Posted on: 06th Apr, 2009 12:28 pm
I purchased some investment properties in the state of TX that went under. They both had 2nd mortgages for 88K a piece. I've been in communication with the debt collector and they are sending me a demand letter for 18K which would then settle both accounts. He also said they would file a judgement if I don't settle for that. My question is: Should I file bankruptcy instead? I think I may be able to file Chap 7 if I pass the means test. Should I just go to court? I don't think they can garnish wages in TX so that leaves just putting a lien on my house (which I'm never going to sell anyways). Is there anything they can do? I could pay the 18K, get all that debt off my credit then start over I guess. Just wanted to get someones opinion on my options.
If you can settle 88k for 18k sounds like a good deal, How much are the houses worth?
I didn't know if it was considered a good deal or if I could get them to go lower. The houses were some beautiful 3 story flats...worth about $250K before the economy tanked.
Oh and just to clarify....I would settle about 176K for 18K. Is this typical?
Are the houses bring in any income?
Nah, the houses have been foreclosed since last year. These are 2nd mortgages that have not been forgiven. Whats worst is having to get 1099s for the difference that they are going to write off.
hi ccp,
in my opinion, it would be good if you could pay off the 18k and settle the second mortgage. this will have a positive effect on your credit report as well. however, if you don't pay off the amount, the lender may charge off the amount and then a collection agency will collect it from you.
yes, as the lender is forgiving a certain amount of your debts, you will have to pay taxes on that. however, you can contact a tax adviser and check out whether you would be able to take the advantage of mortgage forgiveness debt relief act.
thanks
in my opinion, it would be good if you could pay off the 18k and settle the second mortgage. this will have a positive effect on your credit report as well. however, if you don't pay off the amount, the lender may charge off the amount and then a collection agency will collect it from you.
yes, as the lender is forgiving a certain amount of your debts, you will have to pay taxes on that. however, you can contact a tax adviser and check out whether you would be able to take the advantage of mortgage forgiveness debt relief act.
thanks
Thanks jameshogg, I'm settling with a collecting agency called Real Time Resolutions who are "representing" the lender which means the lender still owns the debt. Yea, I think settling will be better in the long run but in the short term it's killing me man. I do not qualify for the MFDR Act because these were investment properties. All I have to say is know what and who you are dealing with when you get into investing prop...people are scoundrals. I MAY be able to claim insolvency on my next tax return, if that doesn't work I'll be in the hole for a while.
hi ccp!
welcome to forums!
yes, if it's an investment property, you won't be able to take advantage of the mortgage forgiveness debt relief act. filing bankruptcy should be the last option that you should consider. you can file bankruptcy but i would suggest you to speak to a bankruptcy attorney. he will discuss the options with you and this will help you in deciding whether you should file chapter 13 or chapter 7. did you consult a bankruptcy attorney?
sussane
welcome to forums!
yes, if it's an investment property, you won't be able to take advantage of the mortgage forgiveness debt relief act. filing bankruptcy should be the last option that you should consider. you can file bankruptcy but i would suggest you to speak to a bankruptcy attorney. he will discuss the options with you and this will help you in deciding whether you should file chapter 13 or chapter 7. did you consult a bankruptcy attorney?
sussane
Yea, I spoke to a couple of bankruptcy attorneys and of course they told me that I should file bankcruptcy. One guy said I may be able to get Chap 7 depending on my disposable income with such a large amount of debt. Another guy said that I wouldn't and to just go for Chap 13. If I file Chap 13, I'd probably come out paying more than 18K in 5 years anyways so I've decided to pay this debt off, clear my credit up, and get it behind me.
Hi CCP,
It's good that you have decided to pay this debt off. It will have a positive effect on your credit report as well. Moreover, I think, if you pay off 18k, the lender will not file any judgment against you. Thus paying off the debt is the best option of for you.
All the best.
It's good that you have decided to pay this debt off. It will have a positive effect on your credit report as well. Moreover, I think, if you pay off 18k, the lender will not file any judgment against you. Thus paying off the debt is the best option of for you.
All the best.
Thanks Adonis. It pains me to do it but at least I'm able to do so. Thanks again to all who commented. This was very helpful if not only to have a place to vent out my fustration.
You are most welcome CCP! Feel free to post if you have further queries regarding mortgage related issues. The members/experts participating in the forums will try to help you with their opinions.
Wish you all the best once again :)
Wish you all the best once again :)
If the second mortgage is reported as "unsecured" on your credit reports it means it can be settled, as you obviously know. What happened is that your first mortgage covers all the value of the house(s), meaning there is no equity anymore!
But why do they want to settle? Because if you file bankruptcy and you get an appraisal to testify in court you do not have to pay anything!!! What i recommend is that you try to settle with them for less and tell them to specify on your credit report that you payed it all in full!!!! If your credit report says you payed it in full, you do not need to pay taxes!!! Get it in writing first, then settle! You can not be intimidated by your mortgage lender, be the boss and settle!!
Good luck!
[Email address deleted as per forum rules. Thanks.]
But why do they want to settle? Because if you file bankruptcy and you get an appraisal to testify in court you do not have to pay anything!!! What i recommend is that you try to settle with them for less and tell them to specify on your credit report that you payed it all in full!!!! If your credit report says you payed it in full, you do not need to pay taxes!!! Get it in writing first, then settle! You can not be intimidated by your mortgage lender, be the boss and settle!!
Good luck!
[Email address deleted as per forum rules. Thanks.]
I'm in a similar spot. Did you end up negotiating the settlement below 18k? How was RTR to work with?
I have a 2nd mortgage around 50K it is the with the same mortgager as my first. Though they modified the 1st as an investment property, what would be an acceptable settlement offer for the 2nd I can't afford to pay both mortgages with the rent i'm receiving in this economy.