How can I get out of a motorhome loan with the least reprocussions?

[mudechevy]

We have a motor home that we purchased in 2005/2006 for about $237k. We owe $197k. We are just now late on our 1st payment because my husband is a framer and can't find work in this economy and hasn't for quite some time. We've eaten through savings and are selling off things to pay our mortgage and basically living off of credit cards and maybe a job a month now. I know, credit cards are a last resort but we have to eat and use gas to find work & get kids to school.

The bank suggested we short sell the motor home but we can't seem to find a buyer. What do you suggest we do if we can't find one? We will be 30 days late soon. Our credit is excellent(for the next week or 2 anyhow). I know we'll take a hit but I don't want to owe the $80k or so that will be left on the loan if they repo and sell at wholesale.

We have a 1st mortgage, no car payments, retirement savings of about $70k that I'd rather leave as a last resort.

Is bankruptcy an option with this high of debt? Would a repo be better? I don't know what to do.

[MarvBear]

I know of some motorhome dealers that have unsold NEW inventory that is at least 3 model years old.

 

From my contacts, I understand motorhome sales are down far far in excess of automotive sales, which would have a dramatic impact on not only the worth of your motorhome and the market that out there for those high ticket items.

 

If you feel another forum would be more suitable for your topic, I'd be happy to move it wherever you want me to.

[mudechevy]

I didn't know where this post should go. I assume it's like an auto loan. If you know of a better place for it, by all means. I can use any help I can get.

Thank you!

[MarvBear]

Lets move this to the main credit forum for more views and suggestions.

[GEORGE]

We have a motor home that we purchased in 2005/2006 for about $237k. We owe $197k. We are just now late on our 1st payment because my husband is a framer and can't find work in this economy and hasn't for quite some time. We've eaten through savings and are selling off things to pay our mortgage and basically living off of credit cards and maybe a job a month now. I know, credit cards are a last resort but we have to eat and use gas to find work & get kids to school.

The bank suggested we short sell the motor home but we can't seem to find a buyer. What do you suggest we do if we can't find one? We will be 30 days late soon. Our credit is excellent(for the next week or 2 anyhow). I know we'll take a hit but I don't want to owe the $80k or so that will be left on the loan if they repo and sell at wholesale.

We have a 1st mortgage, no car payments, retirement savings of about $70k that I'd rather leave as a last resort.

Is bankruptcy an option with this high of debt? Would a repo be better? I don't know what to do.

"MOTOR HOME" that cost many times over the most expensive "MOBILE HOME" in this area

 

 

Is this thing like one of those "MOTOR HOMES" that are like the size of a school bus and then some

 

4 or 5 bedrooms

 

2 or 3 bathrooms

 

Jacuzzi bath tubs

=====================================

It is going to be a very hard sell

Edited November 12, 2009 by GEORGE

[GEORGE]

I don't get this part--->Is bankruptcy an option with this high of debt?

 

"IF" you know anything about "DR" the snake oil salesman...HE WENT BK ON $1,000,000's

 

So have many others...

[PHRoG]

Wow...This is going to be tough, RV sales in general are WAAAAAAAAAAAAY down. My uncle has a 3 year old model ($300k-ish new, paid in full) that he has been trying to offload at 150k for over a year now. Not one...single...bite!

[GEORGE]

Wow...This is going to be tough, RV sales in general are WAAAAAAAAAAAAY down. My uncle has a 3 year old model ($300k-ish new, paid in full) that he has been trying to offload at 150k for over a year now. Not one...single...bite!

I didn't even pay $150,000 for one of my houses

[PHRoG]

Yeah, even in the current economy, he's financially secure. It was a toy, he had is fun and has now lost interest in it. He really doesn't care if it sells or not, so I guess that helps. LOL

[GEORGE]

I would guess there would also NOT be any rental market for it

 

I do know some people did rent motor homes for vacations (YEARS AGO)

 

I would love to do that when I retire...(assuming gas is not $5.00/gal)

[mudechevy]

Yes, motor homes do cost that much and no, it's not plated in gold. Yes, it obviously was a big mistake and I'm willing to pay the price for that. My husband is a framer. We would have never bought a motor home had we expected to be out of work for more than a few months.

 

Our credit scores are both over 740 until it hits 30 days late.

Would you all use your retirement savings to save your credit? Let's say it doesn't sell through a short sale in the next few days.

 

George, renting is not an option. Our insurance doesn't allow it. And I have no idea about bankruptcy. I thought I read somewhere that if you have more than $100k debt you can't file one of them.

[pryan67]

Wow...This is going to be tough, RV sales in general are WAAAAAAAAAAAAY down. My uncle has a 3 year old model ($300k-ish new, paid in full) that he has been trying to offload at 150k for over a year now. Not one...single...bite!

