Wednesday, September 15, 2010

What brought me to bankruptcy

This is the story of my journey to bankruptcy. I have had this one rolling in my head for months now, and just have not been able to get it written down. To tell this story, I must back up a bit. I am trying to be very delicate when I say this, as to not slander my ex-husband, but a few months prior to his leaving, he took out a second mortgage on our house. It was typical then, and so many people were doing it. It put the house upside down in equity, but it was so easy to get the loan, and the housing market was booming, and I think we foolishly thought it would continue that way. I blindly signed off on it, never thinking in just a few short months, I would be handling such debt on my own. When the divorce took place, he agreed to pay a little more than what the state required of him for child support in order to cover the two mortgages. That, combined with me working full time, was enough for me and the kids to live frugally, but comfortably. A little over a year after the divorce, he got fired from his good paying business job, and thus all but completely stopped paying child support. That moment is the beginning of my journey to bankruptcy.

Because of the house being upside down in equity, I was never able to refinance it to put it in my name only. All this time, I have been still tied to him through the house. I think we both have equally hated that fact, but it’s something neither of us can do anything about. By the time Paul and I got married, I was already falling behind on the mortgages. I was paying some, but not keeping up. I ended up taking my ex to court to get child support started again, but because he so dramatically changed his job situation, my child support dropped by $1,100 per month. The addition of Paul’s income helped, but when you factor in the expenses that he brought as well, it did not completely make up that difference. Paul and I have tried many things over the last year and a half to save our house. The loan modification process is a nightmare!!!!! They need every detail of your life written down, and then they ask for it again! You are a total peon that means nothing to the mortgage company. They hound you and hound you and then “lose” what you send them! We got far enough into things that we even paid for three months on a modification, only to find out paperwork had been misfiled, nullifying the whole thing. We set up a modification program with the second company based on the mod. with the first. That one was current up until the day I filed for bankruptcy! But at this same time, my ex filed bankruptcy, thus complicating my modification process. Everything was put on hold for many months until his stuff was settled. Almost as soon as it was, I started getting foreclosure notices. I attempted again to start the modification process, but it soon became apparent that things were not working out. I began to really consider bankruptcy as my last option. I began to surrender to the thought that we were going to have to move. Yes, in a bankruptcy you can restructure things to keep your house and car. But coupled with the housing market crash, I now owe $60,000 more than what the house is worth. Add to that the fact that we, as a growing family of 7, will very soon out grow the house, and Paul and I both know the best thing for us is to surrender the house. I will write more about that choice in my next post.

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