Must Move to another State and Cannot Afford Rent and Mortga

quicksilver13 · Joined: 05 Sep 2008 Posts: 2 1.96 Dollars($)

Must Move to another State and Cannot Afford Rent and Mortgage - Lawyer Says Chapter 13...I must move at the end of the month from upstate New York to California. I won't be able to afford my new apartment and my mortgage.

The lawyer I contacted is dead certain I should do Chapter 13. He says the primary reason is this will stop there being a Deficiency Judgment against me - if I do it before any foreclosure.

In addition, he says my other debt will be reduced - I realize now I'm not sure if he said to 5 cents on the dollar or 5% of the debt.

I could pay for six months using my HELOC while trying to sell house, but then I would have to sell it for that much more - around $16000. Its valued around 348k (fair price though probably won't sell at that) and I owe $302k. I would sell for just cost and realtors commission - around $320k total now.

1) Is the lawyer right that Chapter 13 is the best option?

2) He says bankruptcy makes any deficiency non taxable so I don't have to worry about the 2009 deadline for the Mortgage Relief Act.

3) He says I must wait six months in California before I can declare bankruptcy. I suppose I should keep paying mortgage for six months so I have good credit to start a new life, but would like perspective on this $16000 cost. This would seem to suggest trying to sell during this time.

4) When I stop paying, what are the stages and how long will a foreclosure take?

5) This is very important to me - how is the house taken care of while I have left it? The winters are of course very cold and I don't want pipes to burst, yet I don't want to/can't pay electricity and heating oil. I also don't want it to become overgrown.

a) Is it reasonable to get a Realty Management company to look after the house and how expensive is that?

b) From what the lawyer said it could be 1 1/2 years until they take the house (although he at first said 5 years - me going into bankruptcy). How long would I be trying to keep the house together from afar? If I keep paying for 6 months, that makes it 2 years until foreclosure doesn't it?

I should state he shot down Short Sale and Deed in Lieu of sale as having unlikely success.

I was discomforted by dealing with this lawyer as he seemed gungho for this course of action from the beginning and finally got around to his $1900 fee. He wanted me to file in New York so that he would handle it even though I pointed out this would make getting an apartment in California difficult. I wonder if his advice is self serving yet I must stop paying and I don't want a deficiency judgment.

Finally, if I don't declare bankruptcy, is it not true that a foreclosure would take so long now that any sale would fall past the 2009 deadline for the Mortgage Relief Act? And, as the lawyer stated, I would have to declare bankruptcy later to escape a Deficiency Judgment anyway?

Sorry there are so many parts to my query, but its very hard to get a handle on what to do and I only have 26 days now. I must go and get an apartment next weekend.

helping_user · Posted: Mon Sep 08, 2008 3:12 am Post subject:

Hi Quicksilver,

If you are interested to file bankruptcy, it should be done in the state where the property is located. It is true that bankruptcy puts a stop to foreclosure as long as you keep making payments under Chapter 13 repayment plan. But this doesn't mean that the lender will foreclose in future. Maybe if you pay off the arrears and bring your loan current, there'll be no need to declare a foreclosure.

I don't think it's a good decision to use the services of a realty managment company. Instead of investing your money there, it'll be better if you pay more towards the mortgage.

You shouldn't file bankruptcy solely for the purpose of stopping the deficiency judgment. If at all you're comfortable making payments, only then you should try filing chapter 13.

Thanks.

quicksilver13 · Joined: 05 Sep 2008 Posts: 2 1.96 Dollars($)

Thanks Helping User. The basic problem is I can't afford rent in California and my mortgage in New York. So, I'm looking for the way to solve this with the least damage to my credit.

I have always been current with mortgage and all payments and am still so. But this will not be possible quickly - within 4 months - of moving to California. In addition, I worry about the property deteriorating once I am no longer here.

Would you have any suggestions to remedy this? Step by step would be great.

And as you said file bankruptcy in state where property is - can I file in New York once I am living in California - which will be October?

Thanks for replying. I would appreciate any further insight you would have.

Jessica

Hi quicksilver,

Welcome back to our forums.

As per the laws, you need to file bankruptcy in the state where you have resided for the greater part of 180 days prior to filing. What I mean is, if you have stayed in New York for 91 days prior to the filing date, then you should file the bankruptcy there even if you've moved out to California.

I think you're paying your mortgage with the Heloc, is that so?

I usually advise people to file for chapter 13 if they're able to repay. But in your situation, you'll be moving out of New York. So, you'll have to make sure that you can come over to New York for any court proceeding or to meet the trustee as and when required. Also, you'll be paying for the mortgage under Chapter 13 plan. I doubt whether it'll be possible for you to come over so often.

If at all, you don't want this property, why don't you rent it out? It could become a source of income for you. And, you can try paying the mortgage using the rental income. I know it's easier said than done but that's what I feel right now and I'd like to know your thoughts too.

Regards,

Jessica.

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