Find a rental now or wait until forced out of home

[ssmdem]

Which do you think would be better in the long run? We are not reaffirming our home and originally planned to just stay here as long as we could. But now, I'm wondering. Should we go ahead and find a rental before all of this shows up on our credit? We haven't filed yet - actually aren't behind on any payments yet, so we were thinking months off - but now I'm wondering if we're going to have problems finding a rental with the bankruptcy and foreclosure on our report. We ourselves have rented to two families, both of who had a foreclosure on their report, and they were great tenants - so I know it's possible, but I also know if could knock out several choices too if people aren't willing to risk it. Anyone experience a REALLY hard time trying to find a rental with this on their record? We live in a small town - there are MANY rentals here due to a heavy military presence and people just can't sell their homes right now, so I know we'll have plenty to choose from but don't know how many are going to be willing to stick their necks out for us.

[AngelinaCatHub]

OK, this is my opinion. Call it a crap shoot if you will, but here is what I would do: As you stated there are many rentals and more to come as well as houses now in desperate need to sell or rent. I would if you have decided to bk, stop payments, collect enough for first, last, security, and then some, and live out the house until forced to leave. Once a judgment of eviction is given, you will most likely be given 30 at that time to vacate.

Watch where you put this money and by all means, do not hide it from bk Trustee, lawyer or Judge. It is for ONLY your apartment or house rental. If you can wait to foreclosure and later, it would be best to rent while being forced out and spend that money at that time then bk after. Then there would be no large amount of savings that could be taken as well as rent is exempt.

Forget about credit scores. They are becoming obsolete in this economy. People are hungry for any dollar. Liquidate now at yard sales stuff that exceeds your state exemptions and plan this well.

It is a business decision and you must plan it as such. 'Hub

[ssmdem]

OK, this is my opinion. Call it a crap shoot if you will, but here is what I would do: As you stated there are many rentals and more to come as well as houses now in desperate need to sell or rent. I would if you have decided to bk, stop payments, collect enough for first, last, security, and then some, and live out the house until forced to leave. Once a judgment of eviction is given, you will most likely be given 30 at that time to vacate.

Watch where you put this money and by all means, do not hide it from bk Trustee, lawyer or Judge. It is for ONLY your apartment or house rental. If you can wait to foreclosure and later, it would be best to rent while being forced out and spend that money at that time then bk after. Then there would be no large amount of savings that could be taken as well as rent is exempt.

Forget about credit scores. They are becoming obsolete in this economy. People are hungry for any dollar. Liquidate now at yard sales stuff that exceeds your state exemptions and plan this well.

It is a business decision and you must plan it as such. 'Hub

So, you're saying wait to file bk until after the house is foreclosed? Couldn't that take forever? I've got credit cards that we will stop paying soon as well, and don't want to deal with those banks suing us whie we're waiting for the house to foreclose.

I guess I was thinking of it from the another direction - file soon while we literally have NO money and once it's discharged, then start saving up and hopefully have a pretty large amount, maybe three months rent plus the deposit that could hopefully give landlords more security in renting to us.

I guess you could look at it either way. How long does it normally take for a house to go into foreclosure once you stop making payments?

[goingcrzy]

one thought-

More and more rentals may pop up shortly. The tax credits are about to run out. Anyone who hasn't been able to sell their house will probably start to look to rent it out.

I would wait and bank as much money as possible. I think a owner will be more likely to rent to someone who is sitting on some cash and can give them 3 or 4 months up front vs someone having better credit.

[goingcrzy]

How long does it normally take for a house to go into foreclosure once you stop making payments?

Depends where you are. I read FL has an 80,000 case backlog. You might be in your home rent free for 6 to 8 months or more

[ssmdem]

Depends where you are. I read FL has an 80,000 case backlog. You might be in your home rent free for 6 to 8 months or more

I'm so hoping for that - that would save me $18K or more!! Can't even imagine!

