ch13 vs. foreclosure: which is worse for your future credit and new mortgage?

[Moneypenny]

I am debating between ch13 and strategic default on a house with underwater 1st and a 2nd HELOC coming due soon (no other debts).

One issue is that is a possible tipping point is that for the future possibility of getting into a reasonable house, I would be taking various credit hits and new mortgage problems depending on the choice.

It is my understanding that ch13 is better that way: I might strip the lien on 2nd or pay it off in three years, take a BK on my credit report and then build up from there. no foreclosure on record should I seek a mortgage in the future, and by the time I'm done in three years, my first should be even or even I might be in the money slightly.

While, a default would be really bad for future mortgages: but the upside would be in three years I would have saved up some money, whereas with the 13 I would be even.

This is post ch7 so deficiency judgements are not in the picture, and I definitely afford my first and also willing to pay in 13 or otherwise something on my second, but I just can't deal with 70k underwater on the 2nd. My family needs a future.

Am I right that a ch13 is way better than a foreclosure, in the way I outlined above? Any other special considerations?

[leverage]

I believe as hard as it may be you are allowed to get an FHA loan after 12 months of on-time payments to the trustee. You are not eligible for an FHA loan unless the actual foreclosure date is 3 years past.

[Moneypenny]

Thanks! That's one consideration of the relative seriousness of the credit issue. Aside from qualification rules, are there other considerations? I can think of one-- that FC is always asked about on mortgage loans so it is basically permanent record in that sense. Any other considerations of the relative weightiness? Anything that makes ch13 worse?

[despritfreya]

MP,

See response on other forum. . . RE: Chapter 20

Des.