To keep house or not... that is the question.

[enginerd]

We are planning on chapter 7. At first, my wife and I had agreed to let the house go since we have a large 2nd ($52k). Now, she would like to keep the house... But, I'm on the fence. We owe $156k on the first and it was just appraised at $178k. Since we'll have to rent anyways for a few years, is the difference a "wash". It's possible that by the time we qualify for a new home, our equity might be enough to pay off the 2nd. Any thoughts?

btw - we're current on both loans.

[Amy26]

Its really up to you and nothing anyone from here can tell you what to do. You are upside down on it so the logical choice would be to ditch it. However, you're not THAT upside on it... for example, I owed 270,000 on my house and it was only worth 120,000. So, that was a no brainer! You have to compare rental prices vs. your mortgage value. And also it will factor in to your means test. If you surrender the property you may or may not be able to keep the mortgage payment in your expenses. And also the sentimental value of your home... is it big enough...could you see yourself staying there years from now. The housing market isn't going to rebound any time soon...

There may be some other more experienced opinions as well.

[kenshirley]

OK, you are filing a chapter 7 so that leaves you nowhere to go if something else happens and you can't do this again.
Your appraisal may means nothing if you can't see the home and clear the balance should something else happen in your life.
We were put in a similar situation and decided the house had to go.
Consider that in your decision.
At least if you are in a rental and you have a major medical problem that results in the loss of income or something like we faced you can move to something cheaper if you have to.
Just my thoughts.

[mom2three09]

OK, you are filing a chapter 7 so that leaves you nowhere to go if something else happens and you can't do this again.
Your appraisal may means nothing if you can't see the home and clear the balance should something else happen in your life.
We were put in a similar situation and decided the house had to go.
Consider that in your decision.
At least if you are in a rental and you have a major medical problem that results in the loss of income or something like we faced you can move to something cheaper if you have to.
Just my thoughts.

Or you could just continue to pay your mrtg payment (like we are)...without reaffirming...and if something happens down the road where you can no longer make the payments or you just decide it's time to walk away...you can (without oweing them anything because the debt was discharged) !!

We've gone back & forth on the idea of walking away... or just continue paying... so far we're paying but we might decide to walk away if dh ends up laid off from his job this winter... nice to know we have that option

[liz417]

I agree with "mom2three09", just stay in the house and have the "option" of walking away later. That's what I'm doing. Who knows what'll happen in a couple of years. Also, as "Amy26" pointed out, if you give up the house, you may not be able to use it as an expense on your schedules.