[OregonMom]

It took a full year from when I stopped making payments on my home until I got an auction date on it. Our mortgage was with Chase. Quit making payment, save for the rental. You shouldn't have a problem finding one, we were able to rent the first house we really liked. Good jobs and good references were key, along with first, last and deposits.

[ssmdem]

I have another question. We have a rental property that we used to live in before we built this house. We're upside down on its mortgage as well, so intended on letting it go in foreclosure too -- but the 1st mortgage is well under the value of the home ($88K valued at $135K) - the HELOC is $80K which is what is pushing it over what it's valued. Is it at all possible to lose the HELOC in bankruptcy but still keep the home with the 1st mortgage?? It's still not a house we would want to live in permanently, but depending on the timing (trying to keep from changing school districts on the kids), we could live there for about six months anyway, and then just go back to renting it out afterwards, or even actually sell it if possible. Any way to make that happen or am I just grasping at straws here?

[SMinGA]

Based on those #'s - no.

To 'strip' the 2nd/Heloc in a ch. 13 the value of the house must be less than what is owed on the 1st mortgage. The result is a 2nd/Heloc with no equity at all, so in the 13 the lien is stripped and the 2nd/Heloc is treated as unsecured.

You describe a 2nd with ~$42k equity. Can't strip it.

What some may try to do is use the 1st & 2nd payments to 'qualify' for ch. 7. Have both current at time of filing - then keep the 1st current but stop paying the 2nd after filing or after the 341. Save up $ by not paying the 2nd. After a while, offer a settlement of 10-20%. Such as $8-$16k to settle the $80k Heloc. But I think that is mostly successful when there is very little equity available to cover the 2nd/Heloc. Your lender may feel they're in a decent position since more than 1/2 of what you owe is covered by equity. Assuming your valuation is accurate, of course.

1st mortgage is well under the value of the home ($88K valued at $135K) - the HELOC is $80K which is what is pushing it over what it's valued. Is it at all possible to lose the HELOC in bankruptcy but still keep the home with the 1st mortgage??

[ssmdem]

Figured I was asking too much with that one - I wouldn't mind moving back to our rental. I think I could get the kids approved to finish out the schools where they are at, but when my son heads to middle school is when we would have the problem. Our county is good about out of district transfers, as far as finishing up a school where you are currently enrolled - it's all a matter of numbers when you move up to the next school level though. Working in the school system, I have priority, but doesn't ensure that he would get it.

I just really hate the idea of renting for so long.

[junker]

in these times..there are some people willing to sell on contract...and some really dont care about your credit, or bk,s ...this last house i just bought on contract...i put a ad in the local paper...saying i wanted to buy on contract..what price range i wanted...AND the terms i would accept...ie..wanted to buy on contract...home under 100k...% down..and the % willing to pay on the note....i actually got a few calls...the one i bought from didnt care at all about the credit..he said he is in first position on note and really didnt care about any problems i had....he was happy to sell in these times, get a decent % interest on his investment and he knows if i default he will get the place back....and believe me i had terrible credit...he also now has 3 OTHER homes he wants to sell on contract...and just told me if i could find some buyers i would get a kickback from him.....AND i have a judgment on me...he didnt even bother running my credit.....so its NOT the end of the world.......

[ssmdem]

We've talked about this alot this afternoon and actually am thinking seriously about moving back into our rental. The thought of renting - two dogs, not feeling like it's my home with the freedom to paint and do what I please - I just have owned a home for so long, it bothers me to rent.

We are upside down on the rental but not as much as our home now, not to mention the payment is almost a third of what our mortgage is right now! The house is definitely too small for us - but we can deal with it. We can rent homes that size-wise are better suited for us for just a little bit more ($200-$300) than what our mortgage payments would be - but again, it's rent, we're paying someone else's mortgage.

It does put the kids in another school district, but I think I can work that out and keep them where they are. Worst case scenario and they tell me no, then we just rent it back out again and go rent somewhere else ourselves like originally planned.

