svb4jb

should I try to refi or miss mortgage payments

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Thank you Denita. I have some questions to ask regarding your last post.

For debt settlement, how big lump sum? Are you saying like if I negotiated to 50% of a 10K debt I would have to pay the 5K in one lump sum? No, can't do that obviously. You also said "it is a credit killer." you're talking "debt settlement" right?

What about the debt snowball? Cut up my cards and close accounts while I'm paying them off? That would negatively impact my credit score also, is that right? In addition, when I put my figures into a debt calculator that helps figure out what to put toward which credit card for the snowball effect, it could be done in 4.5 years roughly. If we were disciplined enough to do this, would there be any negative impact on our credit at all?

the car. . . and the amount it is worth: I went to that website you referred us to and the state of Nevada says not more than 15K. I'm assuming then we would lose the car under BK 7 and 11, right? How do I find outthe car's value instead ofKBB? That's the number I got.

We could sell the car like you mentioned and purchase a beater, yes. As long as it is reliable and has 4wheel drive due to where we live, in and out of Tahoe! Hmmm.

Now, I stayed up way too late last night reading about BK and other threads, experiences, etc. . .I've still got a ton more reading and researching to do cuz I'm not getting it. But you said, "if you are over median you can file a ch 7 if your disposablemonthly income is less than X. You are right, it is $105/month, but I think we still wouldn't qualify. I'm going to redo the form with more accurate information and more time and see what happens.

In BK then, not 7, they can take the car? Also, does the court put you on some repayment plan?

Sounds like you are recommeding BK, but if I'm over median then what do you think?

Also, with regards to streamline refi, how does this exactly help if we having the same payment per month. AND did youj mean that we would have to pay the closing costs up front?

Sorry for all the questions, I'm stressed to the max! (no pun intended)

SV

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Yes, she was talking about debt settlement when she said CREDIT KILLER. For 99% of people, it is a horrible way to go because it crushes your credit, creates 1099-COD income, and takes years.

If you are partaking in the 'debt snowball' plan, it usually would require a trip into the hardship department so that the creditors will lower or eliminate interest accrual. This usually digns your credit and takes years to pay it off. If you can swing it, have at it. I am all for paying what you can.

Regarding BK, the exemption amount has to do with the amount of vehicle EQUITY, not the value of your car. So assume you owe $15k and your vehicle is worth $19.5k. You have $4500 in equity, which is within the $4500 Nevada vehicle exemption.

Additionally, work through form 22A line by line if you are serious about filing. For the vast vast majority of filers, the means test is a paper tiger. Once you deduct all of your secure debts (home, car, etc.) and then all of your allowable deductions, if you still have $105 leftover then you probably have the ability to pay back your creditors and shouldn't be filing anyway. The "median income" cutoff is just meant to divide those who don't have to go through the hassle of calculating expenses & income deductions (above median) from those that do not (below median).

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Ok, I was probably rambling too much to make much sense in the last post! Hopefully this one will be a little more organized.

Last question first: on the streamline refi, you don't get the same payment because you are looking to reduce your interest rate right? So, if you reduce the rate to 5%, 30 yr fixed, as an example, and you are financing the same principal balance you have now, the monthly payment will be less than your current one because the interest rate is less.

When you borrow money (refinance or purchase money loan) there are closing costs that are associated with borrowing the funds. Those costs come from the lender, the attorney/title co and some government costs (like recording fees).

When you shop for a loan the loan officer has to give you an accurate GFE (Good Faith Estimate) to show you what those costs are. In fact, the new RESPA regulation took effect Jan 2010 requiring an easier to read GFE so you know what your costs will be when you go to closing. By paying up front, I mean you have to bring in whatever those funds are at the time of the refinace. Note, if you are going to file BK, then refi before you file.

