Letting the House Go? Renting?

[momtoroxy]

We filed for chapter 7 on October 14th. We have $75,000 in unsecured cc debt. We purchsed our home for $230,000 four our home in late 2007. We live in Las Vegas and home prices have continued to go down. I think we could MAYBE sell our house for $140,000.

Our initial intention was to reaffirm the house and both of our cars. This was the first house we ever purchased and I think our decision to reaffirm might be too emotional. Due to a job loss (hubby is back working now thank goodness) we are going to have to miss a mortgage payment for sure in November.

Are we stupid to reaffirm a mortgage for a house that is so under water?

I am starting to think we might be better off cutting ties, letting the house go, and finding something to rent.

That poses another problem. How easy is it to find a place to rent while in bankruptcy or right after discharge?

If we let the house go in the bk, when will we officially have to be "out of the house?"

Lastly, if we intend to let the house go, do we stop paying the HOA fee of $120 per month??

Thanks in advance. This is a difficult decision being our first house. But, if our financial situation will be better off down the road if we let the house go, then we might just have to.

[AngelinaCatHub]

We filed for chapter 7 on October 14th. We have $75,000 in unsecured cc debt. We purchsed our home for $230,000 four our home in late 2007. We live in Las Vegas and home prices have continued to go down. I think we could MAYBE sell our house for $140,000. Not 'abbynormal'.

Our initial intention was to reaffirm the house and both of our cars. This was the first house we ever purchased and I think our decision to reaffirm might be too emotional. Due to a job loss (hubby is back working now thank goodness) we are going to have to miss a mortgage payment for sure in November. Great about back to work. But if you have read here very long you know, freedom is getting out from under and not repeating it again.

Are we stupid to reaffirm a mortgage for a house that is so under water? Not stupid at all. Wise to consider not doing that. Pay through if things are going alright, they don't want your house, they want your money.

I am starting to think we might be better off cutting ties, letting the house go, and finding something to rent. Like I said, if you can, pay through. You will have that choice in the future IF NEEDED.

That poses another problem. How easy is it to find a place to rent while in bankruptcy or right after discharge? From what I have read here, it is not at all a problem. Those who rent need the money too.

If we let the house go in the bk, when will we officially have to be "out of the house?" Again, like I said, pay through if you can. If you wish to give up, that is your choice. Usually it can take up to a year. It depends and no one can answer this question for sure.

Lastly, if we intend to let the house go, do we stop paying the HOA fee of $120 per month?? YES!

Thanks in advance. This is a difficult decision being our first house. But, if our financial situation will be better off down the road if we let the house go, then we might just have to. You must due what you have to do.

I wish you well. 'Hub

[mtbc]

We've had some luck with being able to find private non-agency landlords who didn't much care about credit so long as we had a good history with past landlords (before our own ill-fated house) and could come up with rent and security deposit with no trouble. While we haven't actually filed yet, we've had atrocious credit for our past two apartments (which we got many months after we stopped paying the mortgage or HELOC) and landlords who didn't care to check it so long as we had cash and good references.

So, it's certainly not impossible to find an apartment regardless of credit rating, even if it takes some extra effort.

[pinchMYpenny]

Hi Momtoroxy!

We are in a similar situation. Will be filing chap. 7 soon, but have not decided if we will stay in the house or not. We would love to, as this is our first home and it's beautiful. We are already 3 months behind on mortgage, so I'm not even sure how that would work out. If we decide to stay, we will need to negotiate with our lender to bring the 1st current, then continue payments. We will not make payments on the second and are hoping they will be willing to settle for less down the road. Ideally, we would be successful in a load mod. then we can file for chap. 7.

My thinking is, even if they say we can purchase a home in 3-4 years post-bk, I'm not sure if we would be able to purchase a home as nice as we have now. Our payments to the 1st, with HOA, taxes, etc. is equivalent to what we would pay in rent for something similar. We are definitely upside down on this house, but we have to ask ourselves if we are willing to stay here for another 10 years or so.. or gamble that we will have enough downpayment and income to purchase a similar home in 3 years.. paying about the same. Since our credit card debt will be wiped out, we could afford to stay here. We will not re-affirm, as advised.

For now, I will be paying HOA.. just in case we decide to stay.

It is tough, I feel for you. I can't sleep at night thinking about all of this and how we got here and how BK is now the next logical step. I try to take the emotion out of it, but it is challenging. I am hoping to get more guidance so that I can feel confident in the decisions we make. But even with the information, we often find ourselves faced with "emotions!"

Wishing you the best throughout this process.

[momtoroxy]

PinchMYPenny: I totally understand what you are saying. Our situation is different in that our house is nice, but not our dreamhouse by any means. And, we could save AT LEAST a few hundred, up to about 500 per month by getting out of this house and renting. I am so overwhelmed right now because our intention was really to keep the house...but then when I start to think about it and being that we have a chance now, with the bankruptcy, to get out, I think we might be stupid not to, given our particular situation.

I wonder if I stop paying the HOA, if they can come after me later??

We plan to talk with the attorney tomorrow and we'll have to make a decision very soon.
I guess we aren't concerned with being able to buy again for a few years. We live in a town where we moved only for a job. No family and really no friends here...so it would be sad to leave this house, but not the end of the world if you know what I mean.

Our paperwork from Chase says that if we DO NOT reaffirm, the debt will be considered discharged...which means, I think, we have to be out.

