Divorcing, home, etc.

[TommyNVA]

Hey folks.

The wife and I have filed for BK. Unfortunately, and with a very heavy heart (for me) we are now separated with plans to divorce. The BK plans are moving through (her meeting of creditors was a couple of weeks ago, mine shortly.... interestingly, our attorney separated the case) and with luck, this portion of things will be finished soon.

The problem I have is with the home. We are up against the wall on nthe property. As of a month ago, we officially went underwater. To make the property sale-ready and competitive would require a lot of money (carpet, paint, landscape, sales person, etc). Right now we're all under the same roof (me, her, babies, dog), but there are hints that she's ready to go.

We have a first through BoA and a equity through a credit union. I nor she can afford the notes on our own. She has suggested staying in the home until the market improves. My take is that if we dedicated ourselves to staying AND double paying the second (after car is paid in full next spring), we could sell in maybe 5 years. Obviously, for a divorcing couple, that's probably not wise.

Here's the deal. Our attorney is suggesting that we not reaffirm but continue to pay the notes for a bit (spouse was asked if keeping home, she responded yes) then stop. This would give us a few months tomget money together to find our own places (about three months). The attorney said this could be unethical but not out of the question.

I'm not sure of what to do. Actually, my debt is much lower (about a third hers) and I've considered stoppingn the BK, and trying to workmout settlements over an amount of time. I could repay my unsecured in under five years. The only rub is the home.

Any advice that folks in the know could give?

Thanks.

[LadyInTheRed]

I'm assuming both you and your wife filed chap 7 since you say "this portion of things will be finished soon."

You are unlikely to be able to settle with your creditors unless you can pay a lump sum. You already filed, so the damage is done to your credit report and can't be undone. What are you hoping to gain by dismissing your BK?

If it were me, I'd give up the house and live in it until the bank forecloses and evicts me. Keeping it will effectively prolong your divorce process and could get in the way of both of you and your children moving forward with your lives. Nobody can say for sure how long it will take for the value to recover. The ethics are debatable and only you can decide your feelings on that issue.

[TommyNVA]

Yes, Ch7 was filed. I guess I was just trying to see things from another angle in terms of BK vs not. And you're right, the damage is already done.

Our attorney said that once we stop paying, we'll have a very short time before the lien holder would want us out. We filed the petitions in March. He was saying that we'd have to bevready to go by June/July. Something about the automatic stay being lifted, and the lien holder attempting to get relief.