Any Advice Would Be Welcomed
My husband and I are in a bad situation, and are considering bankruptcy. I see many threads here that strongly advise against it, but I really don't know of any other way. If anyone can offer some or a specific alternative, I'd appreciate it. Any advice would be much appreciated.
3 years ago, when we barely 21, we made a bad decision- we got into a large mobile home and financed the loan for 67,000 dollars, on a 30 year note, at 12.9% interest. It pains me to admit how stupid we were, but we were 'had'. We were told that my father could co-sign, since we had no credit yet, and that my husband would be the primary and would be building credit while we paid. We were told that in 2 years, when that credit had built up, we could refinance the home in our name only, and get Daddy's name off.
Those were flat out lies- in fact, we recently discovered the mobile home dealer totally tricked us, and that the application they sent to the finance company actually listed my father as primary and my 21 year old husband as co-signer. We also have found that no one, and I mean no one will refinance our mobile home.
Of course, no one told us (but we should have done our homework and researched it, I realize) that mobile homes, esp those that are not on a note with land, depreciate. Rapidly. So now we have a mobile home that is probably worth half of the note, for 67,000. It's depreciated on it's own, and also is falling apart due to shoddy construction. We have paid only interest in the last 3 years, so the principal has not gone down a cent. Now, my husband and I never would have qualified for a payment this large (800 a month, not including the land payment)- we ourselves knew we couldn't pay that much but got the house in a kind of joint deal with my sister- who was supposed to pay three hundred a month in rent. She was a single Mom, and we were trying to help her and her child out. The three hundred a month would cover food, utilities and childcare (by me). But anyway, you can see where this is going? She gave up her baby and bailed in less than 6 months. We were heartbroken AND in serious trouble.
We have been making payments on this, payments that are over half of my husband's monthly income. Yes, over half of what he makes a month goes to just the house payment. Some months, food is very scarce near the end of the month. I cannot find work, due to the fact that we live in the middle o nowhere- he commutes 80 miles a day in an old car that barely runs. And we only have the one car, and he works shift work and over time. So I can't get a job around here, as there aren't any, and can't commute with no car. And no, there are no busses way out here.
So- to summarize, we have no other bills or debt. No credit cards, nothing at all. Just one old car, a house full of hand me down furniture, and no assets. No money in the bank either. We do not even rent videos, and the only eating out we do is the occasional 99 cent tacos. We recently celebrated our five year wedding anniversary- we couldn't even buy each other gifts. We went on a picnic, which was free, as that's all we could do. My point is, there is nothing to 'cut out' of our budget. And the stress of living this way, for going on 4 years, is tearing us up.
So, we are considering trying to get the note transfered into just my husbands name, letting the house get repossessed, and then filing bankruptcy. We have no assets, and in 7 years, at least we can start fresh.
I have told you all these details so you will all understand there is nothing to change, no lifestyles to cut out, and no other options. We made a mistake with this house, one very very bad mistake, and now we must get out of it, if we are ever going to recover. Do any of you have any suggestions as to how to get out of this mobile home loan, without filing bankruptcy? or is that the best option? Can anyone tell me what to expect with that? Or what I should do to prepare?
And would chapter 7 or chapter 13 be better, seeing as there is only one lender we owe to?
Any advice would be really helpful. Thank you in advance.
Just for some more info:
Do you have children?
What state and city (or area) are you in?
Have you gone to the bank that the loan is through and asked them if they can lower your rate?
I am truly sorry to hear that you are in this situation.
Just for some more info:
Do you have children?
What state and city (or area) are you in?
Have you gone to the bank that the loan is through and asked them if they can lower your rate?
I am truly sorry to hear that you are in this situation.
To Mr. Granger- Thank you very much for your advice. That is something to consider, and we might at least try it. The problems I see are that we live in such a rural area and are so far from the city. Also, it might be hard to find someone who'd pay $940 (the combined house and land amount) or even $800 (and then we could try to just absorb the $140 land payment). But it surely wouldn't hurt to try this route before we filed Chapter 7 or 13.
Mr. Iglooman-
No we do not have children, we are holding off on that until we are in a stable situation finacialy.
We are in Texas, about 40 miles north of San Antonio.
Yes, we did call them (the finance company, which is Conseco), and try to negotiate a buy back. We hoped they might take the house back, sell it at action, deduct whatever they got from the note, and then negotiate with us on a payoff amount. Then we thought we could take out a loan from a bank to pay that payoff amount, a loan that would be at a much lesser interest rate and also be for a significantly smaller amount. That would at least save our credit. But they were unwilling to work with us on that.
