Pre-Foreclosure Chapter 7. Will I be eligble?

[badhouse]

I have a house that is 40% underwater. I can make the payments on it but have decided to stop as I can rent a comparable property for half of my mortgage. I will have no problems passing the means test but since I have no debt other then a relatively small monthly student loan payment, I am worried that my Filling might be classified as abusive anyway.

My plan was to wait until I was given a notice of default and the entire balance became due. There is no way I could produce 125k. Even so, I would be deilberately witholding mortgage payments and assume the court would not then accept my mortgage as a monthly liabilty. Without a monthly housing payment, and no other debt to speak of, it's hard to see how the court wouldn't dismiss the case or convert it to chapter 13. Will the court consider that post foreclosure I will have a housing expense? I am guessing they can only consider current liabilities.

I could always wait until after the foreclosure and I secure new housing. The reason I hesitate is that the first debt will be extinguished, (I live in an anti-deficiency state for 1st lien holders), and all that will remain is the unsedcured 2nd loan for 25K. I fear That debt is low enough that a court might rule I could reasonably repay it. (Especially since my housing payment will be 40-50% less after Foreclosure). Anyone have any thoughts? For now I am trying to do a short sale. I just don't believe Bank of America is going to cooperate.

[AngelinaCatHub]

With what you have stated, why go bk at all? If you have no assets you are collection proof if they get a Judgment. I rarely promote allowing a suit and Judgment. They are tough to work with. If you clear less than $500 a week, they cannot garnish your wage. Your credit will be trashed anyway. 'Hub

[HHM]

ACatHub, keep in mind though, the real question is what sort of lifestyle does the person want to lead. Just because a person is collection proof, doesn't mean there will be no attempts to collect. I never really like the advice of "your collection proof, why file BK?", that advice misses the point entirely. The point of BK is to recover and move on, you cannot do that when your in constant collection for the next 8+ years.

The point of BK is to bring certainty and the ability to move. There is absolutely not downside to that. The real question is, your collection proof, why not file BK?"

[badhouse]

With what you have stated, why go bk at all? If you have no assets you are collection proof if they get a Judgment. I rarely promote allowing a suit and Judgment. They are tough to work with. If you clear less than $500 a week, they cannot garnish your wage. Your credit will be trashed anyway. 'Hub

Exactly, the foreclosure will trash my credit. How much further harm can bankruptcy do? I would only be including the foreclosed mortgages in bankruptcy, so the fimpact on future credit scores should be negligable. What is the benefit to not filing?