Notice of Default on Family Home

[DLynn]

My question involves a foreclosure in the State of: California:

I just recieved a notice of default on the home I grew up in. Long story short, The property was free and clear and I took out loan to help our business 4 years ago (we were in business 14 years) Business closed in July of 2008. Now our personal credit is ruined because it was a sole propeitorship.
It was a private lender home loan, and I owe about $5,000 to cure default. The loan is coming due in June of next year. 10.75% interest only loan. I have about $100,000 equity,maybe more if I could sell. I'd rather not do that as I have my son and 2 year old grandson living here also and he contributes (sons company laid him off a month ago)
I have renters that pay me for 2 of the rooms. I have a job (part-time) and husband just got a job part-time this last week. I have enough money to make payments if they were not so high (they are $2,000 a month)
I am absolutley freaking out.

What are my options? Thanks in advance for any advice you can give me.

[jk]

What are my options?


pay the default or lose the home from what I can see.


of course, if you cannot continue the payments, it doesn't sound like it would make good financial sense to do so.

and even if you can make the payments, any plans for when the balance comes due next June?


what is the total amount of the loan?

[DLynn]

I think I can come up with the default, but am wondering if I were to have someone co-sign a new loan with lower interest rates if that would be feasible. It would decrease our payment in half if I were able to do that. That would make it livable and get me out from under this loan. Then I could sell the house and move into something smaller with the equity, a small condo or something. Loan is for 164,000.
Thanks for responding by the way.
And how does bankruptcy work? Would that give me some time? I've never filed.

[jk]

can't give you much info on California rules for BK but yes, filing would delay the immediate situation. Depending on all the facts, it might not delay it too long though. If you are seriously considering BK, you should visit a BK attorney who can review all the pertinent details and explain what will most likely happen in your situation.

[DLynn]

If I filed BK would I be able to keep the house?

[jk]

I think there is only a $100,000 exemption. That would mean the remaining value would be required to be used to pay bills. Like I said, I am not very familiar with BK law so do not put a lot of weight on info concerning BK from me.

there are a few others that post here that know a lot more than I do on the subject. Hopefully they will add more.

[acip4u]

JK is correct, I am in Calif. and have gone threw bk, but your house my not be worth what you think it is worth, yes you could keep your house if you do not have over i think it is 75K in equity the rest of the equity would have to be paid to creditors, i would definetly speek to a BK Lawyer there is no fee for just talking to them. Bk can get complicated do not attempt to do BK on your own, do not panic you will find out you do have many options when you speek to a lawyer. Its not as bad as everyone makes it out to be, its been almost 2 years for me and now we are on the road to recovery.


God Bless

[mamabear2102003]

Not sure if your home is eligible or not, but have you looked into a modification of the mortgage? Not sure what you mean by private home lender, but if it's a bank, it might be worth checking out to see if they are participating in these modifications. Good luck!

[DLynn]

Thanks I'm trying not to panic. I worry more about my grandson, where will they go. My son needs some help right now after losing his apt and job.
The loan is with a private lender, not a bank, horrible loan that I took out 4 years ago. I've paid over $70,000 interest and nothing to the principal.
Live and learn the hard way I guess.