What they suggest was defferring payments, which I didn't see how that would help us get out of an 'upside down' loan at all, or they said they have something called a default transfer of equity. Which is where we would find someone to take over payments, and they said that they would transfer the title into that person's name. I am trying to find information on that- like if that person defaults, would we still be responsible, that kind of thing. But also, I am afraid we might not be able to find someone to take it over. Why would someone take over a note that has more owed on it that the home is worth? They pretty much suggested I 'trick' someone into it, but I'm not going to do that.
Beyond those suggestions, they pretty much said we made a mistake and now we have to live with it. But we can't go through with a 30 year note when the house won't be standing in 30 years! Man, hindsight is twenty-twenty sometimes.
Bankruptcy was created, and I'm referring specifically to Chapter 7 here, to help folks get a fresh start. Just because you file for bankruptcy does not make you a failure. You made a mistake, which we are all entitled to make, and now you need help out of it. From your post you appear to have explored your options (renting the property out, offering to deed the property back to the lender in lieu of foreclosure). Because the property is worth far LESS than what is owed (and what will be recovered by the bank in a foreclosure sale), you will want to protect yourself against a deficiency judgment (the difference between the amount you owe and the amount that the bank can recover). Bankruptcy will prevent the bank from coming after you for that amount; they will only be allowed to look to the property for their relief. Sometimes the threat of bankruptcy alone may suffice to get the lender's to talk to you. I would negotiate for a deed in lieu of foreclosure (actually because you don't own the land it technically isn't a deed but rather a title). If you filed for Chapter 7, this is what the bank would end up with anyway so you are saving them the expense of litigation.
Alternatively, you can try to work with a buyer/investor for a short sale. It might be harder to do since your loan is current but according to one post I've seen (from the Shortsalepro) it can be done. You might not get many takers as well because you don't own the land and moving and resetting up a mobile can be relatively expensive.
You do have some options. Make sure you fully explore them before you make any decision.
Best of luck to you. J
Ok!
First,
YOU SAID: "What they suggest was defferring payments, which I didn't see how that would help us get out of an 'upside down' loan at all"
Yes, but it buys you TIME!
Second,
YOU SAID: "They pretty much suggested I 'trick' someone into it, but I'm not going to do that."
You need to change your thought process! It isn't 'tricking'!!! Obviously, you bought the home because of the American dream of "home ownership". Is it really that hard to believe that someone else might want what you ALREADY have?? Just look on this site how many people want what you have...
Having said that, here's MY suggestion:
You get Conseco to DEFER payments! Then, you start talking to ANYBODY within "hollerin'" distance about buying your house. (here's the kicker!) Depending on how long Conseco will defer, you pay the buyer CASH back when they take over the mortgage! (so, if conseco gives you 2 mos. deferral, you tell the Prospective buyer, you'll give them $1800 bucks!)
Plan B: Get someone else to move in! And, share the rent, etc..
I usually don't suggest such things, but you're indeed in a pickle!
IF, those don't work... I'm afraid you might be a candidate for BK...
So, my advice is clear... I WOULD EXHAUST ALL OTHER METHODS!!!
Remember, it's hard to see the forest thru the trees. A lot harder when you're staring at the ground! Keep your head up!
I wish you & your husband the best!
What is a short sale? I looked up a definition but I don't understand it....
That's an idea about using the money from deferred payments to pay cash back to a buyer. Also, I think, but am not sure, that in a default transfer of equity, the person I find to 'take over payments' does not have to pass a credit check. It's possible we could find someone who has more cash than they have good credit, and they might be willing to take over payments, esp with a cash back incenitve. I just don't want to 'dupe' anybody. But I need to get it in writing from the finace company that once the transfer of equity is done, we are not liable for the loan at all, no matter what happens with the new title holder.
Thank you all for the advice!
I would say you were a perfect candidate for bankruptcy except for one major problem, your daddy is primary on the note and CANSECO knows this. If you file for bankruptcy, this might solve your problems but now becomes your dad's problem, unless he also files for bankruptcy. The only way to remove him from the note is if your husband can qualify for a refi but you've already tried this.
Here are some of my suggestions, if I may:
Have you approached your dad to see if he can help in anyway? Maybe if he tries to refi, he can qualify for a lower rate and cut the monthly payments. His name would still be on the note, but he'd be in a better situation then he is now.
Do you live in a mobile home park? If you do, maybe you ask the management if there is any type of job they can offer you to make a little cash?
Maybe try to find a neighbor who works regular hours in the city, find a job and carpool w/ them? Maybe have your husband ask his employer if they have a job opening in the company you could apply for?
You could take CANSECO advise and find someone to assume your loan, then you guys can move to city, rent an apt., find a job and in a couple of years be better of financially where you can buy a house.
Try to find an investor who would be willing to take the property of your hands, you sound like a motivated seller.
I know things seem rough right now, but at least you still have each other and are relatively still young. Keep your head up, try to see if any of the advise here on this post can help you, and before you know it, you'll be sitting in your living room in your new house laughing about the all the troubles you guys were having in 2003.