Can I change terms of payment arrangement made with a collection agency or risk foreclosure by doing so? 6 Answers as of July 12, 2013

I have two mortgages with separate banks. One is for $200K and one is for $50k. The first one is in the middle of a possible loan modification. The second has been sent to a collection agency. I made an arrangement to pay $300/month to them but realize we can't afford it. Can I try to lower my payments with them or will I risk foreclosure by doing so? I have been out of work for 1.5 yrs. so my husband is bringing in the only income and we have three kids. We have already lowered our monthly bills to bare minimum and are paying on two court judgements already for unpaid credit cards (we now have no credit cards), and have one more year to pay on our one family car. We have no one to borrow $ from. What would you suggest?

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Why don't you consult with a knowledgeable bankruptcy attorney in your area. Find out if you qualify for a "lien strip" of the second mortgage. Generally this can be done when the first mortgage is more than what the house is worth.
Answer Applies to: California
Replied: 4/19/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
If you cannot keep up with your payments, BK may be your best option. If you are in WA, we provide free consultations and I can asses your situation at no charge.
Answer Applies to: Washington
Replied: 4/18/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
Whenever you fail to make payments on a debt you always run the risk of foreclosure. If you cannot make the payment then you should seek alteration with the collection agency. If you still have difficulty you could consider a Chapter 13 Bankruptcy to reorganize your debt.
Answer Applies to: New Hampshire
Replied: 4/19/2011
Law Office of David P. Farrell
Law Office of David P. Farrell | David Farrell
It sounds like you are tapped out! You may be good candidates for chapter 13 bankruptcy. Chapter 13 is a reorganization plan where you classify your creditors and treat them under a plan of reorganization.

Some creditors must be paid in full in chapter 13, while others only get paid if there is anything left over.

How much you can afford to pay into the plan each month is determined based on your income, family size and other factors using a means test. In addition, chapter 13 allows you to treat your 2nd mortgage as "unsecured" if you can demonstrate to the court that the fair market value of the property is less than the amount of your 1st mortgage - i.e. your 2nd mortgage is completely unsecured by the property. You may also avoid other types of liens in chapter 13, like judgment liens. If you complete the plan your unsecured debts, including maybe your 2nd mortgage, will be discharged and you will emerge from chapter 13 current on your mortgage and otherwise debt free. Contact an attorney immediately to further discuss your situation. I'd be happy to talk to you about it.
Answer Applies to: California
Replied: 4/18/2011
Ferguson & Ferguson
Ferguson & Ferguson | Randy W. Ferguson
You can always talk to the company about your situation. They can only say no or start the foreclosure process. If they will not work with you, sit-down with a bankruptcy attorney and see what you can do. Most attorneys charge no fee to talk to you.
Answer Applies to: Alabama
Replied: 4/18/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    If you filed bankruptcy and got rid of the credit card judgments, would that help your budget? Have you talked to a good bankruptcy lawyer?
    Answer Applies to: Virginia
    Replied: 7/12/2013
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