Letting House Go After Filing

[Medora]

Again, it is my understanding that if you haven't surrendered the house yet, even if you are behind on mortgage, you can still claim the mortgage payment as an expense.
Read this:
http://www.************************/...ked-it-part-4/
AND
http://www.************************/...ting-decision/
AND
http://www.************************/...ed-it-part-14/

[debtmonster]

I plan on letting our house go as well. There's no point in keeping it. Jobs are all too far away from here. Most of them are a 2 to 3 hour drive one way for anything paying over $40k/yr.

The thing is, I can now rent houses that are superior to mine for much less than my P.I.T.I., so why should I even bother keeping it?

I have heard of some people being able to stay in their houses for an amazing 12 to 18 months, rent-free when they foreclose. How are these people able to do that? I want to live in my house like this so we can save all of the money after the BK to buy a replacement car and we'll need thousands to put first, last and security on a place we rent. We can't save any money for rent if we're paying an existing mortgage and taxes.

Me and my wife are finally getting health insurance. Her tax home paycheck was just over $130/wk. after they took out the insurance premium. It costs about $50-70/wk. in fuel for her to get to work. This absolutely sucks. It's almost getting to the point where it's cheaper for her to quit her job and just stay home.

As of last night, I've been adding up all of the creditors and we're almost to $360,000 in debt that we want to discharge! WOW!

[Medora]

I totally agree--in a situation where you can rent for half of what the monthly mortgage nut is, and if you have little or no equity, it makes sense to walk away. But each state has their own laws governing foreclosure. I'm not sure what the timeline is in Florida. We stopped paying our mortgage in September, and the lawyer we consulted with said we would be able to stay in our home for at least a year if we wanted. That's because it is usually taking around for months to receive your "Notice of Default," then about 4 months until the actual sale, and then if it doesn't sell they will try to get you out by giving you cash for keys, and there's also a motion you can file to stall the eviction. And of course, filing BK also freezed things for a while. So yes, now we all can save some money for the first few months of rent that will be required now that we'll have trashed our credit. But hey, like you, with so much debt, I don't mind paying cash for a while until we rebuild... bye bye 750 FICO!

[debtmonster]

Bye bye 750 FICO? For me, try "bye bye 587 FICO". What a FICO like that, there's nothing worth saving. So after I go BK, do you think my score will tank to the low 400's or high 300's? Once they repo my BMW and that shows up, that should knock off 100 points right there. Then once the BK shows up, it should go down a good 150-200 more, I would think? Correct me if I'm wrong.

My PITI is about $1100 for my house. My house is in the middle of nowhere. When I first bought it, I was thinking I could sell it in 3-5 years and walk away with $60-100k. WRONG!!! In 3 years of living here, 36 x $1100=$39,600, plus our down payment of $3,000. We have all of that money invested and even if we sold it, we'd walk away with virtually nothing. So with that being the case, I should have just rented a much nicer house for $900-1100. I was searching North Carolina and found TONS of GORGEOUS houses for under $1200/mo. Many with garages or basements. Plus there would be a hell of a lot more jobs. I was researching Cary, NC. The median income for that city is over $119,000/yr. household income, while the median income for Florida is $51,300 or so.

Here's an example of a house I would not mind renting
Click on the thumbnails at the bottom.


I want to wait until we get evicted and then use all of the thousands we saved during the year and pay for movers.

When you get evicted, do they come out and kick you out or do they give you so many days to get out? I've never been kicked out of a house that I've held a mortgage on, so I don't know how all that works.

[CindyLou]

If you get behind before your discharge the mortgage company could file for a relief of stay which could tip off your trustee that you aren't planning on keeping the house. Best to stay as up to date as possible until you are discharged if you are using this to pass the means test.

[debtmonster]

What is the big deal about not keeping the house? I plan on not keeping my house. So now I can't do the means test just because of that?!

[CindyLou]

If the trustee finds out your intent to surrender the house he "could" deny you the ability to use that amount on your means test if it is over and above the max. allowed in your area. Being behind on your mortgage points to that fact.

Different districts have different practices, but there are many people on this board who have not been allowed to use the overage as expenses when surrendering.

