Legal Question in Bankruptcy in Pennsylvania

Not in Bankruptcy... yet

I apologize if I am posting this to the wrong area and hopefully, I have provided enough detail. I Currently have a mortgage and a HELOC on my home. I am also going through a divorce and neither I nor my wife can afford to maintain both mortgage payments. She is slated to move out in August at which point I will be obligated to provide support to her which will destroy and hope if staying current on the loan payments. I am trying to sell the house but the market is dry and I have no choice but to drop the price of the house below what is needed to payoff both loans. I owe 160k on the Mortgage and 60k on the HELOC. My Realtor feels the house will sell fairly quickly if we drop the sale price to 200k (house appraisal value was 220k, we had it listed for 235k and has been on the market for 55 mths with no nibbles) which we figure to be about 30k short of settling the HELOC. I was exploring a short sale via the HELOC (2nd). I haven't missed a payment yet but I am now at the point that I just cannot continue with both payments. Should I secure an Attorney to help with the Short Sale? Since I haven't missed payments yet, will they even consider such. Is there any other alternatives available to me?.

Thanks much...


Asked on 7/12/07, 4:06 pm

2 Answers from Attorneys
John Gibson John W. Gibson, Esquire

Re: Not in Bankruptcy... yet

You really do need to consult with an attorney. Bankruptcy may or may not be your best option at this time. It is probably worthwhile to try to negotiate the HELOC down because if you simply walk away from the house and let it go to foreclosure, the holder of the junior lien is going to have to pay off the first mortgage to acquire the property and then will inherit the same problem that you are facing now. I've sense over the past couple years with declining real estate values that lenders are starting to be more reasonable.

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Answered on 7/15/07, 3:07 pm
Matthew Nahrgang Nahrgang & Associates, P.C.

Re: Not in Bankruptcy... yet

Short sales are difficult to obtain and require an agreement of sale. So, it is premature to think about until then.

If your credit is good, it is preferable to maintain it by going that route. However, it may not be possible. Rather, you may be forced to allow it to be foreclosed on and save yourself much money, time and aggravation. You can also consider a bankruptcy to eliminate any concern that the home equity loan will pursue you.

You should speak to an attorney about all your options.

I trust this answers your question but feel free to call or E-mail me on a free initial basis.

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Answered on 7/12/07, 5:17 pm


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