Only problem then would be that we kept the property when we could have let it foreclose. Can we NOT reaffirm that mortgage/HELOC but stay current on the payments anyway? Then if things don't work out, let it foreclose then? We absolutely cannot ask a rent amount that is equal to our mortgage - we'll never get it - and I don't see throwing away that money every month, unless of course it's us that's living there.

[hescrazy]

my ex husband stayed in our home almost a year before the bank came and changed the locks. the payments were about 11 months past due at that time.

[SMinGA]

If you're current, you should be able to 'stay & pay' in a ch. 7 without having to reaffirm. Then can let it go later if needed. If you file 13, the plan payment would be able to catch up any arrears. And if the time came in the next 3-5 years where you wanted to let the house go, you could work with your attorney to amend your plan.

Just one comment I wanted to make about your "it's rent, we're paying someone else's mortgage" comment. While that IS true about renting, I think its really no different to rent if your mortgage payments are being made to an upside-down home. Either way, you are not personally building any equity with your payments. If that is your SOLE reason for not wanting to rent, I don't think its an objective one.

Overall though, I think the idea of downsizing for a while is probably a good one if you have that option readily available. We considered the idea of giving up our house/mortgage - but we really can't rent anywhere nearby for less. And if all goes well, we'll be able to do an in-house modification with Bank of America that will lower our payments (reduced rate) and lock us in at a lower rate than we have now.

[ssmdem]

If you're current, you should be able to 'stay & pay' in a ch. 7 without having to reaffirm. Then can let it go later if needed. If you file 13, the plan payment would be able to catch up any arrears. And if the time came in the next 3-5 years where you wanted to let the house go, you could work with your attorney to amend your plan.

Just one comment I wanted to make about your "it's rent, we're paying someone else's mortgage" comment. While that IS true about renting, I think its really no different to rent if your mortgage payments are being made to an upside-down home. Either way, you are not personally building any equity with your payments. If that is your SOLE reason for not wanting to rent, I don't think its an objective one.

Overall though, I think the idea of downsizing for a while is probably a good one if you have that option readily available. We considered the idea of giving up our house/mortgage - but we really can't rent anywhere nearby for less. And if all goes well, we'll be able to do an in-house modification with Bank of America that will lower our payments (reduced rate) and lock us in at a lower rate than we have now.

Good point, and you're right. We're going to get an assessment done to make sure exactly what the house is worth before we make a definite decision. We will more than likely stay current on the rental for now just to keep our options open until we file and make a definite decision which direction we're going to go. It's rented - and we're only having to pay out $150 more than what we're bringing in - which is still money we're throwing away, I know - but at least it's keeping that option open for us right now. And I don't want to have to go the Chap 13 route if we can help it - we're so close to the median anyway without even factoring in expenses. We're still waiting about 4 more months to fille - just for that reason. My income that I've lost will fall out of the six month lookback, as well as my husband's reduced income that he also has had.

I'm torn. We can get MORE for our money house-wise if we rent from someone else, not have to worry about school districts, etc. If we move into our own rental, we're going to have to get rid of some furniture because it just won't hold it all - which that bothers me some, but I can live with it. Yesterday, I was all for it - today, after sleeping on it, not sure anymore. My kids aren't thrilled with the idea as they'll be further away from their friends they go to school with. They do HAVE friends in that neighborhood, and it's a neighborhood I feel safe with them playing and riding their bikes, etc, so it's not the end of the world for them - and we've all got to make adjustments here somewhere. I'm just trying to minimize the effect it has on them since this is not their fault - it's ours.

I think I may call some of these rentals that are now available and tell them what our circumstances will be then. Obviously, they probably won't still be available when it comes to renting, but it will give me an idea of how open some of these homes we are considering would be to renting to someone with our financial history. I'm hoping to have enough to give the three months rent plus the deposit when the time comes - hoping that will be enough to sway them towards renting to us.