I posted this on the Bankruptcy forum and they suggested I post it here too. Just looking for some feedback. We stopped by the Ford dealer to ask about financing a truck. I know, I know, I'm the anti finance person, but hubby needs a truck bad. We told the salesman upfront what was going on and he sent us back to the finance manager. The finance manager pulled hubby's credit, all 3 bureaus, and looked it over. He told us that there was no way we could get financed on anything for at least a year. He asked if we reaffirmed the mortgage on our house and we said no. He told us that was going to hurt us in the long run, and that there was a chance the bank would get tired of voluntary payments and foreclose anyway. He said we need to get the heck out of there and find a place to rent, that would do more for credit than staying where we are. I guess the fact that we had vehicles repoed hurts us too, even though they were repoed in the bk. Guess we would have been better off keeping them and reaffirming. He also said that we need to keep our one credit card and keep a small balance on it and make payments on it. Also mentioned was a secured loan through our bank, he said that would be a good idea to do. The thing that surprised me the most was when I asked if we should go to the trouble to correct errors in our credit reports......like things reported as charge offs that should be reported as included in bankruptcy. He said no, it makes no difference, the only thing that matters from this point forward is what we do with our credit now. He was very blunt and matter of fact, he also knows what he's talking about, this guy has been a finance manager for 20 years. So, guess we will be borrowing against retirement to buy a truck and get some money together to move. Not a big deal, just frustrating. He had me almost in tears. I feel like such a loser and so hopeless.
House - I would check with my BK attorney. It doesn't make sense that they could "just get tired of voluntary payments" The credit card and secured loan do make sense. By all means you should think about fixing your credit. (Think of it this way - why would someone that is going to make much more money in interest on subprime, encourage you to clean up your report?) But, I wouldn't jump on the changing it to "Included in BK", use that leverage to work for deletion of the account entirely! You need to read up as much as you can on this site, especially the first three threads, and search on bankruptcy. There is a lot of good advice here. Don't jump in without understanding what you are doing. Rule No. 1 - never never never send the CRA's your BK papers! Good luck
Well, let me disagree with much of the F&I guys advice. As to the house. Why did you not reaffirm? If you have a negative equity or a bad loan or are struggling to make payments then you likely should move. But, if you are making the payments easily and are not upside down, there is about a zero chance that the bank will foreclose on a preforming loan. Banks make no money warehousing real estate and a forecllosure proceeding is expensive and timeconsuming. Just sit down and make that decision based on dollars and cents and take the emotion out of it. Do what makes economic sense. I also disagree on not cleaning up your report. He is right to a degree. A fresh bk on score driven models is going to be bad for a couple of years regardless how accounts are posted. But, as the bk ages it'll be very important to get rid of all of those lates.
Please don't let this guys view of things make you feel so bad. It's his opinion and he's only right on a couple of points. Reaffirming isn't required in the bk code for you to keep your home. I've always only read that as long as you stay current, they shouldn't bother you. (you can read up more on the bk process at sites like lawdog, nolo and freeadvice.com). You should do like the last poster said and figure out the financial aspect of it when considering having to move, don't let this guys (bad) advice push you to it. He may have 20 years experience, but that doesn't mean he's RIGHT. YOU yourself need to read up about fixing things on your credit reports. at this site and others, and read the FCRA. You can clean things up and also let any new credit you get age. I'm sorry he made you feel that way. But please don't believe him and work towards helping yourselves. Even a bk can mean less and less as time goes on and you work at rebuilding. There is life after bk or else a lot of us would be in a whole lot of trouble!! Good luck and don't give Up!! Newstdt
Thanks for the replies. As for why we didn't reaffirm, well, its a nasty loan, we only took it to try to stave off bk.......obviously it didn't work. We owe $47,861, our house appraised for $47,000 5 years ago. The interest rate is 12.25%. Also, there are things in the loan papers (found them today) that are making me very nervous. Here is what I found: Call Option: We may, in our sole discretion at any time after 120 months from the Date of Loan, call your loan immediatly due and payable in full. Default-Entire Balance Due: If you don't pay an installment on time or if you violate the terms of any other security instrument that secures payment of this Note and Security Agreement, you'll be in default. When that happens, you agree that without giving you advance notice, we can require you to pay the remaining balance of your loan at once (less any required refund of interest). We can also use any remedies available to us under the Uniform Commercial Code or any other law. This is a 20 year loan, taken out 3 years ago, we owe more now than we did 3 years ago. The other reason we really want to move is I can't work where we live, there are no jobs. We live in the middle of no where, my husband works at the base which is close by, but with his schedule moving 100 miles away is not a problem. He works 3 days on and 4 days off, so he would only be driving once a week really. This whole thing just frustrates me. I guess I need to find some good books on this subject (cleaning up credit, bk, and all that) and just start reading.
