Selling home AFTER filing Ch7

[tallberry]

Okay...I'm going to try to send this again...it didn't go the first time

History: husband had job transfer from IN to FL last spring, put home up for sale in IN, renting home here in FL, juggled both since last May, ran out of savings, lived on CC's trying to keep both going, of course, no buyers in site for home in IN, decided no way out but to file Ch7 (haven't filed yet).

Questions: Can we sell home AFTER filing BK? If we get an offer below value can we go back to bank and say, "take it (offer) and get something or we follow thru with BK and you get zilch"? Can we do that with CC's too? Offer them .10 or .20 cents on the dollar or we continue with BK? Is settling with CC's and Mortgage any better for your credit or does it do the same damage as BK? I'll tell you all why I am asking (in case you are wondering). If I have to give up my tax refund in BK anyway, why not work out a deal with the CC's to pay them off with tax refund and do a short sale or DIL with house in IN. If doing that will save my credit even a little bit, I would like to give it a go. But if it really is six of one and half a dozen of the other, than I'll just file the Ch7 and take my lumps. Any input soon would be much appreciated...we are literally days from filing.

[HHM]

You can't sell ANYTHING while your BK is pending. And once you file BK, you can't just stop it, so your plan to file and THEN negotiate is a non-starter.

Also, it is wishful thinking if you think the threat of BK is going to move negotiation.

Sounds like your finances are too far gone, and BK 7 would be your better option.

[tallberry]

Sorry...I was overly anxious and my question came acrossed twice! My apologies.

[tallberry]

Thank you, HHM, I was not aware you could not stop a BK once it has been filed. Unfortunately, I don't feel like Ch7 is a better option but more like my only option. Aah, well, it is what it is. If you don't mind my asking...any idea what a Ch7 does to a 720-780 credit score? Sorry if that questions is a bit "off-thread".

[Dollar Bill]

tallberry - Fight to the end. I believe you have a better shot at cleaning your credit history within a year and a half to two than filing ch7. It could be easier and less of a headache.

If you get your mortgage holder to accept less on a "short sell" then you may have something similier listed on your credi report. It will not be a foreclosure.

You will have to not pay your bills for probably 4 or more months in order to get then to settle for 10-20 cents on the dollar. I ammore than 5 months past due now. They are offering 30% I am currently negotiting 10%. I will find out Monday. She mentioned that they hardly ever go 10% for anyone unless they are in foreclosure.

I believe you can work this out with the right planning.

Mortgage companies know about the housing market. Thye may be glad to accept what they can get. Save the money you would normally spend on the monthly CC debt, and plan to settle in a few months.

[HHM]

Fight to the end. I believe you have a better shot at cleaning your credit history within a year and a half to two than filing ch7. It could be easier and less of a headache.

That statement is not really accurate. BK is not the worse thing that can happen to your credit report, and the negative effects really only last about 2 years. Most people make the false assumption that because a thing can be reported for 7-10 years, that it counts as a negative against you for that same amount of time, which is simply not true.

As Dollar bill "rightly" pointed out, in order to settle with credit cards, you have to go delinquent which is going to trash your credit anyway. Whether that is the right course of action for you depends on many factors. For most people, it is not. Also, you say you have no savings, etc, where is this money going to come from to pay "settlements" on your credit cards?

Apparently, you cannot pay your bills (FACT)...and you have a house that won't sell? Also, by going this route, you are betting your financial future on the actions of others, the banks and creditors, i.e. "will the bank accept at Short sale, will the creditors accept a negotiations", those are all uncertainties beyond your control. It is true that your creditors "might" settle, the mortgage company "might" accept a short sale, but what are you going to do in the mean time, what are you going to do if they don't, or worse, what are you going to do if some settle and some don't, your bills are going to eventually go unpaid, the house is going to sit there, etc etc. About six months from now, your credit will be trashed, you will be in the same situation simply wondering why you didn't file BK at the start and get it over with.

My advice to you is to not be so short sighted...people repair their credit after BK, people buy houses and cars on credit after BK...if the choice is between taking some action that "you have control over", or putting your fate in the "hands of others", 99% of the time, you are better off taking the course of action that YOU can control (i.e. file BK). Your credit will heal over time. The stories of those on this board are testament to that fact. The people on this forum that have stuck around, gone through the process all had outstanding credit scores within 2-3 years of BK. Don't let "credit score" fear paralyze your decision making.

[tallberry]

Thank you both so much for your different perspectives. In all reality, I tend to agree with HHM and the fact that the chance that all CC's and mortgage co. will agree to terms WE can live with is about zero. The one thing I have heard over and over on this forum is, "if we knew then, what we know now, we would have filed sooner". DB, I know what you are saying about the fight, that is why I keep thinking I can find a way to "fix" things but my good sense is saying otherwise. This why I love this forum...you all help me work thru these things! Thank You!!!

