am concern that another public record will even tank our scores even further. Would we be better asking for a deed in lieu of foreclosure or list it with a realtor for around ninety days after we move out for a short sale. It would seem crazy for CW to go to all of the trouble and expense to go through foreclosure when they could get the deed in there hands quickly. Any thoughts...?

[ProfessorShays]

Bankruptcy remains on your credit record for ten (10) years from the date of discharge entry. Foreclosures on the other hand remain on your credit report for seven (7) years. So, unless your foreclosure was more than something like 3 years ago, it shouldn't be a problem. I do believe that foreclosures down the road will not be that much of a credit ding, given those with high FICO scores are recognizing that walking may be the right business decision. If it were me, I'd take advantage of the situation by remaining in the home as long as possible and enjoy the "free rent." Note too that there has been a lot of discussion on this site that suggests deeds-in-lieu have the same credit negativity as foreclosures.

Daniel

[karman]

Bankruptcy remains on your credit record for ten (10) years from the date of discharge entry. Foreclosures on the other hand remain on your credit report for seven (7) years. So, unless your foreclosure was more than something like 3 years ago, it shouldn't be a problem. I do believe that foreclosures down the road will not be that much of a credit ding, given those with high FICO scores are recognizing that walking may be the right business decision. If it were me, I'd take advantage of the situation by remaining in the home as long as possible and enjoy the "free rent." Note too that there has been a lot of discussion on this site that suggests deeds-in-lieu have the same credit negativity as foreclosures.

Daniel

Maybe my question was a bit confusing. We have NOT gone through the foreclosure process as of yet. We were just concern about another public record with the addition of our previous bankruptcy that is currently on our reports. I was just thinking if there maybe some way to avoid the actual foreclosure, due to the fact we had both loans already discharged back in 2006.

[ProfessorShays]

It was clear to me. What I was suggesting is the credit ding associated with the foreclosure will not, I believe, be that much of an impact.

Daniel

[southwest]

Professor Shays:
Thank you for all your enlightening posts.
We stopped paying GMAC Nov 1..We received a NOD a month ago. After 4 excruciating months of trying to work out a loan mod with the unresponsive
cretins at GMAC , we gave up. They did agree to modify our second, not our
first. Inane !
We are $200,000 upsidedown in Nevada. I refuse to file Chap 13, as I will not become penniless losing my bank savings to the trustee. I actually want my wife to have her boss lay her off so if we need to, we can file Chapter 7 instead of 13. I will not, under any circumstances file a 13..I'll skip before I lose my last dollars...
I offered GMAC some money to payoff our second Offered $8,000 cash on a $114,000 lien ..No response, no interest.
I asked GMAC to restructure our first to a 3% interest only ..No response
I hired an attorney - They treated him like they treated us..Nada !
Might you have any suggestions before we are foreclosed..The clock is obviously ticking..
Thank you Professor Shays ..,

[ProfessorShays]

If you've read Racoon's posts you begin to understand why Nevada isn't a good state to invest in real estate when compared with its neighbors. From a practical standpoint, I would expect GMAC to foreclose on its first loan and then to seek recovery for the remaining dollars. I would be seeking the advice and counsel from a lawyer who understands both Federal bankruptcy law and Nevada law as it relates to exemptions. A quick Google search of the keywords "Nevada Bankruptcy Exemptions" disclosed the following:

Private libraries - $5,000
All family pictures and keepsake, necessary household goods and yard equipment - $12,000
Farm trucks, farm stock, farm tools, farm equipment, supplies and seed - $4,500
The cabin or dwelling of a miner or prospector, his cars, implements and appliances necessary for carrying on any mining operations and his mining claim actually worked by the debtor - $4,500
Money, not to exceed $500,000 in present value held in qualified retirement plans, employee pension plan or profit sharing plans - $500,000
Motor vehicle - $15,000
Any prosthesis or equipment prescribed by a physician or dentist
Tools of trade -$10,000

I'm thinking it might be time to buy a car and put $15K down. In addition, depending upon the job you have you might want to get somewhere around $10K in tools, and start reading up on how many books you can buy for your library for $5K. Oh and don't forget to use your excess funds properly by contributing them to a qualified retirement plan.

Daniel

[ProfessorShays]

I forgot to mention that GMAC will obviously chase you on that second loan too (that becomes unsecured after the foreclosure sale on the first loan).

Daniel