Letting the house go and ch7.

[Malazan]

To the best community of people on the planet!!

As posted in a different thread, my wife and I were planning a ch13, but she lost her job and now it looks like a ch7 might be on the table.

Our house is underwater, but we are current on the payments. Do we have to wait until foreclosure starts before filing ch7 in order to get that discharged, or can we file ch7 and just refuse to reaffirm anything to do with the house? Don't want to file a 7 and then when discharged get sued by the bank due to home foreclosure. Obviously timing is the key.

[despritfreya]

File 7, no reaff, obtain discharge ='s debt discharged. Lender must proceed under state law to start and complete foreclosure with no $$ claim against you. If you have a HOA, you must pay all fees/dues/assessments from the day you file bk until the day property is foreclosed.

Des

[Malazan]

Thanks des, as always you are awesome.

[memama]

That, in my opinion, is the best way to do it. File bk first, do not reaffirm the house, and when the discharge is done they'll move to foreclose provided that you are not doing the "stay and pay" option If you foreclose first (which can take years), they have every right to pursue a deficiency judgement OR include the cancelled debt on a 1099 form, which you may or may not have to count as income and then be taxed on that amount. I'm not a tax professional nor am I a lawyer, so you'll have to do your own research...

My husband and I chose to file bankruptcy first, not reaffirm our home, and allow the mortgage company to foreclose after the bk was discharged. It took them just shy of two years from our first missed payment to foreclose-our foreclosure sale was on the 12th and it did sell to an investor. We were current on our mortgage until the month prior to filing per the advice of our attorney.

I am *not* sure if you can include a deficiency judgement in a bankruptcy or even how that all works, so I'm not sure if you foreclosed and then received a deficiency judgement if bankruptcy would eliminate that obligation. Most of what I hear is the lender reports the debt as forgiven on a 1099 and then the person gets a surprise tax bill...of course bankruptcy eliminates all of that.

[keepmine]

A deficeincy balance is unsecured debt and is discharged in bk.