Considering walking away after Chapter 7 BK

[mrsjones]

Hello there!

This is my situation in a nut shell:

My husband and I filed chapter 7 summer 09, discharge was granted in Oct 09. We filed separately as we were recently married and incurred our debts separately prior to being married. I own our house, (which was "awarded" to me in a divorce from my previous marriage) I reaffirmed my car, and did'nt reaffirm my house in the bk - I naively thought I wanted to, but I learned it is not common practice to reaffirm mortage debt and I am so very thankful that I did not reaffirm. (I only have a 1st mortgage loan)

We have remained in the house because we make timely payments, however it has been tough to do with our mortgage being more than 1/3 of our combined income and recently we learned the house is over $100k underwater. Our credit report shows zero balance and does not show our payment history since we filed. Also, I have not received any bills since I filed.

We have been advised by multiple mortgage /finance professionals and even my husbands economic professor that we should walk away. We have been told it takes a minimum of 6 months for a forclosure to finalize and that we should continue living in the house as long as we can and save our money. We are considering doing this.

These are my questions:

Since my mortgage debt was disolved and no longer exists, will the forclosure be reported on my credit or will it only be filed in our public records with the county since it will be a forclosure for the lien not the debt?

My mortgage is through Chase, however I did receive a notice that the loan is being serviced through a new company. Does this have any impact, positive or negative on the forclosure process?

Does a forclosure process faster in a situation like mine where the debt has been eliminated?

From your experience, how long can we expect to stay living here once we stop making our payments?

Thank you for taking the time to read my post, and answering any of my questions.

mrs.jones

[tcreegan]

Hi mrsjones,

Since my mortgage debt was disolved and no longer exists, will the forclosure be reported on my credit or will it only be filed in our public records with the county since it will be a forclosure for the lien not the debt?

Shouldn't be reported, if it is you can write letters and get it removed.

My mortgage is through Chase, however I did receive a notice that the loan is being serviced through a new company. Does this have any impact, positive or negative on the forclosure process?

Who knows...if anything it will delay the process.

Does a forclosure process faster in a situation like mine where the debt has been eliminated?

Apparently not, many folks here on the forum have homes over a year past BK and still not foreclosed. Usually the foreclosure process stops during the BK and picks up where it left off after the BK

From your experience, how long can we expect to stay living here once we stop making our payments?

This is highly variable by market and lender. WA foreclosure laws will have deadlines and wait times you can look up, this will be the minimum time you have. (probably around 6 months) Knowing the process also tells you how much time is left, for instance, you have 20 days after the foreclosure sale to move out.

The 'stay and not pay' is a great $$ saver, bank those mortgage payments, they add up fast!!

Tom in Colo

[shark66]

One thing to consider before walking away, at least in my opinion: how much - if anything - are you going to be saving by renting a comparable house that fits your family's needs...

The fact that you're underwater means very little by itself.

The fact that you're struggling to make mortgage payments means a lot.

Weigh all of your options carefully before making a decision.

Good luck.

[mrsjones]

Thank you Tom in Co! This was very helpful. :-)

mrs.jones

Hi mrsjones,

Since my mortgage debt was disolved and no longer exists, will the forclosure be reported on my credit or will it only be filed in our public records with the county since it will be a forclosure for the lien not the debt?

Shouldn't be reported, if it is you can write letters and get it removed.

My mortgage is through Chase, however I did receive a notice that the loan is being serviced through a new company. Does this have any impact, positive or negative on the forclosure process?

Who knows...if anything it will delay the process.

Does a forclosure process faster in a situation like mine where the debt has been eliminated?

Apparently not, many folks here on the forum have homes over a year past BK and still not foreclosed. Usually the foreclosure process stops during the BK and picks up where it left off after the BK

From your experience, how long can we expect to stay living here once we stop making our payments?

This is highly variable by market and lender. WA foreclosure laws will have deadlines and wait times you can look up, this will be the minimum time you have. (probably around 6 months) Knowing the process also tells you how much time is left, for instance, you have 20 days after the foreclosure sale to move out.

The 'stay and not pay' is a great $$ saver, bank those mortgage payments, they add up fast!!

Tom in Colo

[mrsjones]

Thank you!

[iv65536]

I am trying to get the first to reduce the principal and remove the subordinate liens, preferably by some means other than a foreclosure. Instead, they seem to have decided on foreclosure, damn the torpedoes, full speed ahead. If this is how they are going to get there, they haven't told me.