Kathy Y Posted October 12, 2004 Report Share Posted October 12, 2004 We had quite a bit of credit card debt, our own fault, but were paying ok on it. I quit my job when I had my 2nd child (my pay would have totally gone to day care and it just wasn't worth it). At about the same time our house payment went up about $300/month because of taxes. We decided to sell the house, which we got way under what it's appraised for now. The plan was to take the extra $ we made and settle with the creditors for less and try to get it removed from reports - even if they didn't remove, they would show paid, then we'd refinance the new house for a lower rate. We have our house up for sale now, but a few days ago got a summons for court with Credigy. If we go to court and they get a judgment, I assume we will have to pay the entire amount out of the proceeds from the house when it sells and not a settlement amount? If I were to file BK before I sell the house, we'll never be able to qualify for another and if I sell the house first, they'll know about the money we got for it and not let us file. I can imagine the answer will be to suck it up and pay Credigy with the proceeds, then file Bk after we're in a new house, but they say the account is over $8,000 and that won't leave me with enough for closing costs and the down payment we have to pay on the new house because of our bad credit.Is there any way to do this so that I don't have to file BK or I can do it and still be able to move and keep my money?I know that sounds terrible, but we had every intention on giving the creditors something and now they've made it impossible.Thanks Link to comment Share on other sites More sharing options...
bingo Posted October 13, 2004 Report Share Posted October 13, 2004 What state are you in and, what sort of equity do you have in the home?This sentence is confusing. We decided to sell the house, which we got way under what it's appraised for nowHave you actually sold the house or not? Link to comment Share on other sites More sharing options...
Fade to Black Posted October 13, 2004 Report Share Posted October 13, 2004 Ditto..What state are you in?How long will it take to sell the house?As soon as you get an offer, put an offer on your new house that you want to buy on contingency <spelling may be wrong> that the deal depends on funds from the sale of the first. Any agent can help.Work out a finance plan for your new home now. Lenders will give you "ballpark figures" of closing costs and down payment with your credit.Figure out if any money < after sale of new house > will be available for creditors. That is the $ you can offer them to settle.It really depends on where you live as state laws differ greatly.As for the summons...answer it. That will prevent a default judgement and give you time. If you need help, this is the place to get help for everything along the way. Link to comment Share on other sites More sharing options...
Kathy Y Posted October 13, 2004 Author Report Share Posted October 13, 2004 The confusing sentence was just saying that the appraisal and market value on the house is much higher than what we paid for it, so we should have a good deal of money left after it sells. We are in Texas, so the house is safe. It's on the market now, but hasn't sold yet. I did answer the complaint and now they've sent me a date for a scheduling conference. (Which I am getting help with under the "Lawyer..." forum here)I just don't want to sell the house and one creditor that couldn't wait gets all the money we profit and I don't get to pay off everyone. I believe that the mortgage company will re-run the credit right before closing and I wouldn't want a BK to show up and mess up my rates. Link to comment Share on other sites More sharing options...
bingo Posted October 13, 2004 Report Share Posted October 13, 2004 You're on the cusp of screwing this up 6 ways to Sunday. ALL of the equity in a home is exempt from creditor seizure in bk in Texas. You need to pull that house off the mkt NOW and get to a lawyer and file the bk. You can sell the house after the bk if you like and keep all the equity.It's not true that a bk will preclude you from ever getting a mortgage.2 years of good credit post bk will qualify you for FHA financing at conventional rates. 4 years post bk and you'll qualify for other mortgage at prime rates. Link to comment Share on other sites More sharing options...
willingtocope Posted October 13, 2004 Report Share Posted October 13, 2004 Just a thought, but if you've reached the point where creditors are taking you to court, you might think about filing BK now. Trading unsecured debt (cc's) for secured debt (mortgage) is seldom a good idea. And this is particularly true if any of the CC's have reached the charge off stage and what you really have is collection agencies after you.Its admirable to want to pay off your CC's, but if they'be been charged off the CC has already been compensated for their "loss" by the US taxpayer, and the CA paid pennys on the dollar for the right to continue to hassle you. You don't owe them anything. If you do BK 7, being in TX, I'm pretty sure you'll get to keep your house and whatever equity is there. Once your BK is discharged, you can probably get another house (if that's what you really want) in year or so.Talk with a BK attorney... Link to comment Share on other sites More sharing options...
Kathy Y Posted October 13, 2004 Author Report Share Posted October 13, 2004 I could keep the house and wait a couple of years, but our payment has gone up so much ($300/mo) because of taxes I just wanted to be in a cheaper house so that we wouldn't get into this mess again. Thank you all for your replies, you were all helpful. Link to comment Share on other sites More sharing options...
willingtocope Posted October 13, 2004 Report Share Posted October 13, 2004 Just guessing, but are your CC payments more than $300 / month? If your taxes went up that much, chances are the value of your house increased. Much better to put your money into the house than to pay off CCs with it... Link to comment Share on other sites More sharing options...
bingo Posted October 13, 2004 Report Share Posted October 13, 2004 Don't get hung up on buying a house with subprime rates and fees. Nothing wrong with renting for a couple of years post BK and then buying.You're not in too bad of shape. You live in a debtor friendly state with a ton of exemptions in a BK. The trick is, to execrise those exemptions the right way. You are in an adversial situation. Your best interest and your creditors best interest have diverged. Don't worry about them -take care of yourself to the maximum extend the law allows.Most bk lawyers give free initial consultations. Talk with a couple and get your options explained. Link to comment Share on other sites More sharing options...
Fade to Black Posted October 14, 2004 Report Share Posted October 14, 2004 If you sell the house, all the proceeds are exempt for 6 months after the sale in order to let you have time to buy a new house. Link to comment Share on other sites More sharing options...
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