Better to Own a Home and be Bankrupt Or Rent And Not need to File At All?

[Barbisi]

This is a subject that no one dares bring up - Is it ever worthwhile to own a home if it means you will inevitably have to file BK13 ? (as in our case.)
Isn't it better to just continue to rent (as we should have) if you don't have the financial resources and sweat equity skills to restore or fix up an investor dump and thus avoid a five year bk13 sentence?
Would all of you go ahead and buy a house you don't even like (as we did) knowing you will have to file? (which we never dreamed would be our fate).
I know most posters on here seem hell bent on owning a home regardless of the repercussions and appear ready to repeat BK13 as many times as necessary just to maintain home ownership and furthermore, seem resigned to staying in the same town , state and country after their first BK13?
Why do filers see change as such a dirty word?
In our case, once the Bk13 ends, if we don't sell quickly we will be facing 5+ years of deferred updates and repairs to offset a lesser level of home neglect in this 1975 model than the 1963 run down money pit that drove us mercilessly into Bk13 in the first place. In four years, our current home will be the same age in building years as the fixer-upper was , and it will need a complete systems and interior overhaul (which I am not prepared to sacrifice any more of my life to) which would easily replace the BK13 plan as a permanent ongoing payment. I no longer like this layout, particularly the stairs, small closets and small outdated bathrooms, and of course the 12 more year solar panel lease.
When you look at rental houses in another state and find nicer, more modern designed and equipped homes for rent at only a little more than your overpriced mortgage currently costs, it's got to be time to move!

[justbroke]

This is a subject that no one dares bring up - Is it ever worthwhile to own a home if it means you will inevitably have to file BK13 ? (as in our case.)

Yes. For example, my home has appreciated 43.5% in the past year.

Isn't it better to just continue to rent (as we should have) if you don't have the financial resources and sweat equity skills to restore or fix up an investor dump and thus avoid a five year bk13 sentence?

Way too fact specific. In an appreciating market, like Florida, the investment opportunity is too great (right now). Rental would just be all expense with no upside.

Would all of you go ahead and buy a house you don't even like (as we did) knowing you will have to file? (which we never dreamed would be our fate).

That's a difficult question because I would never buy a house that I didn't like. I tend to buy new construction or, worse case, a home that is under 3 years old with only one prior owner and warranties still in place. Don't get me wrong, I like the concept of a fixer-upper and I've looked at them, but only as investment to rent/lease.

I know most posters on here seem hell bent on owning a home regardless of the repercussions and appear ready to repeat BK13 as many times as necessary just to maintain home ownership and furthermore, seem resigned to staying in the same town , state and country after their first BK13?

A Chapter 13 is actually the tool to save property. People use a Chapter 13 bankruptcy when they fall behind in payments on a property that they like. They also use Chapter 13 where they have too much equity in the property (which could trigger a liquidation in a Chapter 7). A Chapter 13 (or a Chapter 7) is just a tool.

Why do filers see change as such a dirty word?

I don't know anyone who sees change as a dirty word. I would say that most people who file a Chapter 13 to save property, are doing to because they like the property and want to stay where they are located.

I just make this observation because every single case is fact-specific. There is a lot that goes into decisions. I will be the first to tell you that children and family highly affect a person's need/want/desire/job to stay in a particular location. I would never tell anyone to keep their home when it is a burden, an albatross, a so-called money pit.

Filing bankruptcy is stressful enough, but it can be leveraged to change a person's circumstances. I used it to get out of a 2-month old lease and move back into my house (that I liked). I originally filed to get rid of the house, thinking that I couldn't keep it. The wonders of Chapter 13 will never cease to amaze me. I just don't think that everyone understands the flexibility and opportunity it presents to change the filers circumstances.

Personally, I didn't know that I could keep my home. I moved just before filing so that I wouldn't have issues leasing a new residence! When I learned about lien stripping a month later, I then also learned that I could reject the lease. Very powerful tools when used for the debtor's goal.

Finally, I don't expect everyone to know that, when filing a Chapter 13, they should be thinking 3-5 years down the road of where they'd like to be. That's difficult because it requires a bunch of speculation based on a projected budget. I don't think it's enough to just go into a Chapter 13 knowing how much you must pay the Trustee each month. Unfortunately they don't teach this, but I think we should look at 5 years post-discharge and ask ourselves, what should my life look like when this is over?

[Barbisi]

Thanks jb for replying.
I guess my perspective is different because I didn't realize buying a rundown house I didn't like and then pouring ungodly amounts of CCs in to it to make it fundamentally livable , more comfortable and increase its resell value would lead to financial ruin. I also didn't expect that my health would spiral down so that I would need as much PT and costly treatments as I currently do to avoid crippling surgeries. Learning to hate the location (Colorado) so heartily was also a surprise since I thought I was content enough the first four years here.
I would liken it to marrying some one and then falling acrimoniously out of love with them but being forced to continue to live with them and not being permitted a divorce! Perhaps someone can understand that analogy.

[justbroke]

I agree. If we were all as clairvoyant as the fortune teller, not one of us would likely be in the position in which we ended.

