Will I lose my house?

[tofu4you2]

Just a little background. We tried to sell our house in NC about a year and a half ago. No luck. We moved into a reasonable rental hoping it would sell quickly, but it didn't. In the mean time we had mortgage, rent, double utilities (you get the picture). We have $90K in CC debt and finally decided to rent the house Dec 1st. We are contemplating filing bankrutcy. We have always been current on our mortgage payments, card payments etc. Although we haven't paid our CC in 6 months. Our tenants signed a lease/purchase aggreement and really want to buy the house if they can get financing. We have enough equity in the home to pay off our debts if we sell to them. Do we hold out another 9 months for them to qualify for a mortgage or do we file bankruptcy and lose our home? Any advice you can offer would be greatly appreciated. What a mess! Can't Sleep at all!

[FreshLikeADaisy]

Tofu, seems to me like the first priority would be to honor whatever statements you have made to your tenants. It's good business, fewer hassles in the long run, and they may qualify before 9 months is up, especially if you tell them you are considering bankruptcy. If you wait that long on the cc, you do run the possibility of being sued by the creditor before you file, but if your lease/purchase agreement with the tenants specifies rights that would be denied by a bk, you could conceivably be sued by them instead, which I think would be much more painful (and closer to home) than a creditor suit.

A middle road might be to sit down and talk with them openly about your consideration of bk: you never know, they may end up deciding to work harder to get that mortgage today, or reconsider and move out, or stay and roll with the punches.... Either way, they're not blindsided by a bk on your part, and that can only help. Even if you decide to wait the remaining 9 mos on the lease, they are not under the misconception that there are no problems and they can afford to let the decision wait indefinitely. So talk with them. You don't have to tell them details, just say "business problems have caused us to have to consider this" and let it go at that.

You may also be able to keep the house as a rental, IF your state's exemptions cover any existing equity, which would resolve the issue entirely. It's not a second home because you're living in a rental now, and only have equity in one house. Many bk attys offer free initial consutations and you don't have to commit to anything; you may want to run this scenario past one or two and see what they have to say.

Others may have better advice, I've never been a landlord, but that's where I'd start. Don't make an enemy of someone living in your house, and don't breach your contracts. Good luck!!!

[tofu4you2]

Don't want to drag tenants into this!

Thanks for the advice. The last thing I want to do is drag our tenants into this. They have been great, love the house and sincerely want to buy it. I'm just not sue if I can wait that long. After 6 months of nonpayment of CCs most are charge offs, so everyone is getting restless. I don't want to be sued on either side. Bankruptcy/charge offs they both look pretty bad. Hopefully there is some light at the end of the tunnel soon. Thanks!