I didn't even pay $150,000 for one of my houses

 

George- Were you going to post anything USEFUL in this thread, or just your barely veiled ripping on the OP for them having a motorhome?

 

 

 

 

OP- do you have family you can borrow from short term just to get you over this hump? Have you contacted the lender about rolling the payment to the end of the loan? You might have to come up with the interest for this month...but that beats having to come up with the whole amount (and you might not have to come up with that)

[mudechevy]

I think I would dig into the retirement before I even thought about asking family for a loan. I asked about deferring payments and they will only allow me to do 1 payment and we have to show them that we would be able to pay after the 30 days. I don't think people will steadily be building houses that quick. Even if they do, they are paying peanuts compared to what they paid a year or 2 ago. I just don't see us being able to afford this payment until the market smooths out. Who knows how long that will take.

 

 

Another question..If we CAN do a short sale, do you know if this would be considered a 2nd home and if we would have to pay taxes on the difference?

[Elizabeth_Speaking]

Would you all use your retirement savings to save your credit? Let's say it doesn't sell through a short sale in the next few days.

 

Absolutely NOT. I hope you won't blow through all the cash you've saved trying to save this RV. If you were to have an emergency, you wouldn't have any money left to save your house and buy groceries. I would short sale it and work out payment arrangements for any difference before I'd spend my savings.

 

I could be wrong, but isn't the '2nd home deduction' pretty much a thing of the past?

 

Just mho.

[mudechevy]

Would you all use your retirement savings to save your credit? Let's say it doesn't sell through a short sale in the next few days.

 

Absolutely NOT. I hope you won't blow through all the cash you've saved trying to save this RV. If you were to have an emergency, you wouldn't have any money left to save your house and buy groceries. I would short sale it and work out payment arrangements for any difference before I'd spend my savings.

 

I could be wrong, but isn't the '2nd home deduction' pretty much a thing of the past?

 

Just mho.

 

All that cash is the 1st thing they would take with a bankruptcy and it would cost us more than that if they were to repo it and bill us for the difference. I would think that taking a chance on using part of it to get through this time would be a better option if we can't short sale it. That was the whole idea of the post..if we CAN'T short sale it.

If we CAN short sale it, I'm wondering if the govt. would tax the difference as income. That was my 2nd question. I think you misunderstood. Sorry if it was worded incorrectly.

[craigg]

Can you rent or sell the house and live in the mobile home for a year or two? If you allow the bank to repossess the mobile home you could end up with a minimum of a $100,000 deficiency judgment.

 

Bankruptcy may not be the best option since depending on your state of residence you could lose your house and savings. Spending your retirement savings will cost you in additional tax and penalties. Contact a local BK attorney to discuss your situation.

[Elizabeth_Speaking]

You're not by any chance in Texas, are you? I am, and I would tell the bank to come take the thing, use the $$ I was using for RV payments and apply it to my CC bills, forget bankruptcy, and keep my savings. But depending on the state you're in, that might not be an option. In some states, they can get a judgment and tie up your house, wages, etc. If you happen to not live in one of those states, count your lucky stars.

 

Lordy, I'd hate to see anyone lose their house and retirement. All the best to you.

[mudechevy]

It's a motor home, not a mobile home. There is a difference. We could not live in the motor home.

 

We live in FL. I am sure if I just let them come and get it, like craigg said, we would owe them $100k or more because of the market.

[vintagespeed]

advertise it on Craigslist and other online sites for rental! rent it out for trips and weekends and such.

[craigg]

Florida bankruptcy laws allow you to keep your home so consider yourself lucky. I just checked one auction and I saw 119 RVs available for bid. My guess is that there are very few individuals that are willing and able to spend $100,000+ for an RV. You have to add on repossession costs, transportation fees, and auction fees. If you just hand them the keys, after the auction you will receive the deficiency judgment. It's likely that they will send it to collections and you may be able to negotiate a settlement by using the threat of BK as your trump card. If they won't settle or you can't pay anything they will likely sue you. They can garnish wages in Florida but at this point you can file BK and keep your house assuming that you have declared homestead. If I were you I would seek competent legal advice before you do anything.

 

Also, I do realize that this is a motor home but there are worse places to live than a $250,000 motor home. In Florida there are many inexpensive places to hook up and you may be able to move to a place where there is more available work. It all comes down to what you're willing to sacrifice and how important that your credit is to you. Good luck.

