Planning to file 7 and facing possible foreclosure...

[youngnbroke]

After meeting with the attorney, he said that Chapter 7 was our best bet. (at the time we wanted to keep the house, but now we want to surrender it -haven't gone over this yet with the attorney) At this point we are current on the mortgage payments (first and second) but after this month, i'm thinking about not paying anymore. I believe our only option is to notify the lender that we can no longer afford the house but I was wondering if we would need to wait until the foreclosure process is under way BEFORE filing for chapter 7 in order to get the deficiency balance covered in the bankruptcy. Does it matter when we file?? Will it "automatically" go away?! I'm so confused!! I dont want to wait too much longer to file!!

[ssmdem]

If you're surrendering the house, you're no longer responsible for the debt (1st or 2nd). We're doing the same thing - same boat as you. Still going back and forth on whether to keep (we're still current on payments too) - but I think in the long run, if we REALLY want a fresh start, we've got to get out of this monster of a payment or we're just going to be back in the same boat in another 8-10 years, and I NEVER want to go through this again!

[youngnbroke]

Its bad to say, but i'm really glad to hear we aren't alone!! Things haven't gone well in our favor over the past few years and we are in OVER OUR HEADS! I'm surprised we've made it this long!!

So because of the bankruptcy (no matter when we actually file) the deficiency will be wiped away? I'm just concerned about the lender sueing us..at this point we owe about $139,000 but if you include the 2nd mortgage, that bumps the balance up to about $180,000. According to the taxes from 2009 the fair market value is only $146,000 so there is a BIG deficiency!

Thanks for your input, and GOOD LUCK!!

If we can make it out of this.....WE will NEVER get back into it!!

[ssmdem]

Yes, no matter when you file - you'll be fine. It wipes that debt out - of course you lose the home, but you're no longer responsible for the debt. Just be aware that it will be at least three years before you can qualify for another mortgage. That's the toughest part for me - knowing I'm going to be renting for a minimum of three years, possibly longer. We'll be fine - I keep telling myself that - but it's tough after being a homeowner for so many years.

We're way upside down on ours too -- actually two properties. Our home is valued at about $285K, and we owe $350K. Our rental property is valued at $130K, and we owe $168K. Not to mention an additional $50K in unsecured debt. We owe my parents a huge chunk of money too which WILL get paid back, even though they aren't expecting it - but there's no way I'll ever be able to do it without filing and getting rid of this other debt.

Wishing you the best as well. We haven't filed yet - waiting for some bonus checks and my income I recently lost to fall off our six month salary - but it's coming. Hoping our experience goes as smooth as most on here seem to have once they file. Best of luck to you!

[CanBreathe]

This is what we were told and it may be different from State to State. I was told to file BK BEFORE the house went into foreclosure. The reason is that if the BK shows and you have included your home, it counts as one big black mark on your credit. If you let the bank begin foreclosure proceedings and then file BK, there are TWO big black marks.

Also, my understanding is that if the house was included in the BK, and you can show extenuating circumstances like a job loss or major illness, you can purchase in 24 months and not 36.

You may want to verify but this is how we are doing it. We are under water in excess of $250,000 on a house with a dry well and no city water. The atty said to cut our losses and start fresh.

[ssmdem]

This is what we were told and it may be different from State to State. I was told to file BK BEFORE the house went into foreclosure. The reason is that if the BK shows and you have included your home, it counts as one big black mark on your credit. If you let the bank begin foreclosure proceedings and then file BK, there are TWO big black marks.

Also, my understanding is that if the house was included in the BK, and you can show extenuating circumstances like a job loss or major illness, you can purchase in 24 months and not 36.

You may want to verify but this is how we are doing it. We are under water in excess of $250,000 on a house with a dry well and no city water. The atty said to cut our losses and start fresh.

That makes sense too as far as your credit report. I thought it would still be 36 months afterward - but I could be wrong - and Lord knows I'd LOVE to be.

[ssmdem]

I will say I'm trying to keep bills current as long as possible until we actually file so that hopefully my credit can rebound faster. I know I shouldn't be concerned about that - but being a homeowner again AND SOON is my only concern behind it. Fine with me if I NEVER own another credit card!! We've got a decent credit score right now - 738 -- how? with our account balances I have no clue except that the accounts have been open forever and we've never been late. I'm just sick that we let ourselves get into this mess in the first place!!

[youngnbroke]

Thank you soooo much for answering all of my questions!! We too are also waiting to file because we are trying to make it under the median. As long as my husband doesn't get called back to work by the end of June, we should make it! For the first time, I'm PRAYING he doesn't go back for another 2 months!

We've lived here for almost 5 years..and I WANT OUT. At this point, i'm willing to take the hit on my credit report for financial freedom!! We desperately want to have children, but with all this debt, it has been impossible. If we have to rent, so be it. At least we'll be able to rent a decent place AND have money to pay for groceries! Some just don't understand how NICE it will be to not have to use a CC just to get food or pay some bills. I cannot wait to start over!!!

(never thought i'd be "excited" to file for bankruptcy....and lose my condo)

[ssmdem]

Some just don't understand how NICE it will be to not have to use a CC just to get food or pay some bills. I cannot wait to start over!!!

(never thought i'd be "excited" to file for bankruptcy....and lose my condo)

I totally get that!! Sold a vehicle the other day and took that CASH and went and did a HUGE, long overdue grocery trip. I can't begin to explain how good it felt to give them that $300 in cash and know those groceries were paid for and not eating up more interest on a credit card.