Bankruptcy / forclosure help?

Question

I recently lost my job and we can't afford our house. We don't have any credit cards and only have a little bit of debt. We spoke to a bankruptcy attourney and was told that bankruptcy and forclosure would affect our credit (which is crappy anyway) the same. My question is, if we choose forclosure, when the bank sells our house for less than what we owe, will the bank come after us for the rest? I know if we file bankruptcy they can't, but we really aren't interested in filing bankruptcy. We just need to get out from under our house IMMEDIATELY.

Answer 1

If you lose the home to foreclosure, the bank will sue you for the difference between your debt and the proceeds from their sale of the house.

Bankruptcy hurts your credit a lot loss than a foreclosure.

Contact your lender for permission to do a 'short sale'.  It isn't guaranteed they'll do it, but they'd prefer that to a foreclosure.  Contact the actual lender, not the servicing agent, because those idiots will send it to foreclosure every time.

Answer 2

If they do foreclose and then sell the house. You still owe what you owe. They will come out and get you for it. It's like having a car reposed, you still owe for the car even though they sold it.  

Answer 3

I have no idea of the housing laws in the US, however, while the following 'may' seem like a silly answer, it is not.

Money situations can be very tricky for a lot of people, I have adviced individuals on this before and for some it has worked very well. So,  here's the thing of it:

Look to what 'skills' you and your partner have and try and turn them around into money making ventures. Almost everyone has skills of some sort, the trouble is, most people can't see them. These skills could range from making ornate cushions too mechanics, giving talks on subjects you are well versed in, singing in a bar, driving lessions, a second job like teaching et-cetera. It is for the individual to find their hidden skill, follow a year long plan with this and put all money aside, cut back on things you do not really need, like a second car, smoking, going to the movies, eating out, when mounted up, all these cost quite a bit. By cutting back and using hidden skills for a period of time, your money situation should resolve itself. It may not help with your immediate situation, but you also need to look at the long term here as well.

I wish you all the best and my prayers will be with you both.

Shalom.

Answer 4

If you short sale there are possibly two outcomes depending on how much your bank and their graciousness.  

They can agree to short sell and sue you or if you negotiate with them they may eat the difference.  Since you currently don't have a job you can tell them to sue you, they will win and they will garnish the wages you don't have.  Just be sure don't leave money in your accounts or they will take it.  Then once you scrape a little cash together settle with them.  This isn't to say that you shouldn't pay off your debts.

Have you tried to sell the house yourself?  A bank will just sell it asap so it is worth trying to sell it, get a real estate agent (a good one) and sell it.  

I wouldn't worry about your credit score and I depending on how much you are in debt it may not be worth it to file for bankruptcy.

Answer 5

beentheir done that nothing works trust me their is no easy way out just work hard all ur life until 7 year pass by  or move to   asian country where their is no SSN nothing and enjoy life

Answer 6

You should see if you can negotiate a "SHORT SALE".  That's when the house goes up for sale now, and the bank agrees to take a lower price than what you owe and have that be the end of it, once it sells.

It also affects your credit negatively, but from what I understand it lets you off the hook.  Go look it up to find out more info.  (I only know all this because I talked to my mortgage person the other day and I might have to do this within several months myself ...)

Answer 7

See if the bank will let you do a "short sale". What that means is that they allow you to sell your home for slightly less than you owe, but will not have to pay the difference. Another option although rare is giving the mortgage the keys, signing the house over to them without them foreclosing on you. If they can sell it for close to your loan amount they sometimes will not collect on the difference.

Also make sure you have filed for unemployment and looked into any other services and benefits that might be do you or that you qualify for.

Check with a real estate agent to get an accurate picture of what your home is really worth in today's market and go from there.

Answer 8

Are you in one of those ARM loans where your mortgage is jumping?

The solutions depend on how long until you find a new job, your savings and if you can get your mortgage company to take interest only payments for a while. Yes you could short sale but depending on where you live that could take a little time.  

I lost my job last november and between unemployment, savings, parttime work I was fine until I finally found the right fulltime job. It got a little scary because I turned down something in February that was 70 miles from home and it took a little longer to find the right job.

Answer 9

By law this will have an effect on your credit rating for only a few years I am not sure of the amount of time it's either 5 or 7 years.  Then it must be wiped from the records.  However, in that time you will have trouble getting more credit, another house, car, etc.  Check with that attorney to be sure about length of time.

I know this is very bad advise and the others above look better so just give me a big thumbs down.

Answer 10

bankruptcy laws vary from state to state.

you may try to negotiate with the lender to waive the deficiency (their loss on the home after it is sold for less than you owe on it)

also try to get the capital gains tax waived.

what are your chances of finding work?  maybe a loan modification or loan workout would allow you to keep the house if the income picked back up.

if its cheaper to rent then that could be bad advice but talking to the lenders is the best way to find out how they would like you to handle it and workout avoiding long-term damage.