Edited November 12, 2009 by craigg

[Uncle Leo]

Florida bankruptcy laws allow you to keep your home so consider yourself lucky. I just checked one auction and I saw 119 RVs available for bid. My guess is that there are very few individuals that are willing and able to spend $100,000+ for an RV. You have to add on repossession costs, transportation fees, and auction fees. If you just hand them the keys, after the auction you will receive the deficiency judgment. It's likely that they will send it to collections and you may be able to negotiate a settlement by using the threat of BK as your trump card. If they won't settle or you can't pay anything they will likely sue you. They can garnish wages in Florida but at this point you can file BK and keep your house assuming that you have declared homestead. If I were you I would seek competent legal advice before you do anything.

 

Also, I do realize that this is a motor home but there are worse places to live than a $250,000 motor home. In Florida there are many inexpensive places to hook up and you may be able to move to a place where there is more available work. It all comes down to what you're willing to sacrifice and how important that your credit is to you. Good luck.

This is extreme, but not unreasonable.

[SaltyTX]

Bankruptcy seems like a possible option for you at this point. You will be able to eliminate any CC debt, and the motorhome loan in the process. You are in FL which is one of the most debtor friendly states in the country. Where is your retirement money saved? most likely it is exempt under ERISA.

 

You could always wait for the deficiency judgment, and then declare bankruptcy.

 

Your credit is going to be shot with the repo, bankruptcy at least allows you to start over.

[mudechevy]

Living out of a motor home is not an option for us. If we were older, no kids at home & retired I would be willing to do that. Our savings is 1/2 in IRA's and 1/2 in mutual funds. I would be taking a lot of the mutual funds and leaving the IRA's.

Here's what I got on wikipedia. I really don't understand if our savings would be excluded.

 

In 2005, Public Law 109-8[1] amended the Bankruptcy Code, by exempting most organised retirement plans, even those not subject to ERISA, and accorded them protected status, claimable as exempt property by a debtor declaring bankruptcy under the U.S. Bankruptcy Code.

 

Now, most pension plans have the same protection as an ERISA anti-alienation clause giving these pensions the same protection as a spendthrift trust. The only remaining unprotected areas are the SIMPLE IRA and the SEP IRA. The SEP IRA is functionally similar to a self-settle trust, and a sound policy reason would exist to not shield SEP IRAs, but many financial planners argue that a rollover (or direct transfer) from a SEP IRA to a rollover IRA would give those funds protected status, too.

http://en.wikipedia.org/wiki/Employee_Reti...me_Security_Act

[ReformedCreditJunkie]

Our savings is 1/2 in IRA's and 1/2 in mutual funds. I would be taking a lot of the mutual funds and leaving the IRA's.

Here's what I got on wikipedia. I really don't understand if our savings would be excluded.

 

When you san 1/2 in mutual funds, I assume you mean these mutual funds are not held in an IRA. (FYI most IRAs are invested in mutual funds.) If the funds are not in an IRA, they would not be protected during a BK.

 

However, the IRA account(s) would be off limits during BK--they cannot be taken by creditors.

 

Please see a bankruptcy attorney asap. Don't wait until you've spent all your available cash trying to keep things going and trying not to go BK--and then having to go BK anyway...

 

I think it is your best option. If you can manage to keep a couple of credit cards open throughout the process, you might be very surprised how quickly you can recover from a bankruptcy.

 

RCJ

[crazymonkeycat]

Please see a bankruptcy attorney asap. Don't wait until you've spent all your available cash trying to keep things going and trying not to go BK--and then having to go BK anyway...

 

I think it is your best option. If you can manage to keep a couple of credit cards open throughout the process, you might be very surprised how quickly you can recover from a bankruptcy.

 

RCJ

 

+1

 

Find a reputable BK atty in your area and get your free consultation. Gather all of your papers, all of your debts (even ones that you think are silly like owing a friend/paperboy/what have you) and have them nice, neat and ready for the atty to go through. He/she will ask more than once "Are you sure this is everything?" so be sure it is. I forgot one account but, luckily, they assumed they were included and discharged the debt. I should have looked harder, make sure you do. You can go online and find BK sheets where you can list all of your assets from your home to the DVD's in your home. The value they are looking for is basically what you would expect to get for each specific set of items at a yard sale, not how much it would cost to replace them retail. I tell you this because it can make that initial consultation easier. If you choose to hire him/her, they will fill one out and make sure it covers everything when they file but having those estimates helps and saves time.

 

If I were in this situation, given the large amount of money, I would file BK. I don't know what the laws are about moving money around and how far ahead of BK filing you have to do it to be safe but your lawyer will of course know and you can put the money that isn't safe into something that is.

 

I wish you luck It's stressful, time consuming and a bit humbling but it's worth it if it means your future (ie retirement money). You get a clean slate, you learn from your mistakes and you start over. It is easier to bounce back from BK than a lot of companies/people make it seem ESPECIALLY if you read, read, read through this site.