If only one spouse filed ch 13....

[cwife]

Can you surrender your house? My husband and I are underwater about 20,000. We have two mortgages...they both are in both of our names but only I filed BK.
We are moving out of state and need to get rid of our house...so I am looking into amending my plan to surrender the house but am not sure if that can happen since both of our names are on the mortgages.
Thanks for your help!

[IamOld]

Can you surrender your house? My husband and I are underwater about 20,000. We have two mortgages...they both are in both of our names but only I filed BK.
We are moving out of state and need to get rid of our house...so I am looking into amending my plan to surrender the house but am not sure if that can happen since both of our names are on the mortgages.
Thanks for your help!

THAT is a good question! I'm in the same boat (for now) spouse is filed Ch 13 this week, house in both our names - the thing is, I BELIEVE - and the collective wisdom here (that has kept me sane :-) will correct if I'm wrong - but if you give the house back, and ultimately if there is a deficiency balance your CO-DEBTOR (your spouse) will only be "safe" IF your plan provides for 100% repayment of the deficiency balance. Otherwise, ultimately, the banksters can come after him for the deficiency balance. BUT please check with your lawyer... BUT also - since you're only about $20K underwater, maybe lender will agree to a shortsale - I mean the diff would be if you could sell it for market value "only" $20K...it may not be worth their while to contest $20k....

(Ironically, I may be dealing with an out of state move too...got a job offer from out of state...I am employed now but...we're still thinking about it...have no clue what to do...mind you I applied for this place last summer when I was laid off and it took them a YEAR to fill the job :-)

ALL THE BEST OF GOOD LUCK TO YOU!!!!

[shark66]

Unless there is *significant* equity in the house that would cover both mortgages plus all the costs that lenders run into while disposing of your house, your spouse will end up being sued for deficiency.

How far along in Ch. 13 are you?

Good luck.

[cwife]

Shark in August it will be 3 years since confirmation. In MI the 5 year mark starts at confirmation.

Iam Old...best wishes with your new endevours.

[IamOld]

Shark in August it will be 3 years since confirmation. In MI the 5 year mark starts at confirmation.

Iam Old...best wishes with your new endevours.

Thanks CWIFE - I would echo the wisdom from Shark - if you cannot sell the house for the morts on it, AND if only one of you is in a 13, eventually the banksters will come after the non-BK spouse - question though - is. UNLESS you can arrange a shortsale or indeed sell OR...perhaps rent it out. I do believe that if you are/can sell it, you do need the Trustee's permission. Any chance of a conversion to Ch 7 and/or non-filed spouse do a 7 or some such thing?

[cwife]

Thanks CWIFE - I would echo the wisdom from Shark - if you cannot sell the house for the morts on it, AND if only one of you is in a 13, eventually the banksters will come after the non-BK spouse - question though - is. UNLESS you can arrange a shortsale or indeed sell OR...perhaps rent it out. I do believe that if you are/can sell it, you do need the Trustee's permission. Any chance of a conversion to Ch 7 and/or non-filed spouse do a 7 or some such thing?

I am meeting with my lawyer on Wednesday. My husband has really good credit and needs to keep his security clearance so him filing is not an option. I will keep you posted on Wednesday as to what my lawyer says.

[shark66]

My apologies for being blunt but...

If the house is surrendered under current conditions, your husband's good credit will be gone and then some.

Filing a Ch. 7 may actually prove to be the lesser of two evils for him.

Even if you were to get both lenders to agree to a short sale (tough chance) both yours and his credit will be trashed, make no mistake about it.

You'll need a very good attorney to possibly get you out of this mess...or just complete your 13 and then sell the house...

Good luck.

[IamOld]

My apologies for being blunt but...

If the house is surrendered under current conditions, your husband's good credit will be gone and then some.

Filing a Ch. 7 may actually prove to be the lesser of two evils for him.

Even if you were to get both lenders to agree to a short sale (tough chance) both yours and his credit will be trashed, make no mistake about it.

You'll need a very good attorney to possibly get you out of this mess...or just complete your 13 and then sell the house...

Good luck.

Shark, this situation raises a question that I may share with Cwife - what if the house is rented out? Let's say (just for the sake of easy math) mort=$1,500/month. Then Cwife moves and rents elsewhere for say something less, say again for math's sake, $1,200/month. House is rented for say $1,300/month because.

Would the "income" from the rental be a "wash" with the fact that they are still paying the mort for Ch 13 purposes AND on top of that they need to rent a new place? IN other words, is that a feasible solution possibly? What do you think?

[shark66]

I doubt that such a setup would fly well with a trustee, but I've been wrong before.

This is a complicated situation and legal advice from a local attorney familiar with practices and trustees is required.

Good luck.

[LadyInTheRed]

My husband has really good credit and needs to keep his security clearance so him filing is not an option.

You might want to look into that further. Start by reading ADJUDICATIVE GUIDELINES FOR DETERMINING ELIGIBILITY FOR ACCESS TO CLASSIFIED INFORMATION

Here's the section on financial circumstances:

18. The Concern. Failure or inability to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness and ability to protect classified information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Compulsive gambling is a concern as it may lead to financial crimes including espionage. Affluence that cannot be explained by known sources of income is also a security concern. It may indicate proceeds from financially profitable criminal acts.

19. Conditions that could raise a security concern and may be disqualifying include:

(a) inability or unwillingness to satisfy debts;

(b) indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt.

(c) a history of not meeting financial obligations;

(d) deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, income tax evasion, expense account fraud, filing deceptive loan statements, and other intentional financial breaches of trust;

(e) consistent spending beyond one's means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to-income ratio, and/or other financial analysis;

(f) financial problems that are linked to drug abuse, alcoholism, gambling problems, or other issues of security concern.

(g) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same;

(h) unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that cannot be explained by subject's known legal sources of income;

(i) compulsive or addictive gambling as indicated by an unsuccessful attempt to stop gambling, "chasing losses" (i.e. increasing the bets or returning another day in an effort to get even), concealment of gambling losses, borrowing money to fund gambling or pay gambling debts, family conflict or other problems caused by gambling.

20. Conditions that could mitigate security concerns include:

(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment;

(b) the conditions that resulted in the financial problem were largely beyond the person's control (e.g. loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(c) the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue;

(f) the affluence resulted from a legal source of income.

It seems to me that the act of filing BK is a mitigating circumstance because you have to take the financial counseling course and the act of filing is a good-faith effort to repay (if filing Chap 13) or otherwise resolve debts.

In fact, if somebody is having financial difficulties, it seems that filing BK could make them more likely to be eligible for a security clearance.

I have no experience with security clearances. But, if the clearance is the only reason your husband hasn't filed, he should investigate the consequences if he hasn't already.