Should I surrender my house in my Bankruptcy?

[saddebbie]

Here's my story:

I filed for bankruptcy chapter 7 last month by myself. My spouse did not file. I had a condo that I listed in my petition as a surrender. This condo was deeded in my name only and mortgaged in my name only. The house that me and my spouse live in is deeded and mortgaged in both of our names. We bought this house about 1 year ago at a bad time and we are upside on this house. I am thinking hard about surrendering this house as well.

My problem is that since its deeded and mortgaged jointly, that this will mess up my spouses credit as well???

If this is the case, she might of well file a bankruptcy as well and wipe out her credit card debt as well correct?

We are probably upside down on our house by about $40,000.00

What should I do?

[FreshLikeADaisy]

Saddebbie, that's a decision you have to make yourself, but if the house is deeded and mortgaged jointly, it will at the very least show up as a foreclosure on her credit, if not a bk. Also, $40k upside down on a house may or may not be a big deal, depending on the value of the house and where you are located. If there's any chance your area is likely to see an upswing in real estate values any time soon, you may wish to consider staying, keeping in mind factors like how much you like the house and area, if the pmt is affordable, etc.

Personally, I think what you may want to do is go for a ride-through on your Ch7: you declare your intention to reaffirm, continue to pay the mortgage and live in the house, but do not actually sign a reaff. This would give you more time to figure out what you would like to do with the house, because if you don't actually sign the reaff, after bk you can pretty much just walk away. You should know that the new bk law does not allow for ride-throughs and pretty much demands that you sign or surrender, but they are still very common as lenders do not always find a reaff to be in their best interests either.

You know, bk attys usually offer free consultations... you may want to go see a few (literally! not just one!) and run your scenario by them as well *with your spouse*, even though you're pro se, just so she can find out what's best for her. If her own cc and other unsecured dischargeable debt doesn't itself justify a bankruptcy, it may not be wise for her to file at all, foreclosure or not.

Others may have different thoughts and better advice, but that's what came to mind... good luck!!!

[CindyLou]

Are you in a community property state?

[saddebbie]

Are you in a community property state?

I am in Florida.