Process for surrendering house as part of a CH 13?

[zenbit]

I am working on filing - mostly unsecured debt. House is upside down by about $50k... not quite enough to strip the second mortgage, from what the atty says.

I am afraid to keep the house and generally want out for several reasons:

1) Financially - not sure how I can/will keep up the maintenance on a home that I own.

2) It's a big four bedroom for just me and my two kids. It's too much house - in a town and neighborhood I do not want to want to be in for the long haul.

If I do want to 'walk away' - how complicated is it to do this at the same time as filing? What is the process?

Several threads earlier made it seem like it was a straightforward process - just tell the atty to include it???? Is this is different from foreclosure?

I have only met with my atty briefly - but he didn't seem the slightest bit interested in entertaining the idea of walking away from the house.

Something tells me that it could be a very long process.

I am overwhelmed by trying to figure this out. Afraid I have been suffering from analysis paralysis.

Any help that you can offer would be very much appreciated.

[lrprn]

If I do want to 'walk away' - how complicated is it to do this at the same time as filing? What is the process?

You indicate to your lawyer that you wish to surrender your house when you file. However, most people file Chapter 13 to keep assets, not surrender them. Do you not qualify for Ch 7?

Is this is different from foreclosure?

Yes, because if a filer surrenders a home as a part of a bankruptcy case, as long as the filer and the lender haven't signed to reaffirm the home loan(s), the filer walks away owing nothing.

A foreclosure outside bankruptcy does not necessarily remove the entire mortgage debt. If the loan balance owed is more than the house sells for at auction, then the debtor still owes the leftover loan balance.

Of course, if the home has more equity in it than is paid off by the auction, then the extra left after paying off the mortgage(s) will go back to the debtor.

I am overwhelmed by trying to figure this out. Afraid I have been suffering from analysis paralysis.

As you hang out with us here longer, you will see that these feelings are very common. It's hard to admit to yourself that your debts have overwhelmed your ability to ever pay them back. You're off to a great start though because you are here gathering information and doing your best to "unfreeze" yourself Good for you!

Keep asking questions - we'll help you sort things out as best we can. Welcome to BK Forum!

[zenbit]

Thanks for such a great response... Really appreciate the insights.

To answer your question - yes, I do not qualify for a Chapter 7 due to income... And trust me, I have considered many times how to take a lower stress job closer to home, after which point - I likely *would* qualify for a Ch 7.

I am a single father raising two kids after a divorce that was finalized last year - most of the debt is from the marriage and the divorce itself. I have been "holding on" to much of the same lifestyle ever since, maybe afraid of change, maybe afraid of the impact to the kids (school chgs, etc...) - but it is definitely time to move on.

Thanks again.