What would you do?

[optomistic]

I've put this off as long as possible. Next step is Ch7.

My credit score is in upper 700's. Never late on a single payment in 29 years. Starting this month, I won't be able to make the minimum payments on the CC's.

I prefer to keep the house even though the loan balance is $297K and the market value is closer to $175K. I grew up in this house, then bought it from pops when he retired. Raised my 5 kids here, 3 are still at home, youngest is 15.

Would you include the mortgage in Ch7 and rent a cheaper place, or try to keep the house?

Talking to attorney tomorrow...

[mtbc]

I think that once you came to terms with losing the house, you might surprise yourself with what new opportunities are afforded by a chance to find a new place, and to have more money left over at the end of each month through not keeping on paying way more than your home is worth.

Only reaffirm (or perhaps ride through) if you really can afford to. You don't want to commit yourself to staying in the house, and then have some bad luck happen or something, and find that you can't really afford it after all. This is a chance now to sidestep into a more affordable life, and you have to be clear with yourself on if staying in the house is consistent with that.

[helpmeout]

I will tell you what I was told to do when I first came here and wanted to keep my house.

Take a realistic look at your budget, include everything. Even the expenses that are paid once a year and an average of what you have spent on home repair in the last 3 years. AND, imo, include a portion to be paid to a savings account for a rainy day. Compare the total number to your total guaranteed income (don't count a bonus as a guaranteed income unless your employer 100% guarantees that you will get it each and every year. Most employers don't, it's based on how well the company does). If it is negative, it probably isn't a good idea to keep the house. Even with the emotional attachment that you have to it.

The one thing you don't want to do is end up back in the position because you kept a house you can't afford.

My kids are 8 & 11. My house is the only house they have lived in. But it's also the reason why I am in the predicament I am in. When I divorced, I didn't want to move the kids because I thought it would be too hard on them on top of my ex and I splitting and my going from a stay at home mom to working full-time.

Here I am over 3 years after the divorce having to declare bankruptcy and give up the house. The sad thing is that if we had sold the house when we split, I would have had a nest egg for a rainy day and been in a position where I could have saved money instead of using credit cards to pay basic living expenses.

Depending on your area, you may be able to stay in your house long enough for your youngest to finish high school. But I really think that you should think long and hard about keeping your house without attaching any emotions to it. Make it a business decision. Once you add emotions to it, it becomes harder. It's just a house. It shouldn't be an albatross around your neck.

[HHM]

I agree with the others, you have to put everything on the table and forget about your credit score. Your credit score isn't paying your bills.

If the home is really that upside down in value, the decision is a no brainer (financially speaking), walk away. You are literally trapped in that house financially, there is no way you are going to be able to sell it for the foreseeable future. Walk now and take advantage of new opportunities.

[optomistic]

Thanks for your replies. Keeping the house might not even be an option. I'll find out tomorrow.

On another note, all lawyers have a vested interest in taking new cases. This brings up a question about when to file:

Is it better to delay filing of the case until I'm several months late on payments, or file right away?

I'm sure my attorney will advise me, but since he/she earns money by taking cases, I want to make the best decision on when to file. What are your thoughts? I'm obviously new to this...

[keepmine]

File when the time is right for you.
Are you going to need to spend down a potential tax refund for example. That's when you'd delay filing.

[LimpDisc]

One of the forum members posted a link to a calculator that might help you find your answer.

http://www.bkforum.com/showthread.php?t=50939

[optomistic]

Well, I have no liquidity to spend down, but I need to save up if I forfeit the house. And if I save up, the trustee will take it, justifiably so. Seems like a catch 22. Hopefully the attorney will provide those answers tomorrow.

After reading the replies above, and discussing the house with my wife, we both agree it's financially insane to try to keep the house. Doing so would prevent us from truly gaining a fresh start. I can deal wih the emotional aspects knowing it is in our best interest to say good riddance to this shelter...

[mtbc]

Maybe you can stop paying on the house and use the money you save to move to a rental (security deposit, movers, etc.) before you file? You can probably stay in the house for some months after you stop paying but it might be easier to find a rental before your credit takes much of a hit. Just an idea.

[HakunaMatata]

Optomistic-

You need to understand your exemptions in order to better assess potential savings. I surrendered my house and was shocked to discover I could have exempted $10k+ (wish I had that in my back pocket ).

Many factors contribute to determining the proper filing date (employment status, health status, recent balance transfers/credit card use, non-exempt funds, etc.). Many factors contribute to finding the right attorney as well...it will be advantageous to interview more than one.

Like you, many of us had flawless credit prior to filing. Sure, BK is a hard hit to a score. It's important to remember we all started with no credit and built up our scores. Credit can be rebuilt and it doesn't take ten years to achieve this.

It surely sounds as if you and your wife are logically embracing the notion of a "fresh start". BK is a business decision. Emotion oftetimes tried to gain footing; although, it needs to be replaced with business-minded focus. I'm sure your house had provided many wonderful moments; and, I wouldn't be surprised if another house (that isn't $100k underwater) will do so as well.