Posted on: 22nd Mar, 2012 08:25 pm
I am 5 months behind on my Wells Fargo mortgage in IL. I want to walk away and do a strategic default. I have only seen one lawyer and she told me to file Chapter 13. 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.
I owe $155k, home is worth approx $100k.
I see my options as this:
1. I foreclose and file Chp 13. I am then on less payments and understand the mortgage company can’t come after me. I’m scared to do this though because does the trustee tell me what I can spend on my rental????
2. I foreclose and walk, don’t file the chp 13 and have enough cash to make it.
Questions:
1. Lawyer wants to charge me $4k for Chp 13 that sound about right?
2. I have a credit card thru work, Yet it does not show on my credit report. Can I get in trouble and will work find out?
3. Do I start taking my money out of the bank?
4. If I go rent, do I tell landlord the truth on what I am thinking of doing, strategic foreclosure?
5. What is the best time to do this? Prob wait until last minute and pocket as much cash as possible before I rent.
6. Should I try a short sale instead?? What are the implications if I don’t sell it, does it just foreclose?
7. Am I going to qualify and make it in time for the Mortgage Forgiveness Debt Relief Act which expires on 12/31/2012? I stopped paying in Nov 2011. I don’t know what I need to do to foreclose in court by end of year other than stop paying.
One income, approx $90k a year.
I owe $155k, home is worth approx $100k.
I see my options as this:
1. I foreclose and file Chp 13. I am then on less payments and understand the mortgage company can’t come after me. I’m scared to do this though because does the trustee tell me what I can spend on my rental????
2. I foreclose and walk, don’t file the chp 13 and have enough cash to make it.
Questions:
1. Lawyer wants to charge me $4k for Chp 13 that sound about right?
2. I have a credit card thru work, Yet it does not show on my credit report. Can I get in trouble and will work find out?
3. Do I start taking my money out of the bank?
4. If I go rent, do I tell landlord the truth on what I am thinking of doing, strategic foreclosure?
5. What is the best time to do this? Prob wait until last minute and pocket as much cash as possible before I rent.
6. Should I try a short sale instead?? What are the implications if I don’t sell it, does it just foreclose?
7. Am I going to qualify and make it in time for the Mortgage Forgiveness Debt Relief Act which expires on 12/31/2012? I stopped paying in Nov 2011. I don’t know what I need to do to foreclose in court by end of year other than stop paying.
One income, approx $90k a year.
hi nathan,
rather than filing bankruptcy, i will suggest you to apply for a deed in lieu of foreclosure. you should contact your lender and apply for it. if this request gets accepted, then you will be able to get rid of the property and you won't have to pay the deficient balance to the lender. it will be forgiven by the lender. as the mortgage forgiveness debt relief act is still in vogue, you won't have to pay the taxes to the irs. however, it will lower your credit score by 250 points.
rather than filing bankruptcy, i will suggest you to apply for a deed in lieu of foreclosure. you should contact your lender and apply for it. if this request gets accepted, then you will be able to get rid of the property and you won't have to pay the deficient balance to the lender. it will be forgiven by the lender. as the mortgage forgiveness debt relief act is still in vogue, you won't have to pay the taxes to the irs. however, it will lower your credit score by 250 points.
Nathan,
I really hope there is more to this issue other than the property value! Because you purchased an asset not an investment, and while historically you have been able to build an amount of appreciation/equity in a home past performance does not guarantee future performance. You signed on the dotted line and agreed to pay said amount each month for x term so on and so forth, no where in that note did it say your value was a guarantee... That being said, a short sale or a deed in lieu will definitely be your best options. Both only follow you for two years vs the 7 of a foreclosure or bankruptcy and do not have the TAX IMPLICATIONS a foreclosure will have.
You will have to prove cause for a deed in lieu, either financial hardship or relocation for job, death, divorce, etc... not Im under water and I want to walk away! With a short sale you are typically given time to market the property before it goes to sale.
As for your job, you should confirm with your HR department, but you could likely put your job in danger depending on your line of work. Not to mention, in an uncertain economy where you could be looking for work tomorrow do you really want to have the fact that you intentionally had your property foreclosed on than filed bankruptcy to avoid the deficiency judgement come up on your background check. You can bet you will limit your future prospects if you carry out what you are looking to do!
And pulling your money from the bank and hiding it is called fraud!!! In a sense your game plan is a form of fraud.
Do the right thing either live up to what you agreed to whether you are upside down or not... Or pursue pre-forclosure options that are within the investor guidelines for liquidating the property, which you need to do sooner than later.
I really hope there is more to this issue other than the property value! Because you purchased an asset not an investment, and while historically you have been able to build an amount of appreciation/equity in a home past performance does not guarantee future performance. You signed on the dotted line and agreed to pay said amount each month for x term so on and so forth, no where in that note did it say your value was a guarantee... That being said, a short sale or a deed in lieu will definitely be your best options. Both only follow you for two years vs the 7 of a foreclosure or bankruptcy and do not have the TAX IMPLICATIONS a foreclosure will have.
You will have to prove cause for a deed in lieu, either financial hardship or relocation for job, death, divorce, etc... not Im under water and I want to walk away! With a short sale you are typically given time to market the property before it goes to sale.
As for your job, you should confirm with your HR department, but you could likely put your job in danger depending on your line of work. Not to mention, in an uncertain economy where you could be looking for work tomorrow do you really want to have the fact that you intentionally had your property foreclosed on than filed bankruptcy to avoid the deficiency judgement come up on your background check. You can bet you will limit your future prospects if you carry out what you are looking to do!
And pulling your money from the bank and hiding it is called fraud!!! In a sense your game plan is a form of fraud.
Do the right thing either live up to what you agreed to whether you are upside down or not... Or pursue pre-forclosure options that are within the investor guidelines for liquidating the property, which you need to do sooner than later.