We did try to negotiate that… back and forth numerous times. They just wouldn’t budge. Their (very firm) stance was that they could move forward “to the extent of the law” after the short sale or something like that. Basically it took a recourse second mortgage and turned it into an unsecured loan. I think. The short sale did reduce the balance on that 2nd by about $20,000. The first lender paid of the the 2nd to get them to release it (but it didn’t really release our obligation, clearly). And both the lenders were the same (at the time of the sale – one bank bought the other while we were in process. BofA). I don’t know if BofA handles all their cases like this, but that was our experience.

As for bankruptcy. It sure is like leprosy to us. It sticks to you. It’s something you carry around with you your entire life and you need to check boxes on forms declaring it every time you apply for a job or want credit in the future (just about). Especially a personal bankruptcy. We also just have a “feeling” that we should try to pay off the debts we racked up the best we can. In the case of our home, the banks had the house for collateral. And we couldn’t see ourselves paying our way out of that one no matter how we budgeted. So… until we are unable to buy groceries that just won’t be our choice. That doesn’t mean I think any less of people that go the bankruptcy route themselves. Just a personal bias for us.

Thank you to those who sent a private message. We will start contacting people next week. We are also aware of California’s unique and creative ways they want to tax their citizens and how that might be contrary to the federal laws regarding loan forgiveness. But all this is changing so rapidly, so I don’t want to fill out those forms!