Call Option is a little scary...I don't know how often they actually call one. Is the loan five years old? I don't understand why its a negative amoritization. This wouldn't, by chance, be a Household loan? Default - That is an acceleration clause. In layman's terms, if you quit paying, and this clause is not there basically, they would have to "re-default" you as each payment comes due. The Entire Balance Due clause allows them to foreclose all the full amount of the loan at one time if you ever become late. Thats a fairly standard clause.
This loan was taken out in November of 1999, so its just over 3 years old. The loan holder is Wells Fargo Financial, they were also known as Norwest Financial before Wells Fargo took over. We have tried for the past couple years to find out why the balance goes up every month, they have never answered us. Our attorney has tried for 2 months to get an answer out of them, but all they do is talk around it. We should owe $45,600 according to an ammorization schedule. We had originally reaffirmed the loan, but since they wouldn't tell us why the balance was so high we are recinding the reaffimation agreement on Tuesday.
120 months is 10 years so you have plenty of time to refi before the remaining 7 years of the loan are up. It would look better to a lender after rebuilding credit to have a mortage that's current so don't sell it because the F&I guy said to. You really need to figure if it's best to move to a new area where there is plenty of work and if you can afford to move. Renting a place might be hard with bad credit too. You may need to put an extra 1-2 months security deposit.
Renting is no problem, we have checked into that already. What we are hoping to get is a lease option. Money isn't an issue anymore, we are doing fine. We cannot refinance this place because its a 1976 Bon Prix mobile home that is not on a permenant foundation and the well and septic are not up to code. Our only choice for a loan was these sharks, no one else will touch it. Best our attorney can tell is they are going to make us pay all the interest up front until the first 10 years is up, then the principle will be paid after that. We have no equity in this place and won't have for several more years. Its not in the best shape (never has been) and needs thousands of dollars put into it. The only thing it has going for it is we have 5 acres, but 5 acres in a job starved area means nothing. The area we live in only has about 500 people. Anyway, not trying to justify anything, just give more facts. We are still weighing the pros and cons, so any input is nice.
Weighing the pros and cons is the right way to approach this. Based on what you said it sounds like moving and renting might be the way to go. Just my opinion on what I've read. Make up your own mind of course. Good advice I heard from a multi millionaire recently was be willing to relocate to where the money is and be willing to take risk. Is there anything of value in the house that you can take and sell such as copper pipes or brass faucets? Keep us posted.
Hmmm. It really sounds like you need GOOD legal advice. People here can give you great help on how to clean up your credit report, but they can't read your loan papers and give a legal opinion. If your present attorney is unable to do that you need a new one immediately. In the long run it will work out and like I said people here are a tremendous resource, but your number one task is deciding what to do with the home/loan. Good luck!
The loan is on the house and the land. There are 2 barns which do NOT go with it, they are ours, moved here from another house. Also, we figure we can take our appliances, tear down the greenhouse that we built, there is lots of stuff that is ours. The biggest hold up for me wanting to move is I have this wonderful old horse and I can't bear the thought of losing him. Silly I know, but he has been through a lot in his life and is finally feeling safe. At any rate, we have a great attorney, his advise was if you are going to make a mistake make it on the side of walking away from debt. He won't tell us what to do, only offer advise. He's a great guy. His paralegal, who is wonderful, has been dealing with the bank on this mess and even she is stumped as to why they won't give her an answer. In my head I know that we need to walk away. If we move into Fairbanks (yes, we live in Alaska) I can get a good job and we will be that much better off. Now if I could just convince my heart of this I'd be doing good.
from what you've posted here (we have no other info to work with), I agree with your atty. err on the side of walking away from a bad situation. It sounds like: 1.) you have a better chance of getting a (better) job by moving. 2.) the loan on the house is a bad one. 3.) the house itself is not in great shape and if you tried to sell it you would lose money BEFORE paying any 'closing costs' like realtor fees, taxes, etc. aside from it being hard to sell anyway. 4.) you can find a place for your horse in your new town. that said; I've met people who have been in their respective industry/profession for 20, 30, 50 years and still didn't know jack shit! you definately need to work on cleaning your CRs. even if you only clean up 50% of what's on there it will make a big difference 2 years from now. DO NOT SEND ANYTHING TO THE CRAs, especially bk paperwork. try disputing the bk itself and all 'included in bk' accounts as 'not mine' with all three CRAs. Having a new address might help in that regard if you can get your old one off your CRs first (I would try to get all old personal info removed before doing anything else). I've already got my bk off EX and my wife's off TU so don't tell me it can't be done... Best of luck with everything, let us know what happens!
