Please help or give me some advice??

[LadyInTheRed]

We went in with the intention that we are going to voluntary foreclose but did not realize that the mortgage company could come after us for years to come for the remainder of the money.

Just in case anybody is still confused, the above statement is true (unless the lender agrees to a short sale of consent judgment). As already explained, in a deficiency state, if no BK is filed and the bank forecloses, the bank can come after the OP for the deficiency. If the lender decides not to go after the deficiency and instead writes off the deficiency and issues a 1099C, then the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation comes into play to exempt the amount forgiven from taxable income.

[frank1010]

I want to do a strategic default. I do have the $$$ to come even but only have $500 in the bank. We are tired of living in the home. Again worth $100k owe $155k. We want out and can go rent somewhere for the next 2,5,7 years or whatever it takes. There are homes that our double the size for the same as my mortgage.

I just don't know if I should file BK and I met with the lawyer and she is making it sound like this is my best option. I read so many different things and confused but feel that since I am 5 months behind and getting calls everyday, I better think pretty quickly here???

Please share any advice that you have?

[LadyInTheRed]

I read so many different things and confused but feel that since I am 5 months behind and getting calls everyday, I better think pretty quickly here???

Please share any advice that you have?

You really have plenty of time to investigate your options and decide what is right for you. As long as you already know you want to give up the house, there is really no hurry to file a BK until after you are sued and served with a summons. Even after you are sued, you'll have some time. The foreclosure will have to take place before the bank can get a deficiency judgment and start trying to collect. A BK will discharge the deficiency whether you file before or after the foreclosure. Read the collections forum for tips on dealing with the phone calls. Don't feel like you have to rush to make a decision at this point.

Consult with a couple more BK attorneys. They may have different advice then the first.

Would you still be considering bankruptcy if you weren't concerned about the mortgage deficiency? What is the size of your household? This is important in determining whether you may be able to do a Chap 7. There are people who have been told by one attorney that they should file a 13 and then another attorney gets them through a Chap 7.

[frank1010]

Would you still be considering bankruptcy if you weren't concerned about the mortgage deficiency? What is the size of your household? This is important in determining whether you may be able to do a Chap 7. There are people who have been told by one attorney that they should file a 13 and then another attorney gets them through a Chap 7.

Let's put it this way. before I went in to speak with the lawyer, no BK was on my mind at all. I just want to loose the house, go rent something nicer and not have the mortgage company ever come back on me. I don't think I need to do a BK. If i continue to save $1,500 month for the next few months, I will be fine. I can borrow approx $5k from a parent to help me out.

[frank1010]

I have a family of 4, married and 2 kids. Both under 10.

[momofthree]

If you file bk13 and give up your home, you will have to stay within the IRS standard for rent in your area based on family size. It looks like, depending on your county, it could be much lower than $1500/mo that you'd be allowed to spend on rent. Here is the link to look it up: http://www.justice.gov/ust/eo/bapcpa..._charts_IL.htm

You ARE allowed to continue to pay your mortgage payment if it is above the standard, but if you do not have a mortgage, you must adhere to the standard dollar amount--many people find these figures to be rather stingy.

[LadyInTheRed]

Let's put it this way. before I went in to speak with the lawyer, no BK was on my mind at all. I just want to loose the house, go rent something nicer and not have the mortgage company ever come back on me. I don't think I need to do a BK. If i continue to save $1,500 month for the next few months, I will be fine. I can borrow approx $5k from a parent to help me out.

When I started researching how to deal with my mortgage, I never thought about BK either until I stumbled upon BKforum. My situation and goals were much different from yours. But, my point is that just because you didn't consider BK before doesn't mean it isn't the best option.

That said, if you can handle your other debt, I suggest you talk to a couple more attorneys who have experience in foreclosure defense. Also, google "Illinois strategic default" or "Illinois mortgage deficiency". Take it with a grain of salt, but I found a couple of articles saying that banks often don't pursue a deficiency in IL. The fact that you have a 2nd could make the argument for BK stronger. There is no substitution for consultations with a few attorneys experienced in both BK and mortgage foreclosure defense.

My guess is that you would not qualify for a 7 with your family size and income, but do ask whatever attorneys you consult with about the possibility. When deciding whether to file a 13 don't forget to consider the following:

1. If you stop paying your mortgage and rent a home, can you pay off your dischargeable debt (25K in credit card debt) within 5 years without filing BK?
2. If you don't file BK and the banks write off the deficiencies and issue 1099s, what will your tax liability, if any, be on the forgiven debt?
3. If you try to avoid BK and a year or 2 from now after going through foreclosure you find out you have to file BK anyway because the banks are coming after you for deficiencies, will you regret that you would just be starting a 5 year Chap 13 when you could have already been 1 or 2 years into it?

Those are the major considerations I can think of for now. I'm sure I'm missing some.

[frank1010]

1. If you stop paying your mortgage and rent a home, can you pay off your dischargeable debt (25K in credit card debt) within 5 years without filing BK? I think so. If not in 5 years, pretty close to that.
2. If you don't file BK and the banks write off the deficiencies and issue 1099s, what will your tax liability, if any, be on the forgiven debt? Not sure of all this. I only would not my mortage and then do i NOT or do I pay the $200 a month home equity line of credit?? not sure.
3. If you try to avoid BK and a year or 2 from now after going through foreclosure you find out you have to file BK anyway because the banks are coming after you for deficiencies, will you regret that you would just be starting a 5 year Chap 13 when you could have already been 1 or 2 years into it? What kind of amount will these deficiencies be?? Can't I pay a percentage or pay so much per month??
There's got to be a way to get by doing all this if others are doing it. I just want to go rent something bigger and get out of the house that I will never see another dollar on. Just not sure how to do it all.

If I short sale, can the mortage company still come after me???
What's a deed in lieu of foreclosure?
It's been 5 months of unpaid mortage, do I pick up the phone when they call and talk to them, what do I tell them??
Should I start taking my money out of the bank?