Kind of a 3 topic multi-part question, but nothing is ever simple, is it?
My former primary residence (1st & 2nd mortgage by same lender) was included in my Ch 7 bankruptcy and because of this, my lawyer told me my lender cannot come after me for any debt owed and I can "walk away" clean.
However, in order to attempt to save our home even after bankruptcy, we had to start renting it out and we moved out of state to pursue a better job and cheaper cost of living. So our property included in the bk is now legally an "income property" which I'm afraid complicates walking away with no financial recourse... at least as far as taxes are concerned.
We hoped to wait it out for the market to recover, but 10 months later and we are starting to get behind and can't afford 2 mortgages and our rent for where we currently live. Our renters pay us $500 less than what we owe towards the home each month. At this point we decided we need to utilize our choice to "walk away" from the house and mortgages.
1)
But what are we liable for taxable income/profit in this situation because it is legally considered an "income property" now? (p.s. we do not own any other property or any significant assets to speak of)
Our stats: Bought home in 2002 for $105,000. A refi and 2nd mortgage later we now owe $160,000. We put the majority of the money earned from the refi & 2nd mortgage back into the house as renovations (I still have the receipts!). At this point based on comps, our house is worth for around $150,000.
2)
Our lawyer also said when we "walk away" that "foreclosure" should not appear on our credit report as the mortgages were already discharged via the bankruptcy, but he said that was beyond his scope and couldn't guarantee it.
Can anyone report if this is true or not?
That would be great if it was only bankruptcy on our credit report and not both bk and foreclosure.
3)
1 more thing: when you do "walk away" - how exactly do you do that? Call the lender and ask to talk to the bankruptcy department and then inform them you've included your mortgage in Ch 7 and you are using your right to walk away and please don't bother pursuing me for the debt? Or am I going to get the threatening letters anyway and ignore them? How long after you stop paying until you come back to your home to discover all the locks are changed by the bank if the home was vacant? I'm just wondering when I can stop paying but guarantee that the moment my tenants leave by Oct 1st we can show up to take out remaining possessions. I don't want to run the risk of being locked out and losing the worth of what personal items are left inside (hey, I'm including the fridge, stove and washing machine we paid for along with a few other things - we're taking all we can!). Thoughts?
Thanks!
My former primary residence (1st & 2nd mortgage by same lender) was included in my Ch 7 bankruptcy and because of this, my lawyer told me my lender cannot come after me for any debt owed and I can "walk away" clean.
However, in order to attempt to save our home even after bankruptcy, we had to start renting it out and we moved out of state to pursue a better job and cheaper cost of living. So our property included in the bk is now legally an "income property" which I'm afraid complicates walking away with no financial recourse... at least as far as taxes are concerned.
We hoped to wait it out for the market to recover, but 10 months later and we are starting to get behind and can't afford 2 mortgages and our rent for where we currently live. Our renters pay us $500 less than what we owe towards the home each month. At this point we decided we need to utilize our choice to "walk away" from the house and mortgages.
1)
But what are we liable for taxable income/profit in this situation because it is legally considered an "income property" now? (p.s. we do not own any other property or any significant assets to speak of)
Our stats: Bought home in 2002 for $105,000. A refi and 2nd mortgage later we now owe $160,000. We put the majority of the money earned from the refi & 2nd mortgage back into the house as renovations (I still have the receipts!). At this point based on comps, our house is worth for around $150,000.
2)
Our lawyer also said when we "walk away" that "foreclosure" should not appear on our credit report as the mortgages were already discharged via the bankruptcy, but he said that was beyond his scope and couldn't guarantee it.
Can anyone report if this is true or not?
That would be great if it was only bankruptcy on our credit report and not both bk and foreclosure.
3)
1 more thing: when you do "walk away" - how exactly do you do that? Call the lender and ask to talk to the bankruptcy department and then inform them you've included your mortgage in Ch 7 and you are using your right to walk away and please don't bother pursuing me for the debt? Or am I going to get the threatening letters anyway and ignore them? How long after you stop paying until you come back to your home to discover all the locks are changed by the bank if the home was vacant? I'm just wondering when I can stop paying but guarantee that the moment my tenants leave by Oct 1st we can show up to take out remaining possessions. I don't want to run the risk of being locked out and losing the worth of what personal items are left inside (hey, I'm including the fridge, stove and washing machine we paid for along with a few other things - we're taking all we can!). Thoughts?
Thanks!
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