Unsure of what to do, bankruptcy or foreclosure?

I am in a terrible situation and have been trying to crawl myself out of it for quite sometime and I don't know where else to turn. I believe I can see the light at the end of the tunnel to get myself caught up, but now I have been notified that my mortgage servicer has started the foreclosure process of my home. When I bought this home, I had just been promoted to an IT position through taco bell where I was the field tech for about 40 stores. About 7 months later my employer decided to partner with a third-party company, which in return laid me off from this position. My annual salary from this position was 60k+. Since then I have secured a different job as an Assistant General manager at an Arby's grossing about 34k annually. My monthly mortgage payment is $1,127. I also now have gotten two roommates in this household that pay me $400 each, every month, which is going to help me get caught up, but it would be over the course of 6-8 months to make all of my loans current. The monthly income from my job is about $1,900. So $2,700 with payment of roommates. I have 3 credit cards that I have canceled, and am trying to pay off as well. The total debt between the three is about $3,500. The monthly payment agreement for all 3 cards is $300. I have a car loan, that has about $5,000 left to pay. My monthly payment for that is 240. I also have student loans that I am behind on, and need to be paying $100 a month. The total debt of student loans are around $13,000. The roommates have just moved in last month, so I will consistently be receiving an additional $800 monthly to my normal $1,900. Until now, I have been missing payments left and right, and have been receiving letters from debt collectors and attorneys regarding debt collection. I am very afraid to lose my home, I worked too hard to get to where I was. Keeping it afloat is something I genuinely need. I do not have any other large-sized assets other than my car and home. My mortgage servicer has sent me a "loss-mitigation" form to fill out and return to see if I can apply for a section that would not make me lose my home. The representative I had talked to did not seem hopeful that my application would be approved and accepted, but said it was worth a shot. 

 

I am only 25 years old, and am not knowledgeable about bankruptcy or foreclosure processes. If the worst case scenario occurs and my mortgage servicer decides to foreclose on my house, do I need to think about bankruptcy? If bankruptcy occurs, is there a way for me to still keep my car for transportation? If someone is reading this, please help me become knowledgeable in what I need to do financially.

Thanks, Brandon

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  • I'm sorry that you are going though all that. To get the most information that applies directly to your circumstances, you should consult a bankruptcy attorney in your area. They usually do free consultations where they can make a recommendation based on your scenario.

    As a basic bit of info, Chapter 13 bankruptcy is the one that usually allows you to keep your home as long as you get caught up on the payments over the course of the bankruptcy payment plan. Ch 13 is where you make a plan to pay some or all of your debt over a period of years. This link should explain the basics: 

    https://www.alllaw.com/articles/nolo/bankruptcy/chapter-13-affects-mortgages-foreclosure.html

    Also, please take a look at NACA and their home save program. They are a homeowner advocacy group. The home saver program is designed to help people facing unaffordable mortgages and foreclosure keep their homes. There is a number to call that will connect you with a home counselor who might be able to help get your servicer to accept new terms.  This might be a better place to start as bankruptcy has some serious long-lasting effects.

    https://www.naca.com/home-save/

    I hope one of these pans out. Please keep us informed!

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    • Tobias thank you so much for the information. I will do what I can and keep you guys updated. I plan on getting a free consultation with an attorney in the next couple of days. 

       

      I will also research on the links you provided for me. 

       

      Thank you so much

      Brandon

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  • Cornflower Blue Stallion said:
    I worked too hard to get to where I was. Keeping it afloat is something I genuinely need.

     You are 25, friend. I don’t mean that in any way patronizingly, though I’m sure it will sound that way. At 25, everything is still going to go through crazy wide swings and life is still before you like a glorious buffet. It often won’t feel that way until you look back at it, but that is what’s going on. A house is just a house.  There are going to be so many other houses. 

    I’m a little more than ten years older than you,  and one of the biggest changes that happens in those 10 years is not really you getting all that much wiser but you having a lot of time to interact with people who are much wiser than you.  In the past 10 years I’ve had the opportunity to see a lot of people make hard decisions and suffer lots of hard things and walk straight through those fires.  I’ve had the time to realize that nothing I thought was life or death when I was younger actually is life or death except for the things that really are life or death and even those you can get through. 

     Without your roommates you’re operating with less than $200 a month  for anything that’s not a bill.  With roommates, that becomes closer to $1000 which is more doable when you’re current, but it means you have to be dogged about making progress on catching up.  However, you probably will need to live like that any which way: and you’re not super likely to find a place where you can rent for $327.  So roommates plus a super tight budget right now is actually probably the best solution if you don’t have a way to get rid of your housing costs entirely.  I would also definitely consider selling the car and buying a beater if the car isn’t upside down and it’s going to take me more than a year to pay it off. 

     I want to affirm that I hear you saying that you feel really stuck. But you don’t have to be stuck, there will absolutely be better houses and if you had one $60,000 job another $60,000 job is coming your way in the future.  So, go ahead and pare down,  maybe pick up a side hustle since you’re in a non-exempt 40 hour a week job, and see if you can pay back the missed payments. But if you find you can’t manage to keep your feet to the fire, it might be more obvious to you and easier to accept that you need to sell the house after a few months of trying. 

    I know it doesn’t feel like it’s going to be OK, but it’s going to be OK. 

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  • I really appreciate the quick reply and insight on my situation. You're right when you say I feel like I'm stuck. I know that I'm not, and I know that you're right. I'm just more stressed and worried than I ever have been, I just never thought I would be at this point financially and that the decisions I made weren't the best. I bought the house with a girl (yes, young, dumb and in love like everyone else) and of course she left when sh** started hitting the fan after I lost my job. I haven't paid my car insurance in two months, and my student loans in about 5 months. I have tried requesting forbearance or deferment on the student loans, but was not successful. They have not started garnishing wages yet thankfully. 

     

    I just don't know which route I should go to, or which one would be better or worse and ect. I am pretty terrified that even if I get accepted in the loss-mitigation program through my mortgage servicer, that I will not have enough money to make it past the first 6 months of having extra payment added to my current payment. My other option is bankruptcy and I genuinely have no idea how that would go, or which chapter I would file. Is there a situation where I could file chapter 13 and be able to keep my house/car and have all of my debt consolidated? Or do you guys believe I wouldn't qualify for that? I'm trying to read up on everything, but there's a lot of finicky information about bankruptcy that I'm trying to take in. 

     

    In the back of my mind it feels like it would be a better choice to just let them take the house, and find an apartment so I could clear away that majority of this debt/stress on my shoulders, but I hate thinking about having to tell my roommates that we all have to move out right after they have moved in because I could not afford to keep up with my debt. 

     

    Again, thank you so much for the reply and information, it's really helped me get to a better state in my head. 

     

    Brandon

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  • Check out myfico dot com...they have a bankruptcy and debt section that was extremely helpful when I went through BK.

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