[debtmonster]

That is totally not cool. Aren't they going to find that anyway when I tell them that I plan on including the mortgage company in the bankruptcy and want it discharged?

[debtmonster]

Come to think of it, I'm going to be behind on my car payment for the means test as well, so are they going to discount that as well?!?! I have $360,000 in debt that I have NO WAY OF PAYING!! I barely have $3,000/mo. to live on to pay this after business expenses and taxes. If they deny me the bankruptcy, I am just going to walk away and not pay anyone anything. They can sue me all they want. I still won't give anyone a dime. I'll even tell that to the judge if they take me to court.

[Medora]

CindyLou, did you look at the links I posted earlier? They clearly indicate that the courts have ruled on this issue. Now it is possible that different distric trustees are reacting to this differently? Or maybe it's a case of the Trustee saying one thing, and the debtor just saying, "Ok" rather than citing the court rulings as defense, and the Trustee saying, "Darn, well it was worth a shot." I think it's important for the debtor and their lawyer to be up on current rulings, as much of BK law seems to be being determined in the courts as we speak.

http://www.************************/...ked-it-part-4/
"...the majority of courts which have considered this question have decided that what’s important is the amount of the monthly mortgage payment which is contractually due, on the day the bankruptcy is filed. Whether you intend to make payments in the future is irrelevant, under this reasoning...."

And Debtmonster: Do not think of being evicted. After your home foreclosure sale takes place (and no one buys it) you will have some time--there's a document you can file with your county (at least in Cal.) that postpones any attempt at eviction. At that point, your lender will offer you "cash for keys." We're talking like $2000, or whatever you negotiate. At that point, you'll surrender the keys, take the check, and start over--phew!

I really sympathise with your situation. We had hoped to turn over our house in 5 years and make enough to pay off our credit cards. Yeah, we all know how that turned out. We spent a good amount of time kicking ourselves for not staying in our cute little rental at 1/4 the price of our mortgage, and investing the $ instead of paying it out in interest. Well we've all learned from this. All we can do is move forward and say, "it's been fun." Hindsight is always 20/20, and we take the lessons and apply them going forward and will be ultimately fine. Focus on the future, and let bygones be... That's my pep talk to myself, as well as you!!

[debtmonster]

Do they always offer cash to people for the keys? We were going to take the stainless steel appliances. Will I get in trouble for doing that? I wanted to find some bottle of the barrel stuff from Craigslist (working or not) and throw them in the holes so they don't look empty when I leave.

How far into the process do they give you money for the keys? Can I stay there 15+ months and then get a check on the 15th month to move out?

[BROKENN]

How far into the process do they give you money for the keys? Can I stay there 15+ months and then get a check on the 15th month to move out?

Each mtg co is different, you have to talk to them to find out.

I don't think if they get a sheriff out there they will be anxious to pay you

Think of it like a math problem when you get your data from the mtg co. Which is cheaper?

I took my SS frig and didn't replace it. I bought it separate.

[Medora]

Yup, Broken NN is right. The point is, negotiate before they have to call the sheriff. My lawyer said cash for keys is pretty standard, but don't plan on pushing it to 15 months. Plan for the worst, hope for the best. We're thinking of moving around June of next year, though we could probably push it a few extra months. Start looking for the right situation so that you'll be ready to move when it's right for YOU, not them. Once you're set, ask them what they'll pay you to leave. You might be surprised at the answer! Good luck.

[debtmonster]

The thing is, I'll need at least $6-7k for moving expenses. I seriously doubt they will pay us that. We will need at least $3k for a moving truck and first, last & security on one of those $1200/mo. homes... not to mention deposits for electric, phone, etc. I need many, many months to save that kind of cash once they discharge is done.

My mtg company is Ditech, a GMAC company.

[Mark80]

I posted a similar question earlier today!

Has anyone on here actually gotten kicked out of a Chapter 7 for this? As mentioned on my thread I did the exact same thing. I was behind, thought I could catch up and keep it, and just today finally decided to let it go back a few weeks after my 341. My attorney said its rare to have any issues, since they pretty much just go with the info on the day you filed. But I am sure many of us are worried!

On a side note, how long do I need to hold my breath to find out if it kicks me out?