Giving up house in chapter 7

[cinderella]

Hi,

I have to surrender my house because I do not have enough money to catch up on the past due payments and I really need to file a chapter 7 an move on with my life.

How does this work? I have heard of some mortgage companies making offers to modify during the bankruptcy (which would move the past due to back of the loan). Has anyone heard of this?

Should I move out as soon as I file?
Is it best to try to sell instead of surrendering?

The house has Tax liens and HOA liens. Would I get rid of these liens if I surrender the house? I have not other assets and the house has negative equity.

Thanks

[hamburgervol]

I wouldn't move out until you are ordered to do so. You may be able to stay in the house rent free for a while if you surrender.

[mike258]

The only benefit you gain from selling at this point is that you shorten the amount of time you have to wait until you can get a mortgage again.

If you surrender the home, you can walk away from everything (including those liens because they are attached to the home), but you will need to wait 3 years before you can get an FHA backed mortgage. The 3 years starts from the date the house gets transferred out of your name (which could end up being 4 years).

If you sell (and file bankruptcy of course), you only have to wait 2 years to get an FHA backed mortgage.

Some people need to get the clock ticking as soon as possible, so they choose to sell. Keep in mind, if you sell, you will need to pay off those liens.

I personally chose to surrender. I did not want to deal with asking the bank for a short sale or paying 5k in real estate taxes. My bank even offered to reduce the balance on my second mortgage from 80k to 6k (this was after they realized I was walking away). I told them thanks, but no thanks...and asked them where the hell they were when I was asking them for help...

[tkharvey]

Mike 258, doesn't that just kill you? We asked for help from several of our creditors months ago, they said the couldn't do anything for us....not even lower our interest rates. Now, since they know we're filing, they're scrambling offering us all kinds of "deals". No thanks.....

[hereforinfo]

You could ask the bank for a short sale, but it's a long drawn out process and even if the bank agrees to consider short offers the majority of the sales never close. If you walk away, the property taxes and HOA liens attach to the house and will have to be paid by the bank.

You could also ask the lender for a modification. Many lenders are doing these so it's definitely a possibility.

[AlreadyFiled]

stay in it as long as you can (probably even up to a year) and save the money you would be paying to the mortgage and use it for when you need to move out. You'll have awhile to stay in there. I surrendered mine and still, nothings happening to it, its been sitting there for a year and a half...

[123ABC]

My mortgage company is modifying during the bk and moving past due payments to end of loan. I put in my schedule that I want to keep the house and that started the ball rolling. If you want to keep it you may be able to work something out.

[goingcrzy]

ours is doing the same thing as 123abc. I think the fear of BK, no reaffirmation and you possibly walking away might give you some leverage.

[123ABC]

goingcrzy, who is your lender?