Ch 7 or Let Ex Walk Away from Home...Which is worse?

[mimiinmi]

I feel like I'm in an odd category.

I'm divorced. Ex didn't refinance before divorce (I know, I know). So I'm still on the mortgage and second. Now he has been unemployed for almost two years and his unemployment will be running out. He had been making the payments on both up until now.

I have about 16K in cc debt. I have a decent job and am current on everything.

I'm an inch away from filing Chapter 7 (barely under the income requirement). Should I just let him walk away instead and take the hit? What can they do to me? Will my credit be just as bad?

I was told by a family member that bk will haunt me for life where no one asks if you've ever had a foreclosure on applications.

I don't know what to do because it feels so permanent. Any advice is appreciated. I'm supposed to file next week.

I don't feel comfortable with the attorneys. I had a bad divorce experience, and I always feel like they're not giving me the full picture and downplaying the negatives.

Thanks everyone!

[Pandora]

welcome to the forum - you're not alone in your situation as there are many on here that have been through the same thing.

To answer some of your questions / concerns:

Since you are still on the mortgages - yes they can come after you since you agreed to pay. If ex-hubby walks, they will turn to you for payment. When you did your divorce decree was there a stipulation for refinancing the mortgage within a certain time frame? Your credit is probably already affected - if you havent pulled your report in the past year or so..I'd suggest doing so; remember you can get your credit report annually for free.

As to your relative saying "Bk will haunt you for the rest of your life... etc" - some one is uneducated in how BK really works. It will stay on your credit report 7-10 years - and its not nearly as bad as debt settlement, a foreclosure or simply just trying to ignore the issues. Your credit recovers much faster filing Bk than any other method. Don't talk to those people that believe those that file BK are "losers" or "deadbeats"; been there done that and I learned early on to tell them to take a flying leap. You've got to get some thick skin to deal with people ....

Interview several attorneys - and ask lots of questions. Read all you can on here, make a question sheet and ensure that the attorney you decide to hire is one you feel comfortable with. Just because they're an attorney does not mean they are a good attorney, so remember that. Go with what your gut tells you and remember that its perfectly acceptable to ask questions.

Hang in there - it will get better.

[mimiinmi]

I appreciate it. I didn't have a refinance included in my decree. He wouldn't do it because of the fees. I went ahead and signed because I had to stop the bleeding.He ran up $70k on the home equity line to buy investments--without my permission.

As a last hope, I applied to refinance under Harp 2.0. Because they have to include my rent with his mortgage, I don't qualify. When I told him this, he got angry and said he is going to quit making payments immediately. If we sold, the first would be covered. The second is killing me. I was told that if he stops paying, they'll do a default judgment and come after my assets for 20 years.

I guess I got my answer. It makes me sad that we could rent the place and cover the payments. I'm not dealing with someone rational though.

Hopefully, I feel a sense of relief soon.

[btbeme]

Whatever debt you have in your name will be discharged under the Ch 7. You can certainly attempt a loan modification after Ch 7 discharge, but be aware that if his name is on the deed you will need his cooperation to get the modification done (and it is likely he will remain on the deed afterwards).

Speak to a couple good attorneys about this. My personal feeling is that a Ch 7 is the end of your problems here, as it absolves you of all the debts around your neck. The worst part will be finding another place to live once the bank finally gets around to foreclosure on the house. You will live rent-free until then And, ask an attorney whether a foreclosure would help your position for spousal support, as the mortgage will no longer be paid out of his funds (unless he wants to continue voluntarily). Just a thought - certainly not my area of expertise.

As for the stigma of a bankruptcy... There are penalties, and BK should never be taken lightly. Those penalties include listing on your credit report for up to 10 years (which might mean higher insurance rates, few or no credit cards or loans for a while, etc) and difficulty getting certain types of jobs (such as accounting or a Top Secret clearance). Generally, I'd say that virtually everyone who takes the BK opportunity to start fresh - and continues on that path of affordable living - has nothing to worry about.

Want proof? My wife and I are 17 months out of our discharge. We were able to short sale the house, dump the mortgage, get a beautiful rental we can afford, ditch over $100k in credit debt, and now have a year's living expenses in the bank due to our ability to SAVE rather than SPEND. We have made a conscious choice to live debt-free and are well on our way to having a much more comfortable retirement because of that choice. And, we are doing so on one income (we had 2 before). BK was tough love, but it was the wakeup call we needed.

[mimiinmi]

Thank you very much for your advice.

I don't live in the home, so I'm already renting a place I love. One issue I don't have to worry about for now. It appears that it will all be his problem now. He has always done what he wants and stuck me with the outcome. This is the only control I have over the situation. I think he feels I'm bluffing.

I'm so glad to hear that things are going well for you. That's all I want, too. I've worked so hard to build a good life after my divorce. I found a good job in Las Vegas where the unemployment is highest in the country. I'm taking care of two amazing kids...and all of their medical bills. This will be one more step in establishing my independence.

Thanks again. I'm looking forward to this being a memory.