[dp1969]

tallberry- We tried for 8 months to "live through" the mounting CC debt and house payment to avoid BK. Finally, I dragged my husband into an attorney and he gave him the cold hard facts...it was going to happen.

We are surrendering our home and moving out.

Don't be overly concerned with your credit score. We were dwelling on that...all the while, it was dwindling with trying to refi the home and stay current on the cc's.
You have to compare the long term effects of trying to sell a house after the BK is well beyond discharge. A "short sale" and "deed in lieu" actually worse on your credit than a foreclosure. At least, that's what my mortgage broker told me.

My point is, if you want a "fresh start" then start COMPLETELY over. We would have sold our home, if the housing market would have supported it. But, it would have been at a big loss. So, instead of making "HUGE" mortgage payments that would be very stressful, we decided to walk away. That way, our FICO would take a one time hit for the BK & foreclosure. Right after we discharge, we are going to get 3 secured cc's (advise from our attorney) and start "rebuilding" that score. Our long term goal (thanks Debt Education Course ) is to save $1k a month and in about 3-4 years, purchase another home.

Like HHM stated, your credit will rebuild over time with diligence and perseverance. Good Luck!
~DP

[tallberry]

Thank you, dp1969, for being a "voice of reason". I think the fact that we have always had great credit (like many people on this forum), it is soooo hard to let go. But a fresh start sounds really good to me. Another thing, I have to admit, is that this experience has changed my way of thinking about money and credit and priorities in life. When we lived in IN, my husband and I worked insane hours and made a great living (money wise). We lived in an amazing house, I drove a BMW, our kids went to the best schools, etc. (you get the idea). But you know, we were working ourselves to death just to pay our bills!! It sucked...so when my husband had an opportunity to take a job in FL that he could make decent money (nothing like we made in IN) and I could work "Normal" hours and not 60-70 a week (sales) with 2 kids in sports, we jumped on it! We are amazingly happier here in FL then we ever could have been in IN. Like my husband says, "we don't have a pot to piss in" now but we are so much happier. Sorry to go off on that one but I am sure a lot of people can relate. Anyway, Thanks again...

[dp1969]

Thank you, dp1969, for being a "voice of reason". I think the fact that we have always had great credit (like many people on this forum), it is soooo hard to let go. But a fresh start sounds really good to me. Another thing, I have to admit, is that this experience has changed my way of thinking about money and credit and priorities in life. When we lived in IN, my husband and I worked insane hours and made a great living (money wise). We lived in an amazing house, I drove a BMW, our kids went to the best schools, etc. (you get the idea). But you know, we were working ourselves to death just to pay our bills!! It sucked...so when my husband had an opportunity to take a job in FL that he could make decent money (nothing like we made in IN) and I could work "Normal" hours and not 60-70 a week (sales) with 2 kids in sports, we jumped on it! We are amazingly happier here in FL then we ever could have been in IN. Like my husband says, "we don't have a pot to piss in" now but we are so much happier. Sorry to go off on that one but I am sure a lot of people can relate. Anyway, Thanks again...

I feel for you. We, too, had great jobs...that we worked ourselves to death for...and had luxury items (RV, big house, boat etc, suv's).
I quit my job to stay at home with the kids so they could participate in school and extracurricular activities. My husband's job was, truly, not enough to support what we had accumulated.
We ran up the cc's to continue to support, what we thought, to be a "normal" lifestyle. All the while, losing control over it. We ended up selling off items just to live and were left with the cc debt and a high mortgage payment (plus a HELOC).

We are renting but are much happier. We have money in the bank...haven't seen that in a few years.

This, too, shall pass!!!! See you on the boards!

[tallberry]

I believe we have a BK sisterhood of sorts, dp, sounds like we live parallel lives. Thank you for the support and understanding!

[coma]

I think it's easier to recover, too, if your credit isn't totally trashed brfore filing. If you file before there are lates and charge-offs, you'll rebound better.

[Dollar Bill]

WOW. I'm glad I gave my opinion, but I believe HHM said it better; especially, for your situation. Mine has to do with BIZ debt etc etc etc.

[Dollar Bill]

You can't sell ANYTHING while your BK is pending. And once you file BK, you can't just stop it, so your plan to file and THEN negotiate is a non-starter.

Also, it is wishful thinking if you think the threat of BK is going to move negotiation.

Sounds like your finances are too far gone, and BK 7 would be your better option.

If you have a home already in escrow when you file BK, will that be ok? How is it treated?

[HHM]

Escrow is not a sale, so you still own the home, and pretty much the BK will hold up the sale until the trustee releases the home.