Bankruptcy to get rid of second home?

[got2btru]

Has anyone done a chapter 17 to get rid of a second home. Here's our situation

2007 bought a house for $285,000. Even though it was a great house in a descent neighborhood, we found out (by an FBI raid one morning) that we lived across the street from a gang leader who was dealing drugs. Another time we had a bike stolen from our garage while we were home. Another time our air conditioning unit (CENTRAL AIR UNIT!) was clipped off the side of our house. The school district was terrible (we had initially thought of homeschooling or private school but after the crime issues we chose to get the heck out.

2009 bought a second home in the country in a good school district for 255,000

Our first house has not sold after almost 2 years. It is listed for $175,000 (as a short sale) and even our realtor thinks it will need to be $155,000. We still owe 235,000. There is no way we can come up with $100,000 to get it sold. Our attorney says a BK is faster than a short sale. We have no desire and have been advised against renting it.

We have stayed current on everything and have zero balance on our credit cards.

Anyone else been in this boat?

[tcreegan]

short sale

Hello gotbtru,

it was a great house in a decent neighborhood
..if that was a decent neighborhood I would hate to see a bad one !

A short sale sounds like exactly what you need. You need to negotiate with the lender and find out what they plan to do with the deficiency. They might write it off and leave you off the hook. It also makes a big difference if you are in a "recourse" or "non-recourse" state.

Another option is a "deed in lieu of foreclosure" Basically you sign the deed over to the lender avoiding the foreclosure process. It is faster and cheaper (to the lender) than a foreclosure. But again, what happens to the deficiency is the essential question.

Meantime, if your name is on the deed you can rent it out. Just explain the situation to the tenant and do month-to-month.

Leave BK as your option of last resort.

Good luck with all this,

Tom in Colo

[angles]

Tom summed it up nicely. Exhaust your options before pursuing BK, although plan for it in case you find you might need it. The first step is to find out if your loan is recourse or not and go from there...

[got2btru]

We unfortunately are in a recourse state, which leaves our assets unprotected in a short sale or foreclosure, which I think is why our attorney is suggesting BK. We have two loans on the mortgage - one for 219 the other for 16 with the same lender, but the attorney wasn't convinced the bank would accept a short on both. Also, we would prefer not to have delinquency calls every 30 days while we wait for an offer. We do not have one yet.

[bigtim6656]

Renting it out is an option but being such a "good" neighborhood you risk the chance of renting it to the gang members compatition and getting it burnt down.

Issues come from renting guys, damage, non payment, DAMAGE.

Though I would use bk as a end all be all last resort

[newbie2]

We unfortunately are in a recourse state, which leaves our assets unprotected in a short sale or foreclosure, which I think is why our attorney is suggesting BK. We have two loans on the mortgage - one for 219 the other for 16 with the same lender, but the attorney wasn't convinced the bank would accept a short on both. Also, we would prefer not to have delinquency calls every 30 days while we wait for an offer. We do not have one yet.

I would get aggressive with the pricing of the home (follow your agents advice) and try like heck to get the short sale. Many times the 2nd will take a smaller token amount and the first will allow that. (For example: the 1st will accept $150,000 with the second getting $2000 or so). The 2nd doesn't balk as much anymore because they know they are getting something, rather than nothing if you filed for bankruptcy. As always, have an attorney review any short sale approval documents to make sure that they will release the liens with no recourse to you afterwards.