If you are going to go BK, it is not something that you can learn in one night or research ! LOL :) Even if you are over median income you may still be able to file a Ch 7 and receive a discharge. The key is your Schedules I and J. If you have lots of secured debt (house/car etc) these and other expenses probably keep you under the $105/mth DMI which means you would not have to file a Ch 13. Some expenses are allowed and others are not. The best way is to find experienced BK attorney's in your district and interview them. Not all attorney's are good. You want one that will represent your best interest, whether that be filing a Ch 7 or a Ch 13.

NV has very generous exemptions for your auto and personal exemptions. When they talk about exemptions they are referring to equity in your vehicle(s). Equity is the difference between the market value and the loan on it. That is why the actual market value is so important because included in this part of your personal exemptions is also "your non-retirement bank accounts, and most of your other personal possessions, other than your house. " If you file with your husband you can double the exemptions. If you are considering a BK it is far better to speak to an attorney about your specific situation, the first consultation with a BK attorney is free usually. Have your questions written down with an accurate actual budget for your last 6 months to get the most out of your attorney interview.

If you decide to not file BK but to do the debt snowball, read daveramsey.com for details on the snowball. This is just a summary here.Closing your cc's has a negative impact on your credit. If you think you can work the debt snowball and not ever charge on the accounts even though they are open, then it might be the solution for you. However, many people find that they use the card for an emergency and they have an emergency every month! It is not that effective in that instance. If you can put away the cards (sock drawer or freezer is good) and not charge on them and still do the snowball, then you will not have a ding on your reports. If you put the cards in a hardship plan then you get a good interest rate, but usually the creditor wants to have you close the account in exchange for that good rate (zero percent or 2% or 4% is common). Having said that, a hardship plan is much better on your score than a debt settlement plan or a BK. At the end of a successful hardship plan you are paid off and all the accounts are zero balance. Your score would take a hit due to closing the account. Some people overcome this by putting some unsecured in the plan and keeping others open (but not charging on them).

First question last! Debt settlement is exactly like you posted. If you settle for 50% the creditor usually wants the payment in one shot. Some will allow 3 months payment. Look at the debt settlement forum here to get an idea. In any event, you will have a 1099 and taxes to pay on the forgiven amount. Your credit report will read "Settlement" and your score takes a big hit. It takes longer to recover from a debt settlement when you have multiple accounts.

There are a lot of different plans for you to think about. You just have to remember to protect you and your family first and find the program that works best with your budget and your temperament.

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Denita,

You are amazing! how do you know all this? Thank you for answering all my questions. I only have a couple more . ..for now!

Why would a bank even do a "streamline refinance?" Is it just something I call up my bank, or any other bank and ask? If I will still have closing costs to pay, without any extra income to pay it, might be out of the question for us. Do you reccommend this?

BK: I do not have a lot of secured debt, just the two things you listed, House and one car payment. However, i redid the Means test and it does seem like we qualify, if I answered the questions correctly. Some were a little tricky to understand (for me anyway).

BK: If we need a good attorney, and you say to interview them, is there someplace someone has written good interview questions? I hardly know what to ask them?! Also, in Ch7, can they take your car and your house? I believe I read that they cannot if you fill out a reaffirmation form?

Debt Snowball: I totally get this. Thank you for explaining. I believe we can do this. However, it is 5 years of it. When we make more money, more could go to those debts, however, we don't even have any savings!!!!! We do have a 529 and 403b,s etc., but no actual savingS!!!!! How do you know what is best? Man, I have never felt so helpless, ignorant, and confused as right now!88-)

Thanks again Denita!

SV

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Well, I know this because I have been there, done that! :) That's why I am on this board now, I am trying to 'pay it forward'. xangelx

Streamline Refi: The banks want to do this because they get an incentive from the government. http://library.hsh.com/read_article-hsh.asp?row_id=1276

Go here for HARP info: http://makinghomeaffordable.gov/refinance_eligibility.html

BK: If you are current on your house when you file and remain current, they can not take your house. Don't sign a reaffirmation unless it is in your best interest. If you are current on your car in most BK districts you can do a 'ride through' without signing a reaffirmation. The exception to that rule appears to be Ford Credit (FMC) and Chrysler Financial. They will repo even if you are current unless you sign a reaffirmation agreement. :!:

Debt snowball: You put $$ in savings FIRST! Protect yourself and your family. Work your budget around the savings.

