Foreclosure on 2nd home.?

I live in MI and am going to let my 1st home go into foreclosure due to the recent discovery it has structural issues which are est at $20k! I owe $134k + $16k on an equity line of credit, and the house is unsellable obviously. We did get approved for another mortgage and plan on just walking away and buying another house. We did consult w/ 2 bk attorneys and they both said we would have to claim bk to prevent paying the deficiency. My ? is that I thought Bush created a new law that foregives this debt.deficiency?? Both attorneys seem to have nothing to say about this new law-are they just wanting my business?? Just want to make sure no one can come after our new home and also if we file ch 7 does that wipe out all debt owed? Does the fact that we have this equity line affect anything? Will the bank possibly allow us to to deed in lieu? I also want to pull out the remainder $4k that I just paid on the equity loan-will the recent withdrawal make any difference on the bk?

Tracy,

I understand the concern and empathize with your situation.

They can come after you and believe me do not underestimate the greed of these lenders.

Try the "cash for keys" method, in place of money have them provide you a letter forgiving any potential deficiency judgment against you.

Place your future or second home in a Land Trust.

go to my website www.realproperties911.com and click on my links throughout the website.

Good Luck.

is that I thought Bush created a new law that foregives this debt.deficiency
------------
wrong.
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tell me how the home wound up with structural deficiencies after you bought it--unless it was not disclosed prior to your buying.

YOU are not out of luck.

DO NOT do a BK. why?
Cause, though you MIGHT lose
the house, you might not. The
BK is 7-11 yrs on your credit.

stop borrowing till you have
your RE and cash flow evened out.

IF you wish ways to fix the house--
to correct its structural problems,
I might have some ideas.

It all depends on the history of the
structural problem.

Great idea.

Your second home is going to be at a higher interest rate, and once you default on loan #1, no one is going to refi you out of the second loan, so you are going to be stuck at this higher interest rate for years.

There was no legislation forgiving the debt you owe, some people can qualify to not be taxed on the difference between what you owe and what the house sold for. There will be no forgiveness on your debt, and most likely once the foreclosure is final, the lender will slap a lien on your new house.

Bankruptcy laws have changed, most likely declaring will not relieve you of the secured debt. Filing bankruptcy now does not "wipe out" the debt owed.

Your plan is flawed from the jump, and as much as it pains me to say this, I hope you get raked over the coals for your lousy financial planning decisions.

To file bk or allow your home to go into foreclosure because of not having $$ to correct structural problems is a bad, even irresponsible choice. It's using the system to your advantage and makes it difficult for us, who unfortunately have legitimate reasons for being where we'd give anything to not be.

Your email is vague as it mentions a forclosure on a second home, then that you are considering this on a first home....then to purchase another home. If you have another home, the bank will put a lien against it.

Bankruptcy was originally written to give those in hardships a second chance. It's not as grim as some choose to believe but it definitely does have disadvantages of dragging for 7-11 years on credit reports and other information.

It does not prevent one from purchasing another home if they show good standing on existing debts and timely payments however the interest rates will be higher. After a certain amount of time and with a good record, it can be reconsidered.

We were lucky to have sold our home nearly in the last hour but because of a valid reason, yet still unfortunately had to file bankruptcy.

You said that your home is unsaleable. No home is unsaleable. There are other options such as "As is," or doing an auction. Both are better than the consequences that you will be facing.

In Michigan, there's usually more legitimate reasons for foreclosures and/or bankruptcy. Foreclosures are record high and going higher because of the deplorable economy, job loses, and people clamoring for the same, lower hourly jobs just to be employed.

People who have unexpected tragic events in their lives also find themselves caught in foreclosures. Mortgage companies will only work so much with you and in the end expect in arrear payments. Cash for keys has it's flaws but people in desparation have chosen this way out.

BK attorneys, the bank, and the bk magistrate will look at your over all reasons for filing, also your debts. They will not give a Chapter 7 if you do not show legitimate reason. If you do a Chapter 11, the courts will make arrangements for you to pay towards existing debts.

An advantage with bk would be that some lenders and other companies find someone who has been awarded Chapter 7 a better risk because they can't file again for the above years. Of course there's more considered.

You also need to show good intention by contacting all credit card companies and other debtors asking that they work with you. They may reduce the debt and/or interest. An illness or lose of employment, having credit card protection helps those who have credible cause.

I suggest a good attorney and a financial advisor, who will give you appropriate direction. An attorney will also help with resolution to your debts. If someone is in foreclosure and unable to pay penalties, there are another options.

All is takes is one or two bad decisions and in stressed economical states, these can snowball into an eventual financial nightmare.

These subjects are discussed on Suze Orman all the time. You need good guidance, a financial plan, and serious commitment for recovery.

If you take money out of the HELOC prior to bankruptcy, your bankruptcy will probably be denied. The deed in lieu of foreclosure forgiveness would apply to primary owner-occupied homes only, not second homes. Chapter 7 would wipe out your debts but you would also have to sell many of your valuable possessions to make as good as possible on your debts before bankruptcy is approved. Your attitude toward debts is one of the primary reasons why creditors demanded stricter laws. I think the new laws are terrible and I can also empathize with creditors who give money to people who refuse to make good on their promises when they are perfectly capable of doing so.