Bankruptcy and forclosure-which do you do first?

[MrsM]

We are right on the line for qualifying for chapter 7, so would stopping our mortgage payments be a bad idea? Can we go bankrupt and walk away from the house at the same time? Our house is worth half of what we owe (including a second for $40,000), and needs about $40,000 in repairs (new roof, plumbing, electrical). We have $40,000 in credit card debt. In other words, we are a mess.

[tobee43]

generally, yes, you can if you qualify for a chapter 7 include your home and then walk away.

however, i would strongly urge you to consult a "few" free atty consults to go over your situation. that way you would know for certain that you would qualify to file for a no asset 7.

and...welcome to the forum!

i would do them at the same time. because it takes a bit to foreclose even in calif which is mainly a non-judicial state.

you would just stay and pay until you get the notice, which is usually the way it works.

[bulletproof77]

In my case I did a Chapter 7, included first mortgage (BOA) and second (Midfirst). After your 341 hearing and your discharged..you are done. You can walk away. Mine was in California too, and it took approximately 6 months after discharge before house was secured by BOA and resold one month later.

[SweetGeorgia]

Things to consider are (1) how long does foreclosure take after you stop paying, (2) how long can you wait to file bankruptcy, and (3) what costs associated with the property would you be responsible for - if you still owned the property for a period after bankruptcy?

The last part is usually HOA dues, utilities, maybe insurance, possibly lawn maintenance...

In our case, I let the properties foreclose before filing bankruptcy because I was afraid of the property-related costs I'd be responsible for if we filed BK before foreclosure. (We had a lot of property and tenants - the water bills alone would have crushed us since we wouldn't have been able to collect the rent). Plus, foreclosure is super-fast in Georgia and we didn't really have any immediate need to file bankruptcy.

In your case, it might be perfectly fine to file BK first, and then live in the house rent-free until they foreclose and kick you out. It could be a long time. Your situation might improve dramatically! With no credit card or mortgage payments, you should be able to pay the utilities and HOA dues...and save some money because eventually you will have to find a new place to live. Welcome to the forum! It's going to be OK.

[BROKEDED]

We stopped paying our mortgages after a few free consults that advised us to do so to save for BK. We actually didn't file until 17 months later....3 months to discharge and close and then the bank finally foreclosed 9 months later.

2 years, 4 months, 18 days between our last payment and the sale date.
2 years, 6 months, 7 days between our last payment and the eviction date.