Foreclosure insight

The vehicles should be free and clear since most likely he either refinanced or took out a 2nd to pay for them. The house was/will be sold at auction probably at a substantially lower amount than he owes. The bank could then file a deficiency judgment for the difference against him. It depends on the bank. Some banks do, some banks don't.

"azfinfanmang wrote:

Okay, so I am not experienceing Foreclosure, but I have a friend whom I think is dealing with it.

Bottomline, he got himself in waaaayyy over his head. He bought a really big house, with nothing to put down, built a pool within the first year, and even put two vehicles under his mortgage (Stupidist thing I have ever heard of, as he will be paying for those vehicles probably 15 or 20 years after he doesnt have them anymore)

So, my question is, IF he experience Foreclosure (Not sure how he couldnt have, and he is now renting a different house) what happens? And especially, what happens to his vehicles?

I know some of you in here really get this stuff, I dont

Thanks in advance, az

Hi Kenny! Unfortunately, Chris and I are experiencing foreclosure first hand. We just got a notice yesterday from the Essex County Sheriff that our house will be sold at a sheriff's sale on January 6, 2009. We bought the house in Newark in 2006 for $280,000 and it's being sold for just under $180,000. From what our attorney says, normally they could try and come after us for the difference, but since we also just received our bankruptcy discharge notice they can't come after it. So Rafael is 100% correct. :up:

Very very sorry to hear that Miss Mary.

Theres no doubt that times are really tough. More and more I keep hearing about things just like this. :pity:

"azfinfanmang wrote:

Very very sorry to hear that Miss Mary.

Theres no doubt that times are really tough. More and more I keep hearing about things just like this. :pity:

It's definitely terrible times. We're lucky we have each other and a VERY solid family support system. When I called our attorney and told him about the sheriff's sale notice I got he said we're lucky we have so much time but to get ready to leave our home. We have a dear friend who owns a house in Irvington who's going to let us live there rent free, or we would have no place to go. It's times like these when you realize who are your real friends and who are not. :no:

"njfinfan wrote:

It's definitely terrible times. We're lucky we have each other and a VERY solid family support system. When I called our attorney and told him about the sheriff's sale notice I got he said we're lucky we have so much time but to get ready to leave our home. We have a dear friend who owns a house in Irvington who's going to let us live there rent free, or we would have no place to go. It's times like these when you realize who are your real friends and who are not. :no:

I'm so sorry Mary. I knew some of this, but I didn't know how close it was to happening.
If you were near me, you guys would be welcome to stay with me.
I wish there were something I could do to help. Know that my prayers are with you, Chris and the girls.
Luv,
Deb

"dolphindebby wrote:

I'm so sorry Mary. I knew some of this, but I didn't know how close it was to happening.
If you were near me, you guys would be welcome to stay with me.
I wish there were something I could do to help. Know that my prayers are with you, Chris and the girls.
Luv,
Deb

Thanks Deb - that's heartwarming to hear. This friend is awesome and he just offered his house in Irvington out of the blue. Until I heard that, I was VERY worried about what we were going to do.

luv
me

"njfinfan wrote:

Hi Kenny! Unfortunately, Chris and I are experiencing foreclosure first hand. We just got a notice yesterday from the Essex County Sheriff that our house will be sold at a sheriff's sale on January 6, 2009. We bought the house in Newark in 2006 for $280,000 and it's being sold for just under $180,000. From what our attorney says, normally they could try and come after us for the difference, but since we also just received our bankruptcy discharge notice they can't come after it. So Rafael is 100% correct. :up:

Sorry to hear about that Mary, I can feel your pain, after my company went under in 2005 we were ladled with an incredible amount of debt. We are not out of the woods yet and live day to day. Another 3 years of slightly negative cash flow and we will be out of it.

As for foreclosures even in bankruptcy they cannot come after it but the IRS can, they have the option to claim the difference ($100,000) as unrealized income for your 2008 filings. Bankruptcy does not remove you from the IRS long and clammy reach. I imagine you filed Chapter 7? Now I heard a rumour that the new bailout removed this from the IRS' purview but I have yet to confirm that. Please check with your accountant re this.

Even after the Bankruptcy Abuse Prevention and Consumer protection Act in 2005, and depending on the state you live, if you file Ch 7, your house (up to a certain level (state or federal rules)), your car, your ERISA plans (401(k) or 403(b) etc) and IRAs are protected from creditors. Unfortunately IRAs aren't always safe from the IRS even in Ch 7. However you still need to pay for your house and car to avoid losing them, as it is very difficult near to impossible to remove that debt (home) from the creditors. This is a year you need a good accountant Mary, one who specializes in Bankruptcies and Foreclosures. Let me know if you need help finding one.

