Advice needed.

[mike22]

We are proceeding with a Chapter 7 as soon as we are able to save the cash to pay the Attorney. Currently we are 4 months behind on our mortgage, this is not by choice we have not had the money. We would like to keep our home even though we are upside down by over $125k, our goal would be to live in the home for the next 8-10 years at which time our kids are grown and the market has rebounded.

Our Lender is a Portfolio Bank and I have spoken to the person in charge of work outs and modifications and he told me that once we have filled that they would work with us to help us to make a long ter modification to the mortgage.

We live in Washington State, a recourse state. If the home is discharged in the BK but I have reaffirmed and then later have problems can the bank come after me for the deficiency?

[yomann]

.............. If the home is discharged in the BK but I have reaffirmed and then later have problems can the bank come after me for the deficiency?

You never want to reaffirm a mortgage discharged in BK.
Just do a "ride thru" or pay-and-stay.
Then, if you ever get in a financial hole, you simply walk away from the house.
If you do reaffirm, the bank can pursue for deficiency, should you re-default.
Most BK attorneys will refuse to sign reaffirmation papers, as will most trustees.

[mike22]

Thank you very much.

[mike22]

Do you think that the Bank will work with me if I refuse to re-affirm? We really don't want to leave,I don't want to uproot my kids. My income is dramatically lower than when I bought the home and need a cheaper payment to succeed. I was worried about just the point that you made in your reply, that they could come after me in the future.

[eventsdj]

Even with BK we only felt free once we decided to let go of the house we can no longer afford.
We are in the very beginning stages of foreclosure and will stay and save till they kick us out...

I get your reasons, Ive got kids too. WHat about renting in your area? WHY on earth would you want to save a house your 125k under water on? By the time the market turns around you will be able to get an affordable home!

[mike22]

Thanks for the reply. We are just very torn and actually scared of what a move would mean for out family. Good Luck to you as you move forward.

[keepmine]

We are proceeding with a Chapter 7 as soon as we are able to save the cash to pay the Attorney. Currently we are 4 months behind on our mortgage, this is not by choice we have not had the money.

This says it all. You got something you can't afford. This is what you need to be scared of-dragging this albatross through bk. Not moving to someplace affordable.
BK is about a fresh start. Nothing fresh about what you're thinking.
I'd suggest you stop making any mortgage payments and stay where you are until they blast you out. You may have 6 months or better before eviction. Save that money for moving expenses, deposits, etc. and get yourself on a firm financial footing.

[tcreegan]

holding on to house too long...

Hi Mike22,

I understand the heartbreak of leaving a house you have had, all the memories, buried our old dog and my daughters cat there, makes me cry sometimes.

BUT, we found another place for exactly 1/2 of what we had, and it is actually a nicer house. The kids adjust, we adjust, and now we have the financial strength to pay unforeseen medical bills, car bills, new granddaughter bills,

Look for the long term, get a fresh start w/o that inflated mortgage hanging over your head. If you reaffirm and default later, yes they can come after you for the deficiency.

Hope this helps in some way,

Tom in Colo

[mike22]

Thanks for the reply Tom your advice and experience is helpful. Best to you in all that you do.

[researchnerd]

We were in your position about a year ago. Without DH's income we couldn't afford the mortgage, so we started trying to get a modification. After six months of aggravation with the mortgage company, we asked ourselves a really important question:

If we get the modification, will it be enough to make the home affordable on our current (50% of previous) income?

For us, the answer was no. Unless they brought the balance down to market value (a drop of approx $80k) and gave us a 0% interest rate, there was no way that house could be made affordable for us. And there was zero chance of either of these things happening. Once we made that realization, we knew we had to let it go.

Like tcreegan, we found a rental house in the same school district for half what we were spending on the mortgage, and it is a newer and nicer home. We no longer have our dream, a little 5-acre farm, and that part was incredibly difficult (try finding new homes for 40 chickens!) But we have all adjusted, and now our family has a comfortable place to live that we can actually afford. 5 months later I'm still sad about losing the farm, but I started sleeping better the first night we moved.

[msm859]

You never want to reaffirm a mortgage discharged in BK.

What if you live in a non recourse state, you are not upside down, and you want to rebuild your credit?

[mike22]

Thanks so much for taking the time to write. Funny thing is we are on 5 acres with animals as well. The main reason we moved to our home in the first place all those years ago was for the school. The part that is the hardest for me trying to find something to rent in the same district that still meets the needs of the family and at the same time is owned by intersted in renting to someone that is in BK and givng their current residence back.

Boggles the mind that something that should be a no brainer from a buisness point of view is so hard to actually do. I find myself looking at all of the compensating factors that the home brings. vs the unknown of becoming a renter for the first time in 2 decades but this time with poor credit.

It is very helpful to hear from those who have been where I now am.

Thanks again.