I haven't said it in a while but life is what happens when you are too busy making plans. (Attributed to John Lennon, but based on an earlier quote from someone else.) I shorten it to just simply, "Life Happens." I can swear by that expression myself. I thought I'd own at least 8-10 properties by now and be the king of my tiny real-estate kingdom. Life happened and I've gone through divorce and a layoff, bankruptcy, hurricanes (multiple!), and everything else that life has thrown my way.

I'm not dissuaded, but certainly put off course.

[shipo]

I agree. If we were all as clairvoyant as the fortune teller, not one of us would likely be in the position in which we ended.

I haven't said it in a while but life is what happens when you are too busy making plans. (Attributed to John Lennon, but based on an earlier quote from someone else.) I shorten it to just simply, "Life Happens." I can swear by that expression myself. I thought I'd own at least 8-10 properties by now and be the king of my tiny real-estate kingdom. Life happened and I've gone through divorce and a layoff, bankruptcy, hurricanes (multiple!), and everything else that life has thrown my way.

I'm not dissuaded, but certainly put off course.

LOL, there is also the quote, "The best-laid plans of mice and men often go awry." (Robert Burns)

Been there, done that, and have maybe a dozen copies of the same freakin' tee-shirt. Now in my mid-60s it's enough to play the conservative game, stack every spare dime away for retirement, and then plan on a comfortable twilight lifestyle; far from the lavish lifestyle I was hoping (planning?) for.

[Barbisi]

You two justbroke and shipo are older and wiser then I am or will ever be, but I still maintain that I would prefer to rent and be solvent than be bankrupt and "own" a home.
And that I think that is the biggest lesson I will take away from this venomous BK13 experience - we should never have bought a house here at all unless we could have either not needed to fix everything up or had enough cash to have afforded whatever hiccups came along.
Going forward I think renting is the best course, as we will hopefully find our footing in a new place with a higher COL and buying another fixer-upper would just be suicide repeated IMHO!
For some people like us , buying a house is a direct route to Bk13 and now like you guys, we are starting over in a very vulnerable position which is going to make our transition back to renting from homeowning a hundred times worse than it would have been had we never bought in the first place and just stayed renters .

[justbroke]

You two justbroke and shipo are older and wiser then I am or will ever be, but I still maintain that I would prefer to rent and be solvent than be bankrupt and "own" a home.

I don't think it's an either or, Barbisi. There are plenty of people that are bankruptcy and renting as well. In my case, saving the equity was worth keeping the home. When you're in a rental situation that decision does not need to be made. A home sold in bankruptcy will fetch much less than if it were on being sold on the market terms. That's why some will keep the home so that they don't lose $40K in equity just because the home is sold by a Trustee in a bankruptcy sale.

For what it's worth, I'm no wiser than anyone. We all use our collective experience applied to our very specific factors which led us to decisions... wise or not.

And that I think that is the biggest lesson I will take away from this venomous BK13 experience - we should never have bought a house here at all unless we could have either not needed to fix everything up or had enough cash to have afforded whatever hiccups came along.

I think that you and Zombie just had the perfect storm. A home that sucked the life out of you (a money pit), and then entering a Chapter 13 with a trustee that play hardball. (The same thing happens in Chapter 7 and most bankruptcy attorneys know when they are getting the "tough but fair," or the "tough and difficult" Chapter 7 Trustee. Some will try to time the filing to rotate the pool -- it's random, but not entirely random since it's a round-robin.)

Going forward I think renting is the best course, as we will hopefully find our footing in a new place with a higher COL and buying another fixer-upper would just be suicide repeated IMHO!

I've learned my lesson. I am not going to rent property out when I live in a different State. Even my management company was lousy and I got in an argument with them because it took 3 months for them to show an empty "new" property.

For some people like us , buying a house is a direct route to Bk13 and now like you guys, we are starting over in a very vulnerable position which is going to make our transition back to renting from homeowning a hundred times worse than it would have been had we never bought in the first place and just stayed renters .

For me, it wasn't the house. It was, actually, income taxes because of the way something changed in my job. I was $50K behind in taxes within 3 years. Of course the investment property in another State didn't help, since I had to pay for that as well. I normally could afford it, but the IRS was sucking $1,200/month out of me on top of everything else. (Combine that with purchasing a home at the peak of the housing crisis and overpaying by 80-90%! I couldn't even sell it because it was a $90K loss!)

[shipo]

I think the Own/Rent decision is a classic "Your Mileage May Vary" situation; I've owned five properties in my lifetime, three were sold at a small profit, one was sold at a significant loss, and one sold for a significant gain. Couple the gain/loss of the properties with the tax savings and over the last 40 years I'm maybe a quarter of a million dollars ahead of where I'd have been if I'd rented. That said, two years before I filed my Chapter 13 I rented my current apartment; from a financial perspective renting has been quite beneficial, of course this place is pretty much the deal of the century as it costs less per month than the various apartments I was renting back in the 1980s (when I had commensurate 1980s vintage incomes as well).

[Barbisi]

You are so right about the perfect storm justbroke! Between buying that house of the damned in 2014 , my mother dying in 2016 , filing in 2017 and spending thousands of dollars for so many injuries, MRIs, cortisone shots, countless doctor/PT visits, and now shockwave treatments ever since then, I feel I'm on a Colorado rollercoaster ride to hell. Selling out when permitted and getting the heck out of here and having the choice to just rent in another state for the first time in eight years will be a real fresh start.
No mortgage headache and no more solar panel lease = freedom.