"rafael wrote:

The vehicles should be free and clear since most likely he either refinanced or took out a 2nd to pay for them. The house was/will be sold at auction probably at a substantially lower amount than he owes. The bank could then file a deficiency judgment for the difference against him. It depends on the bank. Some banks do, some banks don't.

They may not file for it but the IRS can and will do, I am not sure if anyone has noticed how many IRS protection commercials are out there, but that is strictly in proportion to the issue with the foreclosures going through this nation. He will more than likely be getting a 1099C from the bank.

Ok, I looked in a bit further and the debt forgiveness was signed in to relieve from income any debt forgiveness (unrealized income) for the principal residence from Jan 1 2007 through Dec 2009. The caveats, the forgiveness only applies to the principal residence, and not any refinancing to pay Credit cards or to acquire cars etc. Also you do not get this release from the unrealized income if you filed bankruptcy.

GovTrack: H.R. 3648: Text of Legislation, Enrolled Bill

"mnfinfan wrote:

Sorry to hear about that Mary, I can feel your pain, after my company went under in 2005 we were ladled with an incredible amount of debt. We are not out of the woods yet and live day to day. Another 3 years of slightly negative cash flow and we will be out of it.

As for foreclosures even in bankruptcy they cannot come after it but the IRS can, they have the option to claim the difference ($100,000) as unrealized income for your 2008 filings. Bankruptcy does not remove you from the IRS long and clammy reach. I imagine you filed Chapter 7? Now I heard a rumour that the new bailout removed this from the IRS' purview but I have yet to confirm that. Please check with your accountant re this.

Even after the Bankruptcy Abuse Prevention and Consumer protection Act in 2005, and depending on the state you live, if you file Ch 7, your house (up to a certain level (state or federal rules)), your car, your ERISA plans (401(k) or 403(b) etc) and IRAs are protected from creditors. Unfortunately IRAs aren't always safe from the IRS even in Ch 7. However you still need to pay for your house and car to avoid losing them, as it is very difficult near to impossible to remove that debt (home) from the creditors. This is a year you need a good accountant Mary, one who specializes in Bankruptcies and Foreclosures. Let me know if you need help finding one.

Thanks Paul. We did indeed file Ch 7. However, this IRS information is worrying to me. Any chance you can clarify that for me? My bankrupty attorney, whom I paid $3,000 to up front, is now of the attitude that since everything is done and the bankruptcy is discharged, he doesn't need to further advise me unless I reach back into my mother in law's not so deep pockets for more money. I don't choose to that. Lord knows she's given us enough money the past year to help with past due bills.

Mary, I have a good friend that is a CPA and does work within this field, I will give him a call this week to see what he knows.

From what I have found is that the bankruptcy exception for the forgiveness is Ch 11, if you file Ch 7 then you are considered insolvent and shoul qualify for the forgivness. So it looks like you should be ok, but really you need to contact a Tax accountant as they will know more about this than anyone else.

Sorry to hear that Mary. Prayers, thoughts and best wishes for the future.:wink2: Sorry to hear about your friend as well Brother. This holiday season is going to be a real rough one for a lot of us.

Girl, please try not to worry yourself into getting sick again.
I know it's hard, but worrying won't help or change anything. Believe me I know, I'm a worrier.
Take care of yourself. Your health is more important than anything.

"mnfinfan wrote:

Mary, I have a good friend that is a CPA and does work within this field, I will give him a call this week to see what he knows.

From what I have found is that the bankruptcy exception for the forgiveness is Ch 11, if you file Ch 7 then you are considered insolvent and shoul qualify for the forgivness. So it looks like you should be ok, but really you need to contact a Tax accountant as they will know more about this than anyone else.

That's truly appreciated Paul. Thanks so much. Do tax accountants give free consultations as attorneys do? We're just tapped out and like I said I've been borrowing money from everyone we can who has it just to keep the electric and essential utilities on.

"Fin Fan In Cali wrote:

Sorry to hear that Mary. Prayers, thoughts and best wishes for the future.:wink2: Sorry to hear about your friend as well Brother. This holiday season is going to be a real rough one for a lot of us.

It is indeed John. Thanks. I look at my girls' faces when they come to me and say "it's almost Christmas mom" and don't have the heart to say "you're not getting much if anything at all." I know they would understand but it's still going to be crushing to them.

"dolphindebby wrote:

Girl, please try not to worry yourself into getting sick again.
I know it's hard, but worrying won't help or change anything. Believe me I know, I'm a worrier.
Take care of yourself. Your health is more important than anything.

:lol: I take after my mom - she was a huge worrier and so am I, but I'm trying to keep it all in perspective my love. Thanks kiddo.

"njfinfan wrote:

It is indeed John. Thanks. I look at my girls' faces when they come to me and say "it's almost Christmas mom" and don't have the heart to say "you're not getting much if anything at all." I know they would understand but it's still going to be crushing to them.

