Foreclosure Q: can we just walk away in a chap 13?

[Anne2012]

We've been sinking for a long time. We were going to file last Spring. Our atty told us to stop paying the house paymnt so we could keep the principle up on the 1st mortgage so we could hopefully strip the 2nd with the bk. Well, we just filed last week, so now we're really behind, and the truth is, we would rather walk away at this point. We bought in 2005 so now we owe $100K more than its value. We had no kids then, now we have 4, and we can rent a bigger place for the same or less money. Can we just walk away in the bk and not worry about the 2nd mortgage? Will it automatically be forgiven because of the bk, or do we still have to try to strip it?

[HHM]

You don't need to go through with the lien strip.

It sounds like your chapter 13 plan was filed so as to save the house, and now you don't want too (why you changed your mind only a week after filing is a bit of mystery). However, you need to make sure you amend your plan/petition to surrender the house. Reason being, mortgage debt is not discharged in chapter 13 bankruptcy unless you surrender.

[despritfreya]

In addition to what HHM said, if the only reason for the 13 was to save the home and you otherwise qualify for a 7, maybe converting to the 7 is the proper course. You need to discuss this with your attny.

Des.