Surrendering home in Chp 7

[youngnbroke]

About a week ago, we had a consultation with an attorney regarding bankruptcy. After review of our situation, he said that it would be in our best interest to file chapter 7. He also asked if we wanted to keep the property. At the time we did, but after thinking more on it, we decided we'd like to cut our losses now and start over. We have a first and second mortgage...the value of the home is slightly higher than what we owe on the first mortgage (so we can't strip the 2nd mtg). SO my question is...is it possible to surrender our home (2nd mtg and all) back to the lender, even if we are technically capable of making the payments? BARELY. (we just don't want to get ourselves back in this debt situation)

Any thoughts are very much appreciated!!

[StartingOver08]

Yes, you can surrender your home. If the payments are a hardship, then by all means surrender. It is best to dump all the debt you can to get your fresh start.

[angles]

that’s good thinking on you part. BK is one of those things you never want to have to do again - give yourself the best chance to be successful.

[youngnbroke]

That makes me feel SO much better!! Thank you! We will be meeting with the attorney in about a month...our next battle will be to see if we will be able to pass the means test!

As far as surrendering the home - is this going to be just like a foreclosure?! Will we be able to get a new mortgage loan in a few years?! I don't want to screw ourselves anymore than we need to, but i have to figure out what's best for our future instead of what's best for us RIGHT NOW. That's how we got in this situation. HAHA.

Thanks again!

[StartingOver08]

You are in Wisconsin so you have a couple of ways you can get rid of your debt, one is BK and the other is chapter 128 where you can do something like a bk, but you can pick and choose what you want to keep. Ask your attorney about both. Search for information on a Ch 128 in Wisconsin. I don't know of any other state that has it, but it is worth checking out avenues both before you make a decision.

As to the surrender of the house, you will not be able to finance another home until 3 yrs after the deed transfers from you to either the bank or another buyer. That is one of the shortfalls, but really three years is not long in order to get completely clear of your debt, save for the new place and then purchase another home. Figure out what is best for you and come up with a plan. You want to look at the long term here.