my story/questions

[agirlinindy]

first off I'd like to say that I'm very upset with myself for the mess I find myself in. I have had a tendency to avoid things that I didn't wish to deal with. that said here is my story:

My husband & I bought a house about 10 years ago. We divorced a year later. For some reason I decided I needed to keep the house. In the years since I was able to refinance the house in my name only, I have a second mortgage. I took a hardship withdrawal from my 401K. I ignored my taxes for several years. I also have taken a loan from my 401K about a year and a half ago.

Currently I'm upside-down on my house. I owe about what we paid for it 10 years ago(I thought the value was supposed to rise) & I have not been able to keep up with the maintenance. I don't think that there is anyway that I could sell it at this point.

1st mortgage is 122,000
2nd mortgage is 14,000
back taxes are 25,000
student loans 17,000
401k loan 18,000
credit cards 300
medical bills 500

I guess part of my problem is that I've tried to keep up with the credit cards & medical bills & have ignored my house maintenance issues. Anyway, at the first of the year I found out that my boyfriend has decided to move into a condo he is purchasing because of health issues.(not to mention the condition of this house) this really forced me to take a long hard look at my situation. What I see is me stuck in this house, working my butt off for the rest of my life. I've been really depressed, have lost 30+ pounds since the first of January. I have a "good" job and make "good" money but I just don't see any end in sight.

I talked to an attorney last week & am scheduled to talk to another one this week. Most of my debt is not "dis-chargeable".

What happens if I do not want to keep my house? Is it possible to give it up? If so, then what happens?

from what I've read a lot of people stay in their house for a long time after they give it up, what happens to the money you are supposed to be spending on your housing expenses?

thanks in advance

[lrprn]

Currently I'm upside-down on my house.

What's your house's current market value?

Most of my debt is not "dis-chargeable".

You are right - most of what you listed can't be discharged by filing bankruptcy. However, filing a Ch 13 can help you reorganize the debt into a plan that your creditors must agree to cooperate with to help make your finances more manageable over the next five years.

What happens if I do not want to keep my house? Is it possible to give it up? If so, then what happens?

Yes, you can file Ch 13 and surrender your house. What happens after you file and surrender it depends on what kind of rental you replace your house with and how much disposable income your required Means Test and Schedules show. Also some bankruptcy districts allow you to count the house payment and maintenance expenses on your filing forms if you intend to surrender the house, but some don't. Ask what to expect in your local court during your 3-4 free initial consultations with bk lawyers in your area.

from what I've read a lot of people stay in their house for a long time after they give it up, what happens to the money you are supposed to be spending on your housing expenses?

You save it up to use for other living expenses, rent, etc.

However, surrendering a major asset like your house can be trickier in Ch 13 than it is in Ch 7 because Ch 13 also takes changes in your finances *after* filing into account. Some Ch 13 trustees may ask you to submit your new income/expenses budget after surrendering the house. Any extra disposable income that results *might* increase your monthly payment if it's significant enough. This is another situation to review with the lawyers you meet with.

[agirlinindy]

thanks for the reply. I'm not sure of the current market value of the house is. Someone is supposed to be putting some comps together for me but I have not gotten them yet. I used to get something in the mail about once a month(from a real estate agent) that told about home in the area, # sold, high & low sales, average price etc. the prices never really went up. when I factor in the maintenance issues I'm sure I'd have a hard time selling it.

I'm not clear on what happens to the house. You file bankruptcy & then you wait for it to be foreclosed on?

[lrprn]

I'm not clear on what happens to the house. You file bankruptcy & then you wait for it to be foreclosed on?

If you do decide to surrender the house when you file, then after filing eventually your lenders will petition the bk court to lift your automatic stay, then start official foreclosure proceedings.

How long you can stay in the house after this occurs varies depending on the foreclosure laws in your state and how anxious your lender is to reclaim the house. Could be a few months, could be much longer. Be sure to ask what to expect during your lawyer interviews.