Can someone shoot me a dose of reality?

[ItsJustMe]

I have a million things going through my head, and a call in to a bankruptcy attorney, to get an outside opinion.

Here's the story. We have a house, upside down but not by a lot. $55K in credit card debt ($1K+ per month, minimums), $10K in student loans, $25K in car loans. CC debt was higher but we worked our butts off last year and paid it down to where it is now.

Mortgage: 1st (original purchase) for $295K, 2nd $90K (refi). Home value, zillow says $375K, reality says low to mid $300s ($330K seems realistic). Mortgage (escrowed) is $3300.

Lost my (PT) job. Husband will soon loose his overtime. We are realizing that continuing to pay on everything as is is basically just drawing out the ineveitable. Either walking away from the house, or decaring bankruptcy, or both. We have a call in to an attorney.

From what I've read, a mod probably won't work for us. Countrywide has no reason to mod (and, we have a good rate and conventional 30 year loan). I've scheduled a workshop with NACA (but the earliest is AUGUST!) to see if maybe the 2nd can modify, but from what I've read that doesn't sound likely.

If we stopped paying the 2nd, continue paying the first, and declare bankruptcy, can we include the 2nd in the bankruptcy? I'm not sure I really understand how mortgages work w/filing, didn't even realize it was an option/possible until I started reading online about it.

We are in CA. Our income for last year was $105K, this year will probably be 95K. We had a VERY GOOD Jan/Feb ($15K each), but our income now (and should be in the future) about $7K a month.

We would like to keep our house if it is in our best interest, but when you take the emotion out of it (after reading here) we just don't care. Either, or. We are simply tired of robbing Peter to pay Paul (or however it goes). We have lived like that for too many years, which is exactly how we got in this mess in the first place. We just want to make the best choice for ourselves and our future, KWIM.

Anyways. Any opinions? Like I said, we have a call in to an attorney, and will pursue NACA (and have sent letters to 1st and 2nd requesting mod). Just thinking, while I wait to feel out our options w/professionals.

[ORNV3]

As I understand it you can keep your house and get rid of the second if the second is totally unsecured and you file Ch. 13. Not sure....

[ItsJustMe]

Unsecured as in, no equity, right? Our 2nd still has interest in the property (about $40K, I'm guessing, on a 90K+ loan).

[ORNV3]

Yes unsecured as in the house is now worth less than what you owe on the first mortgage.

[ItsJustMe]

Thanks. So, do you know what would happen if we stopped paying the 2nd but continued paying the 1st? Would the 2nd be willing to negotiate, or anything that could be done w/ the debt through a bankruptcy?

[Enough Already]

I've read other posts where people have negotiated a settlement with the 2nd. From what I've read you may be able to settle for as little as 5% - 10%. It's definitely worth trying.

[ItsJustMe]

I imagine though that those cases, there was no equity in the 2nd. Wouldn't you think? Stopping paying on the 2nd is the plan for now, though (until we talk to someone, NACA or attorney, who knows better than us LOL). We'll see what happens.

[melanieg]

Just an FYI with NACA...They can't help you with your 2nd...only 1st mortgages. At least that is what I was told, as I was (am) in a similar situation. Luckily (I think!) MY FMV should be JUST under my 1st mortgage, so hopefully my BK will go through. Also, it doesn't hurt to try to modify your 1st. This is what I did, and I got my 1st (Freddie Mac) lowered from 5.375 to 3.375 life of the loan.

[ItsJustMe]

Thanks. I'll keep trying for the 1st mod, and begging for the 2nd mod LOL. It sucks to be in such an 'in between' place. Not screwed enough for anyone to help, but too screwed to make things work as is.