Foreclose or not to Foreclose?

[JPOP1]

Still having 50 days before I can file, I have a lot of decisions to make! Another decision that I have to make is whether or not I should keep my house or let it go back in Bankruptcy through a Foreclosure. Here is my Dilema with that. I bought my house 2 years ago for 176K. I owe around
170K on the 1st mortgage. Heres is the bad part, Within 6 months of owning the home I applied for a 2nd mortgage/Equity line through one of those websites that sends your application out to several lenders so they can compete for you business. Well lucky Ol' me found one that would loan me 125% with a interest rate of 12%, high rate because I had only owned the home for 5 months,. The loan was for 50K. So I owe them 48K at $630 a month for the next 15years. My current tax value is 170K. I had the lady I bought the house through do a current Market analysis on my home and she came back with a value of $185K. So I owe 170K with approximately 15K or so in equity but with a BAD 2nd mortgage of at least 48K. Almost forgot; my house payment onthe 1st morgage is 1,335.00 (includes taxes, pmi, etc.)

WHAT SHOULD I DO?

My wife and I really like our home and have done a lot of work to it to make it nice. I have read in the "Tactical Bankruptcy Manual" about forclosing on the house through BK and possibly living it in rent free while the foreclosure gets done. The manual said that it takes at least 6 months to 2 years for a home to be foreclosed. During that time I can save those house payments for a future downpayment on another home once I qualify.

Any advice on all this would be greatly appreciated!! You guys have been great so far!!!

JPOP1 - N.Carolina

[SinkingFast]

I address the crucial part first.

With you owing as much as you do, you definitely want to seriously consider whether you want to reaffirm either of those mortgages. If property values are increasing rapidly, and the resale market is stong, then reaffirming may be an option. If not, then I strongly suggest you let the mortgages go.

Call at least 2-3 BK attnys in your area and schedule Consults. Generally, Consults are free. By seeing at least 3 attnys, you may get a consensus of the approach you should take and what your best options are.

Timing of the Foreclosure really depends on what State you live in. Also, another key to Foreclosure is whether or not you have a "Right to Sale" clause in your Mortgage Instrument. If you don't know for sure, dig out those papers and read thru them.

Some States, like North Carolina, go quick. According to this website, your house could be sold in as little as 60 days.

http://www.stopforeclosure.com/North...losure_Law.htm

You also need to know that if you are going to have to move,......... You need to line that all up prior to filing. Generally, you cannot stay in the house after the Foreclosure Auction is held. Any Landlord that checks Credit will not rent to you while you're in an open and active BK. While your BK is open and active, you can add that Landlord and discharge all your rent debt in the BK process.

One last thing you need to do is step back from that house. Look at it objectively and not as the loving owner that's "done a lot of work to it to make it nice." Is that house the driving force behind your other financial issues?? Does that house own you?? Has living in that house put you financially in the basement?? If the answer is Yes, then you definitely need to let it go and move on.