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  1. #1
    Registered User Junior Member
    New Jersey

    Changed from Chap. 13 to 7-Need Advice Re: Foreclosure

    We very stupidly filed for Chapter 13 back in 11/01, despite 3 lawyers advising us to do a 7. If anyone had told us we could have stayed in the house for quite some time, we would have done it. However, no one volunteered that info, so we went ahead with the 13.

    I'll try to be brief--We filed for conversion on 1/17; had our 341 without any problems. We received copies of a letter sent by a rep for the first mortgage holder, who will be appearing in court next month to lift the automatic stay. This is expected, I suppose, in order to begin foreclosure proceedings.

    We've just received notice of late taxes due (2/1 was due date) from the Township.

    A little background. We had the misfortune to meet up with predatory lenders who took advantage of the lack of knowledge about credit scoring, my disability etc. They made us upside down over $21000 in a house worth $92000 and deteriorating rapidly, along with totally absurd and undeserved high interest rates, which led to a bankruptcy in less then 2 years. We said we would give up the house. Fortunately, we found a house to rent that is decent, saves us over $400 or more monthly over the inflated mortgages we were paying etc. We are slowly moving our stuff into it, and have given the landlady 2 months rent in advance to show our good faith.

    My question: what would be the best course of action to take at this time as far as helping to rebuild our credit rating? There are 3 mortgage companies involved. #1 wasted no time in asking for lift of the automatic stay, but so far nothing from the other two. I know we could save $$ by staying here as long as possible but the water is bad, the cesspool is overflowing etc. etc. We really do need to leave.

    Anyone who has been in a similar situation or can offer advice, please let me know what would probably be best. BTW, we were NEVER late paying any mortgages until we were going to sue lender #3 for fraudulent and unethical practices, at which time our then lawyer told us to stop paying them. The other two were paid religiously, as well as the one mortgage we had since 1988 before refinancing.

    Thank you. I am so glad to have found this board. We all need to come together to not only force fair and unbiased credit scores, but also to control the predatory lenders who still seem to have free rein despite the pitiable efforts by many states to curtail their fraudulent practices. Hope this isn't too confusing. I've just taken some of my meds and am nodding off as I write.
    My best to all.

  2. Changed from Chap. 13 to 7-Need Advice Re: Foreclosure
  3. #2
    Registered User Enthusiast
    chicago il
    Sorry to hear about your situation. I too was in a similar situation and from my knowledge, you have about a year before you actually have to move from your home. But this is if they foreclose. If you give up the house in Bk, I doubt that you will get this much time. My advice, look forward not back!! After your discharge, get your credit reports from all 3 agencies and make sure that all accounts discharged are reported that way. I waited over a year and found that 8 out of 10 accounts still showed in collections, balances owing, etc. I am only 2 months into the process to get them "fixed" but it is working. Then start to re-establish your credit. After chapter 7, you will start to get credit card offers. READ THE FINE PRINT!! some are just rip offs. Some decent offers come from Direct Merchants Bank and Household Bank. Make sure you pay the balance off early each month. These vultures count on you going over the limit and making payments late. Their fees total 29.00 for each violation so be carefule. Some questions regarding your mortgages, Did you have three mortgages? If so, which one did you fall behind with? Was it the third who also was the preditory lender? If so, they are in 3rd position on title and will not recover anything from a foreclosure sale so that doesn't make much sense. Your first mortgage will probably be the only one paid. You also might have some legal recourse against the 3rd lender (if what I am assuming is correct). Talk to a lawyer to see if you have any recourse at this point. good luck!

  4. #3
    Registered User Junior Member
    New Jersey

    Great Advice!

    Thank you ever so much for your reply. I will be sure to check our credit reports first thing after discharge. It is confusing to determine what the next step should be and we want to get back on track ASAP. You might be interested to know that when our reports were pulled when we filed BK, our FICOs were 690/681--and this was before we found $30000 in errors! Motto: check credit report at least once a year.

    I do have some things to add. The WORST creditor (allegedly-yes, I'm being good!) in the world is Household Bank. They were loan #3. There are hundreds of thousands of complaints about them and 19 states just made a 484M settlement with them, which those of us who have been burned are calling a pay off. They provide the financing for a large number of stores, including Best Buy and were called Home Wrecker by Forbes magazine. There are so many sites detailing this banks activities that it is impossible to list them all. Try for starters and you won't believe what you read. Check also. And the best for HFC: Sorry for this but I am a crusader against this company. Even AARP is after them. Orchard Bank has been bought out by them, so beware of them as well.

    We are part of a class action lawsuit against Household, so you are correct about suing them.

    Thank you for the encouragement to look forward. It is hard because going bankrupt is a real blow. We have found a nice house to rent and are slowly moving our stuff there. We were never late on any mortgage payment except HFC, after the lawyer told us to stop paying them. That's why it hurts so much. Ditto for all our other bills--NO late payments until the lawyer said don't pay because we were filing BK. All 3 lenders were predatory--which we didn't find out until years later.

    You have helped calm my fears about the future. We expect a discharge by mid-June and can learn to live again. Sorry to hear that you too have suffered. The support and help on this board is excellent, and I cannot thank you enough for your help.

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