As we thought about filing for bankruptcy, our hope has been that our lender will see that we are filing and they're going to lose money on us, and offer us a settlement instead. We filed 4.5 weeks ago at this point, and still haven't heard anything. Our hearing is on Monday, so only two business days left. I'm not entirely sure if we can withdraw our bankruptcy petition after our hearing. While I'm perfectly willing to file bankruptcy to get us out of this mess, I'd rather not if we don't have to. We'll see.
So the hearing on Monday is referred to as a 341 hearing, which, in Virginia, takes place 30-45 days after you file for bankruptcy. (Throughout this blog, I will refer to my experiences in VA; I'm not sure how much of what I experience is consistent throughout the country.) These hearings are scheduled in hour time blocks, with multiple people assigned to each block. You get about five minutes with the judge, during which time he/she asks you questions regarding your filing. Such as, Did you tell the truth? Do you have any changes to your filing? Do you understand the consequences of filing?, etc. Nothing too hard, according to our lawyer, but I'm still kind of nervous about it. We followed the laws, but I'm still afraid I'm going to say the wrong thing. And this is the other weird thing - you're not supposed to dress up. You're supposed to go looking neat and clean, but very simple clothes. You don't wan to project yourself as someone with money, because that's not exactly the image of a bankrupt person, now is it? This won't be hard for me - I don't typically dress very fancy anyway - but it's going to be weird going to a formal appointment and not dressing up.
Thursday, March 5, 2009
How we got here, Part 3
When we last left this story, I told you that we felt we had no choice but to walk away from our condo. I wasn’t crazy about this idea at first, but after I thought about it for a few months, I realized that it was really what had to be done. We can’t continue to live here for another decade, and even if we could fit, I don’t know how I’d feel about continuing to throw our money away on an investment that has lost so much of its value. That’s neither here nor there though, because we just can’t stay.
So now what? Well, we stop paying our mortgage. The lender would foreclose on us…but wait, there’s no guarantee they’d leave us alone. In fact, in Virginia, they have five years to come after you for the balance that you owe them (in our case, this would be something $115K-$120K, maybe more depending on how much they could sell it for). Well, we can’t have that. My husband makes more than he did when we bought the place, but it’s still not a ton. He fully expects that within five years, though, that he will have moved on to a much more lucrative career, and we could actually have that much cash sitting around for the lender to take. That’s not a chance we were willing to take, so bankruptcy is the final step.
So now what? Well, we stop paying our mortgage. The lender would foreclose on us…but wait, there’s no guarantee they’d leave us alone. In fact, in Virginia, they have five years to come after you for the balance that you owe them (in our case, this would be something $115K-$120K, maybe more depending on how much they could sell it for). Well, we can’t have that. My husband makes more than he did when we bought the place, but it’s still not a ton. He fully expects that within five years, though, that he will have moved on to a much more lucrative career, and we could actually have that much cash sitting around for the lender to take. That’s not a chance we were willing to take, so bankruptcy is the final step.
How we got here, Part 2
So there we were! Our own little home. Cozy, but doable. At the time we were searching for a place to buy (in September of 2005), there were some signs that the housing market was slowing down a little but we said, "Pshaw! It's not a bubble!" Famous last words, right?
The value of our condo has fallen 42%. 42%!!!! Yes, when we got our assessment this year, it was valued at $157,600. Yowzers. This wasn't a surprise this year, of course; we saw that our value was falling all along, as follows:
2006: $268K
2007: $220K
2008: $209K (this was wishful thinking on the part of our county, but whatev)
Basically, we're stuck here. It will take many, many years for the value of this place to even get close to what we owe on the mortgage. As in, my youngest, who's currently four, would probably be in high school. Completely unacceptable. We can't rent the place (due to terms in our mortgage) and even if we could, we'd take a huge loss every month.
We put the place on the market in hopes that we could complete a short sale. All that resulted in was many months of me cleaning like a madwoman but no offers. We didn’t really think it would work, but we wanted to give it a shot. And, of course, we had talked to our lender many times before this, but they basically told us they couldn’t modify our loan because of the way it was securitized. This was our only shot.
The only choice left? Walk away.
The value of our condo has fallen 42%. 42%!!!! Yes, when we got our assessment this year, it was valued at $157,600. Yowzers. This wasn't a surprise this year, of course; we saw that our value was falling all along, as follows:
2006: $268K
2007: $220K
2008: $209K (this was wishful thinking on the part of our county, but whatev)
Basically, we're stuck here. It will take many, many years for the value of this place to even get close to what we owe on the mortgage. As in, my youngest, who's currently four, would probably be in high school. Completely unacceptable. We can't rent the place (due to terms in our mortgage) and even if we could, we'd take a huge loss every month.
We put the place on the market in hopes that we could complete a short sale. All that resulted in was many months of me cleaning like a madwoman but no offers. We didn’t really think it would work, but we wanted to give it a shot. And, of course, we had talked to our lender many times before this, but they basically told us they couldn’t modify our loan because of the way it was securitized. This was our only shot.
The only choice left? Walk away.
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