dont want to keep houses

[lrjax05]

We own 2 homes, in in foreclosure and 8 months behind payment and other is rented and current. We don't want to keep both since we are moving and both homes have negative equities anyways.
Should we file BK to get rid of both homes? We failed the means test for ch 7 due to high income (even though it is not enough to cover all expenses). We don't have credit card debts. Does 13 even make sense?
Should we just let the first house go into foreclosure? What if the lender comes after us for the deficiency?

[JRScott]

Did you fill out the second half of the Chapter 7 means test?

[lrjax05]

If I keep the 1 house, then I pass. but we really just want to get rid of both since we are moving. What are the other options?

[StartingOver08]

Surrender one in the filing. For the other one, you could start out by keeping one of the homes as of the filing date and then try to re-work the mortgage during the BK stay. This mortgage re-working is typically not successful, so you can change your statement of intention to surrender of the second house before the end of your automatic stay and prior to your discharge.

If the lender cooperates (very unlikely) then you may have a property you want to keep.

This way you can file for a Ch 7. And ultimately surrender both homes so you have no liability for the deficiency. It is a little bit of a gamble, but not much as the lenders have no obligation to work with you to modify the mortgage.

[lrjax05]

Which house to keep?

1st house: owe 1.3 mil, now worth 975K, 9 months behind pay

2nd house: owe 600K, now worth 550K, current on payment as it is rented.

[StartingOver08]

You are the only one that can make that decision, but if it were me () I would dump the one that is 9 mo's behind and keep the rental.

You may want to check into a Ch 13 to stip the 2nd mtg on the rental (if there is one); that is one of the benefits of a 13.

[lrjax05]

would it be better to just let the first house go into foreclosure? and not file BK? which is better in the long run?

[StartingOver08]

You can let the first house go into foreclosure, but you need to find out if the lender can come after you for a deficiency judgement. If they can, then I would BK to get rid of that possiblity. But that is JMO.