I wonder how long we have?!

[aljohnson007]

Regarding HOA: In most States the owner of record on the title is still responsible for HOA fees and upkeep so check with your attorney. If you stop, they might be able to get a judgement against you personally.

Regarding when you must be out: As long as you are the legal owner on the title, don't believe anyone one can evict you.

[SPalin]

Looks like I'm in a similar situation... was going to keep my negative equity home (-60%) to loan value in CA, but lender Chase is very uncooperative for a loan modification! My attorney advised me, we will file Chapter 7 and retain the house, but after the creditor's meeting amened the filing to surrender the home and be discharged of the mortgage. She also informed to quit paying the mortgage and put in a savings account after filing. She also said in this part of CA that I can stay in the home for 6-9 months rent free and save for rental, or even another home... will have high interest rate, but she has had three clients do this within 3 months of discharge! In CA many more mortgages will be resetting in the next 4 months and with the glut of foreclosures already in the market it will be a buyers market... also will give me more leverage with Chase on a loan modification.

[momtoroxy]

Our 341 is on Nov 18th. I live in NV, so i'm not sure what the laws/rules are. Why can't you just include the home in the initial filing? Just curious. Our Chase thing that we got said that "any reaffirmation agreement filed after 60 days of the creditor meeting will not be considered valid, and the loan will be treated as discharged upon receipt of the chapter 7 discharge.

So, it seems to mean that if we don't reaffirm, we are out. I am contacting my attorney tomorrow to get her advice. Maybe we just do nothing and then plan to be out around the time of discharge?

[SPalin]

Hey Momtoroxy, diffidently contact your attorney and also find out what is allowed in your state. We are including the home in Bk and are retaining in the filing, but will change after 341 meeting to surrender... then rent free for 6-9 months... it is taking 6-9 months for foreclosures to take place in the Central Valley of CA, some even over a year. Chase is the main reason for the filing, also 2 cc with them and they are impossible to work with, unlike Citi or BofA (at least for us).
Chase also wanted a higher monthly payment (3 months) during the loan modification process... others I have talked to with Chase in CA have had their modifications denied even with the 3 months of higher payments! Way to go Chase welcome to screwing over CA property owners!

[momtoroxy]

I'm just wondering why you can't say you are surrendering the house in the initial filing? Why do you have to wait until after the 341?? Is it because the house payment changes your budget, and your ability to repay debt? That makes sense then.

[pinchMYpenny]

I'm not sure whether or not you have to include or not include the house in the initial filing. Can others help with this? The budget thing makes sense.

To my understanding, in chap. 7, you can continue making payments to your lender on the 1st mortgage to stay in the home. You are no longer personally responsible for the loan, so after x number of payments, if you choose to.. you can walk away, and it will eventually foreclose. If you stay indefinitely and do not reaffirm the mortgage, I'm not sure how the lender will take this or how long you can stay.

If you stay, I've read that you should not be concerned with the 2nd mortgage, because they really can't do much, unless the home value surpasses the 1st mortgage where they will take action, such as a foreclosure. Ideally, they will want to settle for a small percentage of the 2nd, releasing you from the lien.

So... in my case, do I stay in a $400k mortgage (-$100k 2nd) to live in a condo worth less than $250k, or just move on. It's not my dream home, but it's definitely a really nice one. I think my brain knows what to do, it's my heart that's fighting, I think. The other argument is that at least I'm already IN a home, that 3-4 years down the road.. I might not have the downpayment or income to buy a nice, comparable home. *shrug* I can't sleep at night! LOL!

Please correct anything I have written above. Thanks!

[mama2three]

I'm just wondering why you can't say you are surrendering the house in the initial filing? Why do you have to wait until after the 341?? Is it because the house payment changes your budget, and your ability to repay debt? That makes sense then.

On our form, our attorney stated our intentions were "other- keep making payments as agreed" At our 341 we told the Trustee we planned on keeping the house, but after discussing it some more and realizing we are at least $150,000 underwater, it makes absolutely no sense to keep throwing away the money. So we are going to live "rent free" as long as possible.

[SPalin]

On the form we signed on Friday is states retain or surrender real property, we choice to retain and then surrender after the 341 because of the means calculations would have put us into Chapter 13... making $66,000 is to much income for 2 in California! The house is worth $113,000 and still declining with a loan of $231,000. That is why our attorney said to stop paying the Bank and put the money way... the house is nice but it will be over 15 years before the house will be worth the current balance.... granted the balance will go down over that time period, but I don't plan on staying in the central valley of California another 15 years!

[ItsJustMe]

I'm glad I found this thread! I just posted something similar, but now I'm even more confused then ever! So, even if you are planning to surrender the home it is still filed as retaining the home?

Our petition has 'retain' checked and then 'other' checked and 'retain and pay pursuant to contract'

Does that mean that we are good either way? We can keep it or let it go and it won't make a difference? Both (1st purchase money and 2nd refi) are discharged (no one can come after us at a later date)? What would it mean as far as obtaining a future loan? Or 'first time buyer' type loans/programs?

[SPalin]

Sounds like your good to go either way! You will be discharged of that loan unless you reaffirm it with the bank/mortgage company, this will allow you to walk away not owing anything on the mortgage, this is helpful if your bank doesn't want to work with you in modifying your loan!