Thanks for all the replies. My husband has a great job, he is a firefighter at the air force base near here. By moving it will increase his commute, however, that is not a problem since it will only be once a week. I'm currently not working (no jobs around here), so by moving I can get a job. Also, we won't spend so much money in gas (I drive a thirsy suburban) since I won't have to drive 200 miles round trip just to go to the bank, grocery store, dmv, ect. Thankfully both of our vehicles are paid for, we lost a 2002 Dodge Ram and a 1998 Jeep in the bk, so we went and bought a 1990 Suburban (very reliable) and a 1994 Escort (also very reliable). Our house is nothing to write home about, hindsight being 20/20, we should have built a house here rather than spend $30k remodeling this mobile home. Heck, it still needs another $10k put into it and even then it would be hard to sell. Anyway, thanks again for all the replies, its nice to know I'm not alone (although sometimes I feel like I am). I'm going to get a CR from all 3 bureaus after the bk is discharged. Our bk would have been discharged on the 13th of this month, but our attorney held it open because of the house loan, wanted to give us time to figure out what we wanted to do. It should be discharged on the 5th of Feb.
It might take a month or two before the BK shows up on your report. You can still work on the previous address in the meantime.
Found this thread that I started 11 months ago, thought I'd drop a quick line. We are now 14 months post filing and almost 11 months post discharge. The Ford F&I guy was full of horse pucky. We recently (6 weeks ago) financed a used 1999 Dodge Ram through Ford Motor Credit with $0 down for 60 months, interest rate is ugly but we plan to refi it in a year with our CU. Of course we also have a loan through our credit union on a 1997 Ford Explorer too, so that helped our case. Two credit cards, one through Crap 1, 600 CL and one through Orchard Bank, 1500 CL. All current and no negs since the bk. Hated to finance that truck, but our paid for truck was breaking down every week and cost us $5000 in 5 months in repairs. At this point we are thinking about trading in the 97 Explorer on an 04 Explorer (rebates are awesome and we would only have to finance 67% LTV). Just kicking the idea around for now, but the 97 Explorer is showing signs of costing us big bucks here soon. Other than that, we are still in our same house making our voluntary payments. We have decided to wait 2 more years and let time work its magic on the credit side. Also, our vehicles would be paid off by then too, well, except 1 if we buy a new Explorer. So, I guess there is life after bk. We are doing ok and hopefully when it comes time to buy a house we won't have any trouble. We've already been told we can get approved with 3% down and conventional rates come February 7, 2004 (day after the 1 year anniversary of our discharge).
A lot of good stuff in this thread, I have a few thoughts to add. In a sense, the nuts & bones of what the Ford guy said was correct - your recent history is far more significant, given the BK. That does NOT mean you don't bother cleaning up whatever you can - just keep your eyes on the prize, a stellar track record post BK. You, obviously, need to find a home/location that best suits your needs, and the ownership of that particular loan doesn't sound like the best deal going. OTH, it IS a loan, which you might not be able to get otherwise, and you can establish a track record w/payments. The harsh terms don't seem very important now, *assuming* you make payments on time. As you are aware, lotsa folks have lots to say about what's best before, during and after BK. I find it easiest to listen carefully to people who have personally done a BK - my current mortgage person has been divorced and BK, so we've bonded and I *trust* him - or those who have CLEAR boundaries and policies. As in "we can NOT give you a mortgage until TWO years after your DISCHARGE date" - that clarity works SO much better for me than "well, it all depends".. I've gotten that crap from BofA, Amex and Chase credit analysts who have turned me down w/good scores, no lates/collections (only one IIB on each CR) and just my - ta da! - BK was the reason in each case, more than 2 years after filing. Keep gathering info, culling people's own experiences and you'll make better choices.
