When we short sold our home 3 years ago the 2nd mortgage holder would not agree to terms. We didn't want our house to go into foreclosure and sit vacant, so we signed a paper saying we would continue to pay smaller payments until paid off ($82,000.) At the time we intended to pay, and did for the first year or two. But now we are barely getting by, my husband owes back taxes. We've been unable to get back on our feet since the economy crashed. Now we're being sued. Should we file bankruptcy? We are near retirement age and basically have nothing. Thank you
"Should we file bankruptcy?" That is one of the issues you should discuss with your bankruptcy attorney.
$82,000 is a lot of money for most persons as well as companies. The bank to which this money is owed likely is not going to forget about the debt unless there is a court order for the bank to do so. You apparently do not have the money to pay.
If you have other debts that can be discharged, filing bankruptcy may be even better.
You and your husband should review the specific facts with bankruptcy attorneys to understand whether you two are eligible for bankruptcy and whether bankruptcy is a good option for you.
I agree with the previous answer and you sold at a loss and you agreed to make up the loss. However you should discharge this debt in bankruptcy as stated above you will also clear other outstanding debt.
Good Luck
It sounds like you have more going on than just the 2nd mortgage. A bankruptcy will discharge the 2nd mortgage, as well as any other credit cards debts you have accumulated. A bankruptcy may even discharge the old tax liabilities. You should consult with an attorney on these matters. Most, if not all, bankruptcy attorneys offer free consultations.
First, I set out some goals you need to focus on below. But $82,000 is a lot to pay.
Second, you need and want to enjoy your fresh start also. But the most important thing is to meet with an attorney as you asking this question means you have not. You care about 2 goals: keeping everything you have equity in and discharging all your debts. If you don't have any of the exceptions to discharge you will obtain that goal; most exceptions are set forth in 11 USC. 523 (Google it) like child support, some income taxes, traffic (in a ch 7) and criminal fines , and presumption of student loans. In your case, income taxes are an issue. If they are owed for years before the 2011 tax year, then you may possibly discharge them and I suggest you discuss this; I go through that as many attorneys do also as it is really the possible threshold issue in your case on when to file!
But some debts are dischargeable in a ch 13 but NOT in a ch 7 so you want to make sure and your attorney will discuss any such types with you also!
Your exemptions depend on what state you have lived in in the last 2 years and thus if in your state, then your states exemptions will apply. Most persons filing keep everything they own but your attorney will confirm that with you when they learn everything you own and the equity thereof!
Some secured debts like homes, vehicles, other secured debts an attorney will discuss your options on also as you must list any debts; but that does not mean you will lose them unless you have too much equity or are in default on paying for them! Discuss those options if they apply with your attorney too.
But other issues can arise that can greatly harm your case. Just one example: If you paid back a relative $3,000 11 months ago and now file bankruptcy next week, the trustee can SUE that relative to retrieve that $3,000 (under what is called a preference) for the benefit of the bankruptcy estate. As a result, most attorneys don't charge to meet with them the first meeting so meet with one no matter what.
On the lawsuit, I suggest putting in a notice of appearance before the answer time period is up and can email you an example with instructions also!
Many great attorneys can be found right here in Washington. The only court is SEATTLE to file your case even though you are in Snohomish County and I go through that with you also. So find an attorney, call, and meet one as soon as you can.
You should also want to know when to file: is there an advantage of waiting versus filing now and who should you pay between now and then! Good luck and enjoy your later fresh start.
I'm starting to see more folks like you who are approaching retirement with debts and aren't sure how they are going to pay their debts on a fixed income once retirement arrives. Although you should speak with an experienced bankruptcy attorney before you file, to me it seems that eliminating the $82,000 second mortgage along with your other unsecured debts would be a helpful way to pare down your expenses in anticipation of retirement. You have done your best to continue paying the second mortgage after the foreclosure of your home, and now might be the time to file for bankruptcy so that you can begin saving for retirement.
In Washington the statute of limitations for suing on a mortgage involved in a short sale is three years. The statute provides, in relevant part, that if the collector "does not initiate a court action to collect the outstanding debt within three years on the date which it released its security interest, the right to collect the outstanding debt is forfeited." Seek qualified counsel.
The question of "should we file bankruptcy?" is not likely to be answered by an attorney. Most are going to explain the bankruptcy process, including the benefits and consequences of filing. They will then review the cost. Most local bankruptcy attorneys will meet with you and do this analysis for free (hoping that you will hire them if you decide to proceed). You will be the one who has to decide if it is a good option for you.
Being sued and owing back taxes can be very stressful. I recommend you meet with an attorney soon so you can develop a plan and strategy for addressing these issues. Good luck.
Gregory J. JalbertChapter 7 Bankruptcy AttorneySeattle, WA ·
You should definitely talk to a knowledgeable friendly attorney to review your options and see what is best for you. Many of us do not charge for initial consultations.
Best of luck