Mary hang in there. You and your husband love your kids very much. :wink2: Sometimes Santa works miracles to see children smile.

"Fin Fan In Cali wrote:

Mary hang in there. You and your husband love your kids very much. :wink2: Sometimes Santa works miracles to see children smile.

Thanks John. We do. And they're very grounded young girls - they're not selfish and they understand the reality of life. I think they'll be fine - they're old enough to know now that mom and dad are Santa and that they may not get something they want. Of course, my mother in law will come through in a pinch if there's nothing underneath the tree, saint that she is, but we're hoping that will be resolved. I'm sure everything will work itself out. Always the optimist! :lol: The only thing I was really worried about was not having a roof to put over our heads in January, but that's a done deal, thanks to our friend. :up:

"njfinfan wrote:

Thanks John. We do. And they're very grounded young girls - they're not selfish and they understand the reality of life. I think they'll be fine - they're old enough to know now that mom and dad are Santa and that they may not get something they want. Of course, my mother in law will come through in a pinch if there's nothing underneath the tree, saint that she is, but we're hoping that will be resolved. I'm sure everything will work itself out. Always the optimist! :lol: The only thing I was really worried about was not having a roof to put over our heads in January, but that's a done deal, thanks to our friend. :up:

I am a strong believer that good things happen to good people, and of course this is testemont Mary as to why somebody is helping you and your's in this way.

As soon as you mentioned your foreclosure, I thought of 2 things (Three really), your health and your daughters.

Sounds as things are gonna be tough for you, dont forget your internal support here. You know that this entire site is behind you and nothing but positive thoughts are coming your way.....

Santa does work in peculiar ways my dear...very very peculiar ways.....:shifty:

God bless you, and you know I am ALWAYS here for you.:bighug:

"mnfinfan wrote:

Ok, I looked in a bit further and the debt forgiveness was signed in to relieve from income any debt forgiveness (unrealized income) for the principal residence from Jan 1 2007 through Dec 2009. The caveats, the forgiveness only applies to the principal residence, and not any refinancing to pay Credit cards or to acquire cars etc. Also you do not get this release from the unrealized income if you filed bankruptcy.

GovTrack: H.R. 3648: Text of Legislation, Enrolled Bill

So what your saying Paul is that he will still be on the hook for the Cars (Probably through a refinance) and probably a portion of the house (Whatever auction doesnt bring)?

As I said, this friend was, and always has lived well beyond his means. The mentality of "IF the bank will keep lending it, I must deserve it", holds true for him. :pity:

Also, when he told me he financed two vehicles under his mortgage made ZERO sense to me personally, as he will be paying on the principal for 30 years. BTW: It's not like he just went out and bought cars, he was easily in for 70,000 for the two vehicles.

"azfinfanmang wrote:

The mentality of "IF the bank will keep lending it, I must deserve it", holds true for him. :pity:

That must mean the same mentality as my sister heeds "If I still have checks, I must have money in the bank." Unfortunately her Air Force husband got in ALOT of trouble for her passing bounced checks around the base.

"azfinfanmang wrote:

I am a strong believer that good things happen to good people, and of course this is testemont Mary as to why somebody is helping you and your's in this way.

As soon as you mentioned your foreclosure, I thought of 2 things (Three really), your health and your daughters.

Sounds as things are gonna be tough for you, dont forget your internal support here. You know that this entire site is behind you and nothing but positive thoughts are coming your way.....

Santa does work in peculiar ways my dear...very very peculiar ways.....:shifty:

God bless you, and you know I am ALWAYS here for you.:bighug:

You guys are truly awesome. A testament to why we love you all here so very, very much. My doctor did mention that my heart attack was brought on by the stress of everything going so I'm managing it and I'm figuring out - along with Chris - what's really worth worrying about. It's been a long road, but I know it's going to work out in the end. And I know "Santa" will come through. Thank you so so much Kenny and everyone else for being here for us.

We love you all. :kiss:

"azfinfanmang wrote:

I am a strong believer that good things happen to good people, and of course this is testemont Mary as to why somebody is helping you and your's in this way.

As soon as you mentioned your foreclosure, I thought of 2 things (Three really), your health and your daughters.

Sounds as things are gonna be tough for you, dont forget your internal support here. You know that this entire site is behind you and nothing but positive thoughts are coming your way.....

Santa does work in peculiar ways my dear...very very peculiar ways.....:shifty:

God bless you, and you know I am ALWAYS here for you.:bighug:

Wonderful Kenny. My sentiments exactly.
I'm here 100% Mary.
We love you.

I've been really sick the last couple of days but after reading what Mary is going through it seems like small potatoes. Sometimes you need a different reference point. I hope things start looking up soon Mary.:up: