Unbelievable Disaster

After living life and creating a safe and secure home for 3 beautiful children the bottom falls out. My wife loses her job at the local medical center, in an effort to stay ahead of the economic storm that is about to hit we take aggressive action to minimize the impact on the family. We secure jobs and move from florida to ny. We rent the house to "trustworthy" folks and take the plunge. After being in ny 5 months I am laid off due the economic slowdown. Those trustworthy renters, not so trustworthy. Forced to put florida home on the market in a short sale situation, lots of lookers, not one offer. Locate job after 6 months of unemployment, return to work with a financial hole the size of the grand canyon, credit cards, school loans, car loan plus a mortage on a property that is losing value by the minute. Struggling to regain our footing after such devastation has been tough beyond words. Finally decided to abandon the idea of selling the florida house when we could not get any offers as th easking price quickly fell to below what we paid to build it. We realized that we needed to declare BK in order to protect our financial. We are now trudging through the early stages of this process. We are struggling to wrap our heads around this. How did this happen? Everything was going great...then bang, the bottom falls out. We know we are not alone, but it sure does not feel that way. We might as well be members of a leper colony. Everyone has an opinion, very little advice is helpful, we are forced to trust the professional advice of an attorney we hardly know and begin to question every little detail of this process; partly because we don't want to make a mistake, partly because we feel guilty about it, partly because a certain level of paranoia sets in and you begin to question everything, don't want any surprises. What an unbelievable disaster. I guess the important thing here is that the family is intact and there is hope for the future, somewhere in those stormy skies above us.

jscotty467 jscotty467 41-45 10 Responses Jan 20, 2009

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These stories are heartbreaking and I hope you all stay strong and weather the storm. Another reason to live within your means. Our society lives on credit and a riciculous amount of it. People in the UK were getting 7x earnings mortagages, thats right, loans SEVEN TIMES their annual salary to buy houses. Irresponsible people and even more irresponsible banks for offering these loans which were always going to beome toxic debt.

These stories are heartbreaking and I hope you all stay strong and weather the storm. Another reason to live within your means. Our society lives on credit and a riciculous amount of it. People in the UK were getting 7x earnings mortagages, thats right, loans SEVEN TIMES their annual salary to buy houses. Irresponsible people and even more irresponsible banks for offering these loans which were always going to beome toxic debt.

My husband and I just had our BK hearing three weeks ago. I was surprised at how "easy" it was. I was really nervous about the whole process but the whole hearing, from the time we parked our car, took an hour. The amount of time we spent in front of the judge...five minutes. Now, however, we're left with this:

We filed chapter 7. Our lawyer is a good one. I'm no complaining about him at all. BUT... Somewhere along the way we failed to comprehend the full meaning of "reaffirming" our mortgage. When we first filed our intent was never to bail on our house. We had intended to reaffirm all along. I guess we thought that as long as we filled out the reaffirmation papers that our house was still ours in the same way it was one month ago. It turns out that when you file chapter 7 you have to surrender ALL of your assets. You can't pick and choose which debts you include and those that you don't. Essentially, our mortgage was wiped out in the process. The reaffirmation papers we wanted to sign, reaffirming that we wanted to keep our home... Bank of America doesn't even send them out. Wells Fargo works the same way. They don't reaffirm mortgages.

I was REELING when I first found that out. I thought "Oh my GOD! They're going to make us leave!" After talking to our lawyer and doing some research, as it turns out... Reaffirming is NOT a good idea. When you do that, it's your way of saying "I'll be responsible for this debt even if I can no longer pay it in the future." In turn, if you ever default on the loan the bank can sue you and youre liable for the debt NO MATTER WHAT. To boot... If you reaffirm it DOES NOT, anywhere in "the system" acknowledge your mortgage as being yours. It doesn't help you re-establish good credit if you keep paying on the mortgage. Once your chapter 7 has been filed and discharged...reaffirmation or not...the only time you get any "credit" for how you maintain your mortgage is if you don't pay it.

On the other hand... If you do NOT reaffirm you can continue to make your mortgage payments and as long as you stay current, the bank cannot foreclose on you. They have to follow the same state laws regarding foreclosure as if you had hever filed for bankruptcy in the first place. If you happen to get to a point where you have equity in your home and you sell it, the bank will take their portion and you get to keep the equity. If you fall on hardship and can no longer make the payments...YOU'VE ALREADY BEEN ASBOLVED OF THE DEBT SO YOU DON'T HAVE TO DO ANYTHING! AND!! They can't's already been done. They then follow all the appropriate foreclosure steps according to your state's laws and... if there is equity in the home they will cut you a check for the difference. If there isn't... well, it doesn't matter because you never reaffirmed and accepted responsibility for the mortgage and you were absolved of it during your BK.

My dilemma is this... My husband and I have been counseled by MANY people to NOT reaffirm anything. It just doesn't make sense...financially. Morally, however, I am having a VERY hard time with this. If we're not planning on staying in our current home for 30 years then "financially" it's in our best interest to walk away and move into a new home with a smaller mortgage. A mortgage that reflects what a home is actually worth these days. If we do that...what does that say about us "morally"? I'm just sick to my stomach about it. I want to do the right thing morally but... In all honesty... Since the BK we've only been paying our mortgage, one car payment and all insurance and utilites and we are living paycheck to paycheck.

Do we suck it up and keep doing that until there's equity in this house (which, by the way, according to current market values, is worth $60,000 less than we paid for it five years ago) or do we look like "losers" who are contributing/causing this economic nightmare and go through foreclosure and move? People are very opinionated on the matter. I know... I was one of them. A year ago I was a person who got irritated by a friend's cousin who moved into a new home (on land contract because he is related to the builder), a HUGE new home, and just bailed on his other house because he could and because he wanted bigger and better. I don't want our friends, neighbors and family to put us into the same category. Uggghh. BK sucks.

I recently went through a similar situation. I was making triple digits and all of a sudden lost my job. I was left with tons of debt I couldn't pay and a huge house payment. I started researching my options online, I could work with a debt consolidation company to try to settle my debts and I could foreclose on my house.

Since I was unemployed, debt consolidation was not an option for me. I started researching chapter 7 bankruptcies in Mesa, Arizona and I can across The Law Offices of Fife and Cesta. I contacted the bankruptcy lawyers through their website

I had a free bankruptcy consultation with the lawyer and he informed me I am able to file a chapter 7 bankruptcy. A chapter 7 bankruptcy was perfect for me because I did not have to repay some of my debts!

Maybe chapter 7 bankruptcy is a good option for you?

I am glad your family is intact while you go through this journey. I am going through this process alone despite having a wife and two kids whom I love so much. The sad thing is my wife's family is so rich that she can seek help from them to solve our financial problems so that I could be with my two sons who certainly need me.

I had worked hard to get a Masters in mech engineering and then had worked for ten years without vacation to build a nice savings so that I could pursue MBA in finance. My timing was so wrong that when I finished MBA, the worst financial crisis had gripped the job market. Even though, my wife had a job, she lost it in 2010 and then she decided to take the kids with her to her mom's place. Her family has a successful biz and have accummulated millions, yet she is unwilling to ask them to help me pay off $50,000 debt. Now, with all my Masters and MBA and my exceptional skills and knowledge in economics/financial analysis, I can't get a job! I am staying at a friend's place and have lost everything that I built over the years. Despite that, I have faith in my abilities and I continue to pay down my debt, as I don't spend on anything. I am an extremely gifted equity/FX trader and I feel with my small capital I could rebuild my life. But now I am considering filing BK 7, as I am tired of the greedy behavior of the banks that brought this collapse in the first place. These banksters take all the risk, yet when it comes to taking losses, they get a bailout! Their executives make millions in bonuses! **** Fuld of Lehman still has $750million in assets! why are ordinary Americans like us have to take all the blame for creating moral hazard? I took credit card loans to get an education and take crae of my family while I was in school. Unfortunately, my wife's and children's healthcare costs took an immediate toll on my finances right after I gave up my job.

I am confident I will weather this storm and build my millions. I have faith. But my bigger question is one of reevaluating my relationships. I get really sad thinking about my wife's denial to help me, even though, she knows that I worked hard to give them a decent life for ten years. It was my bad luck that economic crisis triggered by the bad behavior of few, took away all my opportunities when I came out of school (I really did well in my MBA securing 3.93/4.00 GPA in finance). Why didn't my wife see my potential to succeed? Why did she have to take my kids away from me when they were the source of my inspiration? Now they are 1000s of miles away from me in another country. I can't even see them and play with them when I feel so down at times battling all these challenges. Such is life, you just have to fight and prove all the naysayers wrong. I am ready to fight my battles and I know I will win in the end.

I was brought to tears whilst reading your story as I am a mother of 4 young children and I fear that we may be faced with bankruptcy too. My husband of 12 years has only ever done what he thought would be best for our family and I love him dearly for all his efforts. I have been a stay at home mum as the cost of childcare was greater than any job I could get. My husband left a secure head position to start his own catering business, but bad decesions, bad people and bad economy failed us. I felt for you and hope that your situation has improved and that you haven't let this moment in life spoil your positive attitude. It is so hard to focus on the future when the present seems so hopeless. You will overcome this. Good luck

hell , you cheered me up, see my lawyer on wen. good luck

I work with people facing this daily and it is a humiliating heartbreaking time in their lives. You feel your have failed those you love and depend on you. Please remember that the most important thing in your life is your family and their love. Money cannot buy that.. it is only a means to make life a little easier as we are passing through it... we are living in world created by mega corporations whose main fuction in life is helping you spend your hard earned dollars making them very rich... they want to keep people dependent on them. You can change that going forward from this point.. Take something positive from this experience. There is a new beginning after bankruptcy.... it does not last forever and guess what... the creditors will still offer you new credit once you are discharged as long as you are willing to pay the high interest to make them rich..

The fact that you are both still healty and can work is a sign that this will be forgotten soon. I'm glad that you are both able to work. I feel really sorry for those who add medical problems to the mix of too much debt/no income and so can't ever work again. You will be fine soon. Relocation is such a financial devistation, I wish that I had known, I would have never agreed to move to a major city. I'm filing on my own, I met with an attorney, but found his fees crazy. My chapter 7 is simple, no real estate or property that isn't exempt. $1800?? WTF, to submit forms online to the court that I have to fill out for you anyway? Even if you do use a lawyer, get the Nolo Guide for bankruptcy. Read the whole thing as if it was your college textbook. This will help you a) understand the laws and exemptions and b)make sure your attorney is not an idiot - if you know more than they do after reading this book - fire them.

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Ouch....I am so sorry you and your wife had this happen....My parents had to file in their 60''s very sad...and like you said, very scary...

I am happy to see that you and your wife are together, after such a trying time....A true testament of your relationship....If you can get through this, you can get through anything...God Bless you.

You know I can imagine what is like. Through the years my family went from being wealthy to almost enough to pay the monthly bills. We also relocated but my parents made big sacrifices to make it better for my brother and me. Now that I am starting my family I am scared to death to even borrow money for a car or a house, I already have my student loan on top and I don't see how I am going to afford more. Hard times what our generation is facing...Good luck and hopefully your family stays strong over the whole ordeal.