First time poster, I wanted to share my experience so far. Apologies if this is rudimentary but I figure it might help someone like me who has no experience in this field.
I have a very underwater condo property (thanks 2007-2010) currently rented out to tenants that would cost me up to $75k to repair and sell. Additionally I am losing money every month I rent it out as the fair market rent barely covers expenses. Other than this property I am very financially secure (primary home purchased in 2013 with 50%+ down, no other debt, several hundred thousand in liquid non-retirement savings/investments, etc). I talked to a lawyer about my options as taking a $75k loss on a property I don't want was not sitting well with me.
The lawyer advised that I could simply file Chapter 13, and the plan would include language that I would continue to pay off my primary home mortgage as normal, and surrender my rental property to the bank to fulfill all obligations. In the lawyer's experience, the big banks are too busy or don't want to spend the money on lawyers to contest the filing. As long as the plan was confirmed and/or the deadline to submit claims passed, I would be "safe" and the bank would be legally bound to follow the plan of taking my rental property back. I also had to have some debt to pay off in the plan, so my credit card debt ($800) would become the repayment plan, payable over 6 months.
Well, it went off without a hitch. The bank never responded to the Chapter 13 plan. The trustee had no issues with my plan. It was confirmed last week by a judge. Talk about a huge weight off my shoulders.
Now, all I have to do is make my last 3 months of payments to the trustee to get the discharge. Then wait for the bank to foreclose. Since the language of the plan (confirmed by a judge) says the surrender of the property fulfills ALL obligations, they cannot come after me for the deficiency.
My credit will take a hit, but I don't plan on or need to borrow for the foreseeable future so I was willing to take the hit.
Just wanted to share my story for all of those people in a similar situation. There is help available. I am told this only really works if your mortgage is held by a big bank since a smaller community bank or credit union will likely contest the plan. There was also the risk that the big bank decided to contest my plan. But for $75k I was willing to take that risk and it appears to have paid off.
Hope this helps someone.
I have a very underwater condo property (thanks 2007-2010) currently rented out to tenants that would cost me up to $75k to repair and sell. Additionally I am losing money every month I rent it out as the fair market rent barely covers expenses. Other than this property I am very financially secure (primary home purchased in 2013 with 50%+ down, no other debt, several hundred thousand in liquid non-retirement savings/investments, etc). I talked to a lawyer about my options as taking a $75k loss on a property I don't want was not sitting well with me.
The lawyer advised that I could simply file Chapter 13, and the plan would include language that I would continue to pay off my primary home mortgage as normal, and surrender my rental property to the bank to fulfill all obligations. In the lawyer's experience, the big banks are too busy or don't want to spend the money on lawyers to contest the filing. As long as the plan was confirmed and/or the deadline to submit claims passed, I would be "safe" and the bank would be legally bound to follow the plan of taking my rental property back. I also had to have some debt to pay off in the plan, so my credit card debt ($800) would become the repayment plan, payable over 6 months.
Well, it went off without a hitch. The bank never responded to the Chapter 13 plan. The trustee had no issues with my plan. It was confirmed last week by a judge. Talk about a huge weight off my shoulders.
Now, all I have to do is make my last 3 months of payments to the trustee to get the discharge. Then wait for the bank to foreclose. Since the language of the plan (confirmed by a judge) says the surrender of the property fulfills ALL obligations, they cannot come after me for the deficiency.
My credit will take a hit, but I don't plan on or need to borrow for the foreseeable future so I was willing to take the hit.
Just wanted to share my story for all of those people in a similar situation. There is help available. I am told this only really works if your mortgage is held by a big bank since a smaller community bank or credit union will likely contest the plan. There was also the risk that the big bank decided to contest my plan. But for $75k I was willing to take that risk and it appears to have paid off.
Hope this helps someone.
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