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"BK: If we need a good attorney, and you say to interview them, is there someplace someone has written good interview questions?"

To calm your nerves a bit, you could take a couple of hours and go to the courthouse and sit through some BK cases.

This would give you some firsthand insight on what to expect, and you would be able to see some good and bad BK lawyers in action doing what they do, it also would help you get some good names of BK lawyers.

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Hmmmm. Not sure if I can find the time inbetween work and kids to go watch some court cases. I'd have to pay for daycare for that too! :shock:

At any rate, I looked up HARP Denita and it filled out the questionaire. It looks like you have to have a Fannie or Freddie loan, which we do not. Hmmmm. Am I right on thinking this? The questionnaire says we do not qualify.

I think we're leaning toward Bankruptcy.:cry:

i need to read some more things about how long it takes to rebuild credit.

I am not late on anything ever and have not been delinquent, but I'm getting SUPER CLOSE to being there! thanks for all your input. I'm sure I'll have more questions after I read more about BK and solicit a lawyer!

Thanks again,

SV

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Well, your credit starts improving right away from the BK very quickly if you repair and rebuild. I was discharged 12 months ago (Jan 09) from BK and my score is 691, I understand it takes about 2 yrs from discharge to get back into the 700's. I'm still working on it. Part of the process is showing 24 months of consistent on time payment, that's why it takes two years to rebuild!

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Part of the process is showing 24 months of consistent on time payment, that's why it takes two years to rebuild!
At month 27 post-bk7, I had a middle FICO of 717. Bought FHA at month 30. This was in 2007, so times have changed a bit, but the timeline for rebuilding probably hasn't. So there is hope....

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Hello all you helpful souls,

I went and did some research and met with 4 different lawyers. Oh, that was interesting. Anyhow, I learned that we make too much to qualify for BK7 and so now I'm thinking that we should possibly try the debt settlement technique. What do you all think, given my information from the prior posts a couple weeks ago.

I've been reading about it and I'm super scared and have a ton of questions.

Remember, I'm not late on anything yet! I'm super close to being there, possibly this month as my husband has had to decrease hours yet again!

HELP!

SV

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I feel your pain, all of you. I was fortunate enough to find a company that is legitimate. Now I know that the banks the news and government say we shouldn’t go to any company that charges, that the banks will modify your loans for free. Well, how many of us on here have had our loans modified by the banks?

A lot have lost their homes, and lot more still will unless you do what’s necessary to save your homes from the banks. I went through what most of you have, I was there. Then I was referred to Corey Lassiter of Clear Image Financial Group. They saved my home.

I know I would have lost it to Wachovia if it wasn’t for him, Tasha, Denise and the rest of the people who work there. Got me caught up on my mortgage 1st & 2nd, lowered my interested rate & payment, and secured me a 50k principle reduction.

Before anyone else on here loses their homes you need to give them a call 877-940-1477 ext 231. Corey Lassiter. Don’t be afraid of hiring a loan modification company, be afraid of the banks, they are the ones who are taking our homes!

I know they get the job done. News and TV made me afraid to even consider a loan modification company because they are all scams and my lender will do it for free (wrong). There hasn’t been not one story about a good company and when I tried to contact my local news channel they told me that my success story wasn’t news (What!)

So, I am making it my mission to spread the word on this GREAT company!

I would think that if the people who start these forums and blogs were really trying to help that they’d do research to find credible companies that can help us out when we have run out of options. So this thread here is for eveyone to post info on companies (loan modification, lawyers, non-profits) who have been able to help you save your home!

Edited by ZBurkett

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