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Old 04-21-2017, 05:27 AM
$ Saving Pre Schooler
Join Date: Apr 2017
Forum Posts: 1
Default Help dire need mortgage advice

I have a rather odd situation. Several years ago I was in dire straites. I took out a home equity loan. I was in debt up to my ears (I worked for a year without pay...its a long story)and had to file a chapter 7. We wanted to keep our home and so, on our lawyers advice continued paying both the 1st mortgage and the home equity.
We took out the home equity on the word of mouth info that although it was only for 3 years, that the banks roll them over as long as you are making payments. Well Citizens would not roll it over once they saw the bankruptcy even though we had been paying them monthly payments and the bank wanted the full payment. Obviously our lawyer gave us some bad advice as Citizens started foreclosure proceedings.
Its now 2010 and we are a month from losing our home when a lawyer contacts us. We filed a Chapter 13. The lawyer either misinformed us or failed to explain it in a way that was clear, but after 5 years of a very tough
financial grind, thought we were ready for a new start only to find out Citizens did not agree to the Chapt 13 and we still owed the total amt. Its now 2017 Our house is assessed at about $160,000 (may be higher now if we reassessed) We owe 83000 on the 1st and around $75,000 on the home equity. As I said we thought we were free and clear on the home equity loan until a couple of months ago when I tried to get a very small loan and the bank suggested a home equity as the interest would be lower. I found that we were still in debt for the home equity although Citizens has not contacted us or sent us any kind of paperwork since the Chapt 13 terminated in may of 2015. We haven't paid Citizens anything because we were unaware we owed them any money.
I'm hoping to refinance the house but every option so far says no way due to lack of payment on the home equity. I want to go to them but only when I have a plan for repayment in place. All that to say does anyone have a lender who will take that kind of chance. Credit score is around 680 and both I and my wife are gainfully employed.
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Old 04-21-2017, 06:41 AM
bjl584's Avatar
Join Date: Sep 2006
Location: Pittsburgh, PA
Forum Posts: 5,764

Sounds like a lender isn't going to touch you until you get all this mess cleaned up. You have a rather complicated situation going on. A good attorney should be able to navigate you out of this.
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Old 04-23-2017, 07:09 AM
$ Saving College Senior
Join Date: Aug 2005
Location: Northwestern Pennsylvania
Forum Posts: 1,582

Not only does it sound like you need a better lawyer for bankruptcy type things, you also need to get yourself educated and one of the first ways to do that is read all the reams of paperwork you have acquired over these past few years. For instance, what made you think you no longer had to pay on your home equity loan? The bankruptcy proceedings, I would think, would list what debts were discharged and by inference what weren't.

Why do you want to refinance the house? Is it to have better rates/terms or to open up some cash again to use? Glad to hear that you are both working now, and I would hope that you should be making your mortgages payments as required at this point. I don't know the difference between a Chapter 7 or 13 so I don't know what is covered by them, but you should know. If you don't, got back and figure it out and figure out which kind of bankruptcy you did have. Most places won't loan you any money for the first 7 years after the bankruptcy and I would think the 7 years starts ticking when the bankruptcy is finalized not when applied for. So, you are probably going to have an incredibly hard time getting someone to refinance you house. I don't blame them. You have already walked away from a ton of debt you owed and they don't want you doing it to them. My best advice at this point is learn everything about personal bankruptcy that you can as well as much about frugal living and living within your earnings as you can because the effects of all this will drag on for years. Sorry no happy thoughts about this other than if you determine than you will climb this mountain and stand tall on the summit, it will take a lot of work on both you and your wife's part. Other people have done this and became better money managers after the fact. Others are serial bankruptcy filers. I know a woman that she and her doctor husband filed twice, 7 years apart. I couldnít afford the paper anymore so I donít know it they have done it again. They just couldnít handle money.
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