Am I bad in thinking this way??? RE: leaving house

[basketsbears]

Hi,

My husband and I have been talking about filing BK, either jointly or him alone. The reason is because we have a rental property that will probably end up in foreclosure.

My question is (this is where I feel like a bad person asking) while I like our primary residence, we don't "love it". If we found an lease/option to buy home that we "loved" would we be better off to let both homes go back if we filed jointly? Could we do that before the BK was filed? If we file it would not be until May at the earliest.

Thanks for all your help.

[BobMango]

Well, I look at it this way, you signed contracts for the houses. The contracts specified the rights and responsibilities of each party. I don't consider failing to perform on the contact a moral shortcoming, and the lenders are free to pursue their remedies under the terms of the contract that you signed. If you have a significant negative equity position in both properties I'd walk away. Having said that, I'd not suggest that you enter into another purchase contract prior to defaulting or dumping those houses through bankruptcy. Depending on your state you may open your self up to some complications. Additionally, I think that real estate still has a ways to fall and the market will not be making a sharp recovery, so you have plenty of time to repair your credit and scoop up something you really like at a good price in 3 years or so.

I had a rental property that was foreclosed a month before I filed for Chapter 7. I'm glad it worked out that way since I didn't have to worry about waiting for the bank to foreclose and the 3 year clock for the foreclosure started before I even filed. If I'm ready and the market looks good I should be able to buy in another 18 months.

One last item, we did keep our primary residence as a ride-through, and moved out and rented it. We are current on the payments, make money on the rent and are close to equity with it on the loan. I like not being obligated for this debt if circumstances change, but for now it works to our advantage.

I had no problem renting a house six months after my discharge, with a foreclosure as well. We didn't even have to offer any extra security deposit, meeting the income requirements and having good references was sufficient. Good luck.