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Forclosure, Bankrupsy or Short Sale?
Married Life / 5:44 AM - Tuesday October 06, 2009

Forclosure, Bankrupsy or Short Sale?

Our home is in "negative equity" (the mortgage is more than the home is worth). Due to work cutbacks, we can't continue to make the payments. No possible way of selling the house for what the mortgage is. We are already behind on the payments. I've contacted the lender; they don't care, they want their money.

Which is less damaging to a credit score (or should we not even worry about that at this point)? It is an opportunity to get out from under this, rent a house for a couple of years while the last 2 kids finish high school.

We have worked our whole life, and now this. I'm just sick over it. I've tried the advocate group route, we don't qualify. I'm open to all helpful suggestions...thanks.

- Asked by A Cool Mom, Female, 46-55, Cleveland, Home Maker

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Here's something from Suze Orman:

"If you are more than 5 percent underwater, you won't be eligible for the refinancing plan. But you may be eligible for the loan modification program, which is designed to reduce your mortgage costs temporarily. Here's how it works: Your lender will look at the percentage of your gross monthly income that's eaten up by your mortgage payment, property tax, and insurance payment. This percentage is your debt-to-income ratio (DTI). If it is above 31 percent, the federal government will offer your lender financial incentives to lower your mortgage payments to an affordable level. To push your payments down, the lender can reduce your interest rate to as low as 2 percent, extend your mortgage to 40 years, or even waive interest payments on part of your loan. Your new mortgage payment will be good for up to five years, at which point it will gradually increase to a permanent fixed rate equal to what the 30-year fixed rate was at the time your reduced mortgage went into effect.

The Treasury Department estimates that this program could keep three to four million Americans out of foreclosure. I hope you're in that mix! To find out about both of these programs and to see if you are eligible, go to makinghomeaffordable.go v."

and

"If you can't work out a modification that makes the payment affordable, then it is time to let go of the house. Be strong. The sooner you make the decision, the sooner you can begin to move forward. It is true that a foreclosure or short sale stays on your credit report for seven years, but that doesn't mean you are doomed. With each passing year, its impact on your credit score lessens as it's given less weight in calculating your creditworthiness."

Go to her website and Jean Chatzky website to see if you can find more information that might help your situation.

I don't know who qualifies for help...my mortgage lender wouldn't help me either and I don't qualify for federal help and Obama's Homeowner Affordability and Stability Plan. The person at my mortgage lender told me if I had trouble paying the mortgage, I should rent any vacant bedrooms out to renters. No joke.

- Response by A Thinker, Female, 36-45, Atlanta, Artist / Musician / Writer

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I am so sorry for you.If you have credit card bills I would go for bankrupsy.

- Response by frenchkiss49, A Thinker, Female, 56-65, Tampa, Who Cares?

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Community Rating: Community Star

Your family is going to lose the house, your kids are in high school and your occupation is home maker????? Turn off Oprah, put down the bon bons and look for a job, any job. Unless you live at Neverland Ranch even a minimum wage job should bring in enough money until your husbands work increases or he can find another job.

- Response by bailarenfuego, A Guy Critical, Male, 36-45, Technical

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Have you enquired about paying interest only? I've had to do this for the last 12 months so I can pay something. I missed a few months and made an arrangement with my mortgage compny to pay each month what I could afford. In the UK there are things in place set by the government to help people struggling with mortage payments. I kept in regular contact with my mortgage company and kept to the arrangements, it was frustrating though as each time I contacted them it was as thought they knew nothing about the arrangement I had made and the conversation started from scratch each time. If you are willing to make an arrangement, your mortgage company should be willin gto oblige. Hopefully they will. Good luck.

- Response by A Creative, Female, 36-45, Who Cares?

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Have you tried professional advice other than your Mortgage provider. They may be able to help.

- Response by hands, A Mr. Married Guy, Male, 36-45, Who Cares?

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