I'm new and I have a question about our house.

[Horse of Course]

Hello,

My husband and I are about $90,000 in debt with a car loan and credit cards. We have our free consultation tomorrow and we would like to do a chapter 7.

My question is about our house. We live in the Washington, D.C. area and we bought our house in June 2006. We paid $399,000 for our home. We got an 80/20 loan and we didn't have to put any money down. Our home is currently worth $275,000. Our mortgage payment is $2900 month. We are thinking of relinquishing our home. This is a really tough decision for us. We are currently one month behind on our mortgage. My husband likes to know that we own a home, but I keep telling him we really don't own the home, the bank does. I feel like every time we make a payment we are throwing our money away since the value of our home has dropped so much.

The house two doors down from us is currently renting for $1450 a month.

What would you do, keep the home or relinquish the home and rent?

Thank you so much for your help!

[bmrigs]

Hello,

My husband and I are about $90,000 in debt with a car loan and credit cards. We have our free consultation tomorrow and we would like to do a chapter 7.

My question is about our house. We live in the Washington, D.C. area and we bought our house in June 2006. We paid $399,000 for our home. We got an 80/20 loan and we didn't have to put any money down. Our home is currently worth $275,000. Our mortgage payment is $2900 month. We are thinking of relinquishing our home. This is a really tough decision for us. We are currently one month behind on our mortgage. My husband likes to know that we own a home, but I keep telling him we really don't own the home, the bank does. I feel like every time we make a payment we are throwing our money away since the value of our home has dropped so much.

The house two doors down from us is currently renting for $1450 a month.

What would you do, keep the home or relinquish the home and rent?

Thank you so much for your help!

Good points! The house is not yours just the debt associated with it. Well you can do something about that. Stay in the house as long as it takes them to foreclose on you. This could be up to a year from now. Then walk away and never look back. You didnt put a down pymt on so your not losing that, and the only thing your losing is the closing costs. If you were able to live in that house up to a year waiting for foreclosure, you are going to get those closing costs back to you and then some maybe.

[BKParalegal]

Bmrigs is correct, if you time right, in what we call bankruptcy pre-planning, you can prepare your bankruptcy and file teh day before the foreclosure, which may be 6 months from now. The mortgage company will then have to get a motion for relief done which could take 2 months and then they have to start the foreclosure process over again. Take the money that you are saving from not paying your mortgage and set some aside for a security deposit and moving expenses, and put the rest in exempt assets, like start a Roth IRA, etc. Discuss this with your attorney and if he/she is clueless or is afraid to do this, go find a new one with a set of gonads. I say all this not knowing if you are about to get garnished, imprisoned, or any other bad thing that needs to be stopped immediately.

Good Luck

[liz417]

Hi Horse,

I agree with the other posters, you don't own the house, in fact you are in negative equity. I understand your hubby's point, but if I were you guys, I would dump the house and get a fresh start. The mortgage is too high, if there are rentals cheaper. A few years down the road when the market recovers (hopefully ), you guys and look into purchasing another one.

Good Luck!

[justplaintired]

With that much negative equity, keeping it might not be in your best interest. There are threads on here about buying a home after BK and it can be done. You're correct right now you don't own your home the bank does and it really won't be a fresh start if you keep it.

Good luck!

[Help!]

All I can tell you is that it is amazing how much easier it is to meet ends meet without the burden of a mortgage payment. The house we're renting is just as nice and is about $800/mo. cheaper. If only I had put $800 a month into a savings account instead of buying our last home... I would have had $48,000 in savings, no debt and no BK!

If it were me, I'd hand over the house and start a new life with a great big cushion in my budget. Who knows when the economy will improve, and if it doesn't (or it gets worse) you'll be very happy you left yourself that room.

[Horse of Course]

Thank you everyone for your help! My husband is now starting to understand that our house isn't really our house.

I had our free consultation today and everything went fine. My husband and I will meet with the lawyer on the 8th of August.

[Frogge]

That's wonderful, Horse. Everyone posted great responses to you, a house with that much negative equity should not be such a burden you.

[ccaplinger]

We are giving up our house too. We outgrew it several years ago. In addition it has a lot of work that needs to be done to it. We are trying to move before school starts. I am having a terrible time getting someone to rent to us though. I'm being truthful to them instead of lying and it's getting us nowhere. I just talked to this lady on a perfect house, right size, right area. She asked so many questions I felt like I was talking to my father who always thinks everything I do is wrong.

If you can afford to keep the house try to. You might find it hard to find a place to live with a bankruptcy on file. I'm seeing that first hand.

[breezyday]

Horse, I live near DC in Va and facing the same problem.
Our bank at last has agree to look at offers for a short sale. So far no offers, Zip -zero!
Someone could come in and get a nice home cheap, yet no offers?

We are also having problems finding a rental due to our pets, either no pets allow or they want a very large deposit.