multiple forclosures at once

[larryb]

Hello all,

I have three properties I am going to let go in forclosure all at once. I will show the particulars on them.

Please let me know your opinion on this approach. P.S. this is what an attorney is suggesting.

rental home A) zero equity, unhabitable, with a 30k mortgage

rental home b) currently rented, rent doesnt even cover all expenses, mortgage of 60k, market value of 30k

rental home c) currently suing insurance company do to a fire loss that started form the house next door. (fire transferred to my home) Insurance company is deniying the claim do to unoccupance at the time.
house is worth zero, with a 35k mortgage

rental home d) currently rented for 500 with no mortgage. (I plan on keeping this one) market value of about 15k

My homestead has a 87k mortgage with a market value of about 120k. I am keeping this one.

10 k total in credit card debt.

Also, I just lost my job.

My attorney is advising me to let all the rentals go, and if I am sued, then file BK.

What do you folks think? I know there are issues like 1099 etc for deficiencys, but I dont know of any better approach.

Also, does multiple forclosures at once have more of an impact on credit then just one? What may I expect?

Larry

[HHM]

At this point, your "credit" needs to be the least of your concerns, so take that out of your decision making progress.

You lost your job and don't have enough rental income...

Simply file a BK and end it. Why prolong the inevitable?

[StartingOver08]

Larryb, sorry you are having such a rough time. It really does sound like BK is the way to go for you based on your post.

Once you surrender the houses in BK, the foreclosures will not show on your credit report (if they have not already happended prior to the BK).

Just file and get rid of the pain

[larryb]

Hmm,

I wonder why my attorney is advising me to forclose first and then use BK as a last case scenario?

[wealth2009]

Hmmmm....

Hmm,

I wonder why my attorney is advising me to forclose first and then use BK as a last case scenario?

Are thinking about filing a chp 7 or 13? If chp 7, then you can surrender the property in the BK and your credit report will not show a "foreclosure." Because the lender never "foreclosed" on the property, you "surrendered" it back to them. However, if you are not in the arrearages on either property and you decide to keep them, but after filing or discharge you are foreclosed on then your credit will show "foreclosed." Hope this helps!!

[larryb]

I really dont need to file bankruptcy as I really dont have any other debt besides the rental homes.

Our thoughts were just to foreclose. And only file BK if They all decided to sue me for the deficiency.

I do not want the rental properties.

Does this strategy make sense?

[HHM]

Well, you're also missing the other BIG caveat with foreclosure.

If the lenders decide to "forgive" the deficiency, then the deficiency amount is taxable income. (see IRS Publication 982). Now, there are some exceptions to actually paying income tax on that amount, but you must declare it (because a 1099 will be issued), BK also acts as an exception.

Is the attorney you consulted with a BK attorney?

There is nothing inherently wrong with your strategy unless you want multiple foreclosures, charge offs, missed payment, etc, pilling up on your credit report, and gettting letters and